Bay Street News

Summit Financial Group Reports Fourth Quarter and Full Year 2018 Results

Bay Street

Q4 2018 Diluted EPS $0.60, equaling a Quarterly Record; Full Year 2018 Diluted EPS $2.26, an Annual Record

MOOREFIELD, W.Va., Jan. 29, 2019 (GLOBE NEWSWIRE) — Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ: SMMF) today reported quarterly net income of $7.45 million for fourth quarter 2018, or $0.60 per diluted share — equaling our previous quarterly record, compared to $2.32 million, or $0.19 per diluted share, for the fourth quarter of 2017. Earnings per diluted share for fourth quarter 2017 were negatively impacted (on an after-tax basis) by the one-time charge of $0.28 to re-measure the Company’s net deferred tax assets as result of enactment of the Tax Cuts and Jobs Act (“TCJA”).

For the full year 2018, Summit achieved record net income of $28.07 million, and record earnings per diluted share of $2.26, compared with $11.92 million, or $1.00 per diluted share, for 2017.  Full year 2018 results were positively impacted (on a diluted earnings per share basis) $0.29 as result of higher net interest income, $0.06 due to growth in trust and wealth management fees, $0.08 from increased deposit account-related fees and $0.25 in lower income tax expense as result of TCJA’s lower income tax rates. Higher total noninterest expense of $0.16 per diluted share partially offset these positive impacts. Lower earnings in 2017 were principally attributable to the following non-core or one-time items (on an after-tax, diluted earnings per share basis):  $0.52 as result of a litigation settlement, $0.29 due to the enactment of the TCJA, and $0.08 as result of merger-related expenses. 

Highlights for Q4 2018

H. Charles Maddy, III, President and Chief Executive Officer of Summit, commented, “I am very gratified to report that for fourth quarter 2018, Summit had record quarterly net income and tied its previous record for quarterly earnings per share; and for the full year 2018, we achieved a new annual earnings record both in net income and on a per share basis. In addition, I am particularly pleased by our continued solid lending activity and strong core operating performance in this past quarter. Our acquisition of Peoples Bankshares, Inc. closed at the beginning of 2019, and it serves to combine Summit with a financially strong bank that shares the same commitment to build long-term client relationships by providing ‘Service Beyond Expectations’. The financial synergies relative to this transaction are already evident. I optimistically look forward to 2019 and beyond as we are laser-focused on our goal to be a consistent growing, high-performing community banking institution.”

Results from Operations

Total revenue for fourth quarter 2018, consisting of net interest income and noninterest income, increased 4.1 percent to $22.2 million compared to $21.4 million for the fourth quarter 2017. For the full year 2018, total revenue was $87.2 million compared to $80.6 million for 2017, representing an 8.2 percent increase primarily due to the acquisition of First Century Bankshares, Inc. (“FCB”) in Q2 2017.

For the fourth quarter of 2018, net interest income increased 3.5 percent to $18.1 million compared to $17.4 million for the prior-year fourth quarter and grew 4.9 percent compared to the linked quarter principally as result of $44.2 million in growth in average loans and 19 basis point improvement in average loan yields during the quarter. The net interest margin for fourth quarter 2018 was 3.61 percent compared to 3.65 percent for the same year-ago quarter, and 3.53 percent for the linked quarter. Excluding the impact of accretion and amortization of fair value acquisition accounting adjustments related to the acquired interest earning assets and interest bearing liabilities, Summit’s net interest margin was 3.57 percent for Q4 2018 and 3.54 percent for full year 2018. 

Noninterest income, consisting primarily of insurance commissions from Summit’s insurance agency subsidiary, trust and wealth management fees and service fee income from community banking activities, for fourth quarter 2018 was $4.19 million compared to $3.93 million for the comparable period of 2017. Excluding realized securities gains and losses, noninterest income was $4.39 million for fourth quarter 2018, compared to $4.00 million reported for fourth quarter 2017 and $4.20 million for the linked quarter.

We recorded a $500,000 provision for loan losses during fourth quarter 2018 and $375,000 in Q4 2017.  The need for increased loan loss provisioning during 2018 is directionally consistent with changes in the credit quality in our loan portfolio and our loan growth.

Q4 2018 total noninterest expense increased 1.0 percent to $12.47 million compared to $12.35 million for the prior-year fourth quarter. Noninterest expense for full year 2018 decreased 13.6 percent compared to 2017 principally due to: 1) $144,000 in merger expenses being incurred in 2018 compared to $1.59 million in 2017; and 2) a $9.9 million charge to resolve fully all litigation with Residential Funding Company, LLC and ResCap Liquidating Trust (collectively “ResCap”) recorded during 2017. Excluding the impact of the ResCap litigation settlement charge and merger-related expenses, noninterest expense for 2018 increased 7.5 percent to $49.9 million compared to $46.3 million for 2017, principally as result of the FCB acquisition.

Balance Sheet

At December 31, 2018, total assets were $2.20 billion, an increase of $66.3 million, or 3.1 percent since December 31, 2017. Total loans, net of unearned fees and allowance for loan losses, were $1.68 billion at December 31, 2018, up $88.3 million, or 5.5 percent, from the $1.59 billion reported at year-end 2017.  Loans, excluding mortgage warehouse lines of credit, increased $46.1 million during the quarter, or 11.5 percent (on an annualized basis), and have grown $80.4 million or 5.1 percent since year-end 2017.

At December 31, 2018, deposits were $1.63 billion, an increase of $34.2 million, or 2.1 percent, since year end 2017. During 2018, checking deposits increased $117.3 million or 18.7 percent, time deposits declined by $9.1 million or 1.5 percent and savings deposits declined $74.0 million or 20.7 percent.

Shareholders’ equity was $219.8 million as of December 31, 2018 compared to $213.6 million at September 30, 2018 and $201.5 million at December 31, 2017. Tangible book value per common share increased to $15.75 at December 31, 2018 compared to $15.13 at the end of third quarter 2018 and $14.08 at year end 2017. Summit had 12,312,933 outstanding common shares at year end 2018 compared to 12,358,562 at year end 2017.

As previously announced in Q3 2018, the Board of Directors authorized the open market repurchase of up to 500,000 shares of the issued and outstanding shares of Summit’s common stock.  The timing and quantity of purchases under this stock repurchase plan are at the discretion of management.  The plan will expire December 31, 2019, but may be discontinued, suspended, or restarted at any time at the Company’s discretion.  During Q4 2018, 82,423 shares of our common stock were repurchased under the Plan at an average price of $20.46 per share.

Asset Quality

As of December 31, 2018, nonperforming assets (“NPAs”), consisting of nonperforming loans, foreclosed properties, and repossessed assets, were $36.5 million, or 1.66 percent of assets. This compares to $39.0 million, or 1.82 percent of assets at the linked quarter-end, and $36.9 million, or 1.73 percent of assets, at year-end 2017 as result of our continuing emphasis on improving our overall asset quality.

Fourth quarter 2018 net loan charge-offs were $398,000, or 0.10 percent of average loans annualized; while adding $500,000 to the allowance for loan losses through the provision for loan losses. The allowance for loan losses stood at 0.77 percent of total loans at December 31, 2018, compared to 0.78 percent at year-end 2017.  If the acquired FCB and HCB loans, which were recorded at fair value on the acquisition dates were excluded, the allowance for loan losses to total loans ratio at December 31, 2018 and December 31, 2017 would have been 0.84 percent and 0.91 percent, respectively.

About the Company

Summit Financial Group, Inc. is a $2.20 billion financial holding company headquartered in Moorefield, West Virginia. Summit provides community banking services primarily in the Eastern Panhandle and Southern regions of West Virginia and the Northern, Shenandoah Valley and Southwestern regions of Virginia, through its bank subsidiary, Summit Community Bank, Inc., which operates thirty-three 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.

Contact: Robert S. Tissue, Sr. Vice President & CFO
Telephone: (304) 530-0552
Email: rtissue@summitfgi.com

 

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)    
Quarterly Performance Summary (unaudited)      
Q4 2018 vs Q4 2017      
       
     For the Quarter Ended   Percent 
 Dollars in thousands  12/31/2018 12/31/2017  Change 
 Statements of Income       
   Interest income       
  Loans, including fees  $   22,659   $   20,031   13.1 %
  Securities      2,527       2,412   4.8 %
  Other      127       144   -11.8 %
  Total interest income      25,313       22,587   12.1 %
                   
  Interest expense       
  Deposits      5,103       3,224   58.3 %
  Borrowings      2,158       1,925   12.1 %
  Total interest expense      7,261       5,149   41.0 %
  Net interest income      18,052       17,438   3.5 %
  Provision for loan losses      500       375   33.3 %
  Net interest income after provision for loan losses      17,552       17,063   2.9 %
                   
         
  Noninterest income       
  Insurance commissions      1,132       1,005   12.6 %
  Trust and wealth management fees      627       578   8.5 %
  Service charges on deposit accounts      1,209       1,200   0.8 %
  Bank card revenue      809       743   8.9 %
  Realized securities (losses) gains      (205 )     (71 ) 188.7 %
  Bank owned life insurance income      249       258   -3.5 %
  Other income      366       218   67.9 %
  Total noninterest income     4,187       3,931   6.5 %
  Noninterest expense       
  Salaries and employee benefits     6,928       6,520   6.3 %
  Net occupancy expense     836       772   8.3 %
  Equipment expense     1,139       1,095   4.0 %
  Professional fees     385       355   8.5 %
  Advertising and public relations     193       185   4.3 %
  Amortization of intangibles     410       435   -5.7 %
  FDIC premiums     140       250   -44.0 %
  Bank card expense     395       319   23.8 %
  Foreclosed properties expense, net of losses     507       516   -1.7 %
  Merger-related expense     59       14   321.4 %
  Other expenses     1,474       1,885   -21.8 %
  Total noninterest expense     12,466       12,346   1.0 %
  Income before income taxes      9,273       8,648   7.2 %
  Income taxes      1,823       6,325   -71.2 %
  Net income  $   7,450   $   2,323   220.7 %

 

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)    
Quarterly Performance Summary (unaudited)      
Q4 2018 vs Q4 2017    
     For the Quarter Ended   Percent 
    12/31/2018 12/31/2017  Change 
 Per Share Data       
  Earnings per common share       
  Basic  $   0.60   $   0.19   215.8 %
  Diluted  $   0.60   $   0.19   215.8 %
         
  Cash dividends  $   0.14   $   0.11   27.3 %
         
  Average common shares outstanding       
  Basic      12,358,104       12,325,067   0.3 %
  Diluted      12,407,678       12,371,507   0.3 %
         
  Common shares outstanding at period end      12,312,933       12,358,562   -0.4 %
         
 Performance Ratios       
  Return on average equity    13.85 %   4.62 % 199.8 %
  Return on average tangible equity    16.41 %   6.12 % 168.1 %
  Return on average assets    1.38 %   0.44 % 213.6 %
  Net interest margin (A)    3.61 %   3.65 % -1.1 %
  Efficiency ratio (B)    51.02 %   51.47 % -0.9 %
         
  NOTE (A) – Presented on a tax-equivalent basis assuming a federal tax rate of 21% for 2018 and 35% for 2017.
     
  NOTE (B) – Computed on a tax equivalent basis excluding gains/losses on sales of assets, write-downs of OREO properties to fair value and amortization of intangibles.

 

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)    
Annual Performance Summary (unaudited)      
2018 vs 2017      
         
     For the Year Ended   Percent 
 Dollars in thousands  12/31/2018 12/31/2017  Change 
 Statements of Income       
  Interest income       
  Loans, including fees  $   85,283   $   74,908   13.9 %
  Securities      9,587       9,010   6.4 %
  Other      539       609   -11.5 %
  Total interest income      95,409       84,527   12.9 %
  Interest expense       
  Deposits      17,675       11,210   57.7 %
  Borrowings      7,937       7,170   10.7 %
  Total interest expense      25,612       18,380   39.3 %
  Net interest income      69,797       66,147   5.5 %
  Provision for loan losses      2,250       1,250   80.0 %
  Net interest income after provision for loan losses      67,547       64,897   4.1 %
         
  Noninterest income       
  Insurance commissions      4,320       4,005   7.9 %
  Trust and wealth management fees      2,653       1,863   42.4 %
  Service charges on deposit accounts      4,631       4,109   12.7 %
  Bank card revenue      3,152       2,697   16.9 %
  Realized securities gains (losses)      622       (14 ) n/m  
  Bank owned life insurance income      1,022       1,017   0.5 %
  Other income      1,022       750   36.3 %
  Total noninterest income     17,422       14,427   20.8 %
  Noninterest expense       
  Salaries and employee benefits     27,478       25,075   9.6 %
  Net occupancy expense     3,364       3,011   11.7 %
  Equipment expense     4,411       3,954   11.6 %
  Professional fees     1,607       1,367   17.6 %
  Advertising and public relations     654       578   13.1 %
  Amortization of intangibles     1,671       1,410   18.5 %
  FDIC premiums     830       1,065   -22.1 %
  Bank card expense     1,475       1,432   3.0 %
  Foreclosed properties expense, net of losses     1,350       1,339   0.8 %
  Litigation settlement     –       9,900   -100.0 %
  Merger-related expense     144       1,589   -90.9 %
  Other expenses     6,889       7,025   -1.9 %
  Total noninterest expense     49,873       57,745   -13.6 %
  Income before income taxes      35,096       21,579   62.6 %
  Income taxes      7,024       9,664   -27.3 %
  Net income  $   28,072   $   11,915   135.6 %

 

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)    
Annual Performance Summary (unaudited)      
2018 vs 2017    
     For the Year Ended   Percent 
    12/31/2018 12/31/2017  Change 
 Per Share Data       
  Earnings per common share       
  Basic  $   2.27   $   1.00   127.0 %
  Diluted  $   2.26   $   1.00   126.0 %
         
  Cash dividends  $   0.53   $   0.44   20.5 %
         
  Average common shares outstanding       
  Basic      12,364,468       11,918,390   3.7 %
  Diluted      12,424,573       11,949,245   4.0 %
         
  Common shares outstanding at period end      12,312,933       12,358,562   -0.4 %
         
 Performance Ratios       
  Return on average equity    13.43 %   6.40 % 109.8 %
  Return on average tangible equity    16.09 %   8.01 % 100.9 %
  Return on average assets    1.32 %   0.59 % 123.7 %
  Net interest margin (A)    3.57 %   3.67 % -2.7 %
  Efficiency ratio (B)    53.72 %   52.41 % 2.5 %
         
 NOTE (A) – Presented on a tax-equivalent basis assuming a federal tax rate of 21% for 2018 and 35% for 2017.
     
 NOTE (B) – Computed on a tax equivalent basis excluding gains/losses on sales of assets, write-downs of OREO properties to fair value and amortization of intangibles.

 

 SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)  
 Five Quarter Performance Summary (unaudited)  
     For the Quarter Ended 
 Dollars in thousands  12/31/2018 9/30/2018 6/30/2018 3/31/2018 12/31/2017
 Statements of Income           
  Interest income         
  Loans, including fees  $   22,659     $   21,295   $   20,962   $   20,366   $   20,031  
  Securities      2,527         2,367       2,303       2,391       2,412  
  Other      127         138       134       140       144  
  Total interest income      25,313         23,800       23,399       22,897       22,587  
  Interest expense         
  Deposits      5,103         4,714       4,309       3,549       3,224  
  Borrowings      2,158         1,873       1,815       2,091       1,925  
  Total interest expense      7,261         6,587       6,124       5,640       5,149  
  Net interest income      18,052         17,213       17,275       17,257       17,438  
  Provision for loan losses      500         500       750       500       375  
  Net interest income after provision for loan losses      17,552         16,713       16,525       16,757       17,063  
  Noninterest income         
  Insurance commissions      1,132         1,062       1,013       1,113       1,005  
  Trust and wealth management fees      627         687       672       667       578  
  Service charges on deposit accounts      1,209         1,215       1,116       1,091       1,200  
  Bank card revenue      809         793       801       749       742  
  Realized securities (losses) gains      (205 )       8       87       732       (71 )
  Bank owned life insurance income      248         250       249       275       258  
  Other income      367         196       210       249       219  
  Total noninterest income     4,187         4,211       4,148       4,876       3,931  
  Noninterest expense         
  Salaries and employee benefits     6,928         6,806       6,922       6,821       6,520  
  Net occupancy expense     836         856       840       832       772  
  Equipment expense     1,139         1,118       1,071       1,083       1,095  
  Professional fees     385         503       385       333       355  
  Advertising and public relations     193         170       188       103       185  
  Amortization of intangibles     410         413       413       436       435  
  FDIC premiums     140         210       240       240       250  
  Bank card expense     395         384       361       335       319  
  Foreclosed properties expense, net of losses     507         169       350       325       516  
  Merger-related expense     59         86       –       –       14  
  Other expenses     1,474         1,643       1,965       1,806       1,885  
  Total noninterest expense     12,466         12,358       12,735       12,314       12,346  
  Income before income taxes      9,273         8,566       7,938       9,319       8,648  
  Income tax expense      1,823         1,667       1,658       1,876       6,325  
  Net income  $   7,450     $   6,899   $   6,280   $   7,443   $   2,323  

 

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)          
Five Quarter Performance Summary (unaudited)          
           
     For the Quarter Ended 
    12/31/2018 9/30/2018 6/30/2018 3/31/2018 12/31/2017
Per Share Data           
  Earnings per common share           
  Basic  $   0.60   $   0.56   $   0.51   $   0.60   $   0.19  
  Diluted  $   0.60   $   0.55   $   0.51   $   0.60   $   0.19  
             
  Cash dividends  $   0.14   $   0.13   $   0.13   $   0.13   $   0.11  
             
  Average common shares outstanding           
  Basic      12,358,104       12,374,350       12,366,522       12,358,849       12,325,067  
  Diluted      12,407,678       12,439,051       12,431,984       12,383,757       12,371,507  
             
  Common shares outstanding at period end      12,312,933       12,382,450       12,373,747       12,366,360       12,358,562  
             
Performance Ratios           
  Return on average equity    13.85 %   13.00 %   12.16 %   14.73 %   4.62 %
  Return on average tangible equity    16.41 %   15.53 %   14.68 %   17.80 %   6.12 %
  Return on average assets    1.38 %   1.31 %   1.19 %   1.40 %   0.44 %
  Net interest margin (A)    3.61 %   3.53 %   3.58 %   3.58 %   3.65 %
  Efficiency ratio (B)    51.02 %   54.25 %   55.88 %   53.84 %   52.44 %
             
 NOTE (A) – Presented on a tax-equivalent basis assuming a federal tax rate of 21% for 2018 and 35% for 2017.
             
 NOTE (B) – Computed on a tax equivalent basis excluding gains/losses on sales of assets, write-downs of OREO properties to fair value and amortization of intangibles.

 

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)        
Selected Balance Sheet Data (unaudited)          
             
 Dollars in thousands, except per share amounts  12/31/2018 9/30/2018 6/30/2018 3/31/2018 12/31/2017
             
 Assets           
  Cash and due from banks $   23,061   $   9,382   $   8,314   $   9,042   $   9,641  
  Interest bearing deposits other banks     36,479       44,452       38,097       38,365       42,990  
  Securities     293,284       288,040       283,221       296,890       328,723  
  Loans, net     1,682,005       1,632,747       1,617,373       1,631,150       1,593,744  
  Property held for sale     21,432       22,017       21,606       21,442       21,470  
  Premises and equipment, net     37,553       36,888       36,017       35,554       34,209  
  Goodwill and other intangible assets     25,842       26,252       26,665       27,077       27,513  
  Cash surrender value of life insurance policies     42,420       42,208       41,932       41,668       41,358  
  Other assets     38,510       36,741       34,427       33,707       34,592  
    Total assets $   2,200,586   $   2,138,727   $   2,107,652   $   2,134,895   $   2,134,240  
                                 
             
 Liabilities and Shareholders’ Equity           
  Deposits $   1,634,826   $   1,651,064   $   1,639,996   $   1,654,523   $   1,600,601  
  Short-term borrowings     309,084       238,403       202,429       193,513       250,499  
  Long-term borrowings and subordinated debentures     20,324       20,328       40,332       65,336       65,340  
  Other liabilities     16,522       15,376       15,016       16,514       16,295  
  Shareholders’ equity     219,830       213,556       209,879       205,009       201,505  
    Total liabilities and shareholders’ equity $   2,200,586   $   2,138,727   $   2,107,652   $   2,134,895   $   2,134,240  
                                 
             
  Book value per common share $   17.85   $   17.25   $   16.96   $   16.55   $   16.30  
  Tangible book value per common share $   15.75   $   15.13   $   14.81   $   14.36   $   14.08  
  Tangible common equity to tangible assets   8.9 %   8.9 %   8.8 %   8.4 %   8.3 %

 

SUMMIT FINANCIAL GROUP INC. (NASDAQ:  SMMF)        
Regulatory Capital Ratios (unaudited)          
             
    12/31/2018 9/30/2018 6/30/2018 3/31/2018 12/31/2017
Summit Financial Group, Inc.          
  CET1 Risk-based Capital 11.1 % 11.1 % 11.0 % 10.7 % 10.6 %
  Tier 1 Risk-based Capital 12.2 % 12.2 % 12.1 % 11.8 % 11.8 %
  Total Risk-based Capital 12.9 % 12.9 % 12.8 % 12.5 % 12.5 %
  Tier 1 Leverage Ratio 10.1 % 10.1 % 9.9 % 9.5 % 9.4 %
             
Summit Community Bank, Inc.          
  CET1 Risk-based Capital 12.0 % 12.0 % 12.0 % 11.7 % 11.7 %
  Tier 1 Risk-based Capital 12.0 % 12.0 % 12.0 % 11.7 % 11.7 %
  Total Risk-based Capital 12.8 % 12.7 % 12.8 % 12.5 % 12.5 %
  Tier 1 Leverage Ratio 10.0 % 9.9 % 9.8 % 9.5 % 9.4 %

 

SUMMIT FINANCIAL GROUP INC. (NASDAQ:  SMMF)        
Loan Composition (unaudited)            
               
Dollars in thousands 12/31/2018 9/30/2018 6/30/2018 3/31/2018 12/31/2017  
               
Commercial   $   194,315   $   167,972   $   171,410   $   189,586   $   189,981  
Mortgage warehouse lines     39,140       35,910       54,332       45,702       30,757  
Commercial real estate            
Owner occupied     266,362       272,475       262,174       265,075       250,202  
Non-owner occupied     564,826       530,568       503,047       498,445       484,902  
Construction and development            
Land and development     68,833       71,819       74,018       66,841       67,219  
Construction       24,731       25,703       25,711       33,327       33,412  
Residential real estate            
Non-jumbo       336,977       340,783       343,044       346,477       354,101  
Jumbo       73,599       72,327       66,831       67,169       62,267  
Home equity       80,910       82,018       82,409       83,382       84,028  
Consumer       32,460       33,664       34,249       34,825       36,202  
Other       12,899       12,452       12,728       12,578       13,238  
Total loans, net of unearned fees     1,695,052       1,645,691       1,629,953       1,643,407       1,606,309  
Less allowance for loan losses     13,047       12,944       12,580       12,257       12,565  
Loans, net $   1,682,005   $   1,632,747   $   1,617,373   $   1,631,150   $   1,593,744  

 

SUMMIT FINANCIAL GROUP INC. (NASDAQ:  SMMF)      
Deposit Composition (unaudited)        
             
Dollars in thousands   12/31/2018 9/30/2018 6/30/2018 3/31/2018 12/31/2017
Core deposits            
  Non-interest bearing checking $   222,120   $   232,697   $   217,134   $   219,293   $   217,493
  Interest bearing checking     523,257       505,411       472,041       447,172       410,606
  Savings       284,173       301,269       322,940       346,962       358,168
  Time deposits       316,914       316,941       322,801       318,556       318,036
Total core deposits     1,346,464       1,356,318       1,334,916       1,331,983       1,304,303
             
  Brokered deposits       220,497       227,312       238,662       242,049       202,509
  Other non-core time deposits     67,866       67,434       66,418       80,491       93,789
Total deposits $   1,634,827   $   1,651,064   $   1,639,996   $   1,654,523   $   1,600,601

 

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)        
Asset Quality Information (unaudited)          
             
     For the Quarter Ended 
 Dollars in thousands  12/31/2018 9/30/2018 6/30/2018 3/31/2018 12/31/2017
             
  Gross loan charge-offs $   705     $   413     $   525     $   960     $   550  
  Gross loan recoveries     (307 )       (278 )       (97 )       (153 )       (276 )
  Net loan charge-offs (recoveries) $   398     $   135     $   428     $   807     $   274  
                                         
             
  Net loan charge-offs to average loans (annualized)   0.10 %     0.03 %     0.10 %     0.20 %     0.07 %
  Allowance for loan losses $   13,047     $   12,944     $   12,580     $   12,257     $   12,565  
  Allowance for loan losses as a percentage of period end loans   0.77 %     0.79 %     0.77 %     0.75 %     0.78 %
  Nonperforming assets:          
  Nonperforming loans          
  Commercial $   935     $   801     $   954     $   734     $   696  
  Commercial real estate     3,239         5,090         3,238         3,400         3,164  
  Residential construction and development     3,198         3,200         3,233         3,642         3,569  
  Residential real estate     7,506         7,760         8,241         7,521         7,656  
  Consumer     147         118         110         160         238  
  Total nonperforming loans     15,025         16,969         15,776         15,457         15,323  
  Foreclosed properties          
  Commercial real estate     1,762         1,762         1,818         1,875         1,789  
  Commercial construction and development     6,479         6,790         6,815         7,140         7,392  
  Residential construction and development     11,543         11,614         11,517         11,053         11,182  
  Residential real estate     1,648         1,851         1,456         1,374         1,107  
  Total foreclosed properties     21,432         22,017         21,606         21,442         21,470  
  Other repossessed assets     5         5         12         18         68  
  Total nonperforming assets $   36,462     $   38,991     $   37,394     $   36,917     $   36,861  
                                         
             
  Nonperforming loans to period end loans   0.89 %     1.03 %     0.97 %     0.94 %     0.95 %
  Nonperforming assets to period end assets   1.66 %     1.82 %     1.77 %     1.73 %     1.73 %
             
  Troubled debt restructurings          
  Performing $   26,609     $   27,441     $   27,559     $   27,408     $   28,347  
  Nonperforming     388         113         281         76         26  
  Total troubled debt restructurings $   26,997     $   27,554     $   27,840     $   27,484     $   28,373  

 

Loans Past Due 30-89 Days (unaudited)          
     For the Quarter Ended 
 Dollars in thousands  12/31/2018 9/30/2018 6/30/2018 3/31/2018 12/31/2017
             
  Commercial $   219   $   607   $   319   $   539   $   586
  Commercial real estate     161       988       546       601       1,082
  Construction and development     194       393       264       174       1,127
  Residential real estate     6,249       5,513       4,125       5,218       7,236
  Consumer     593       345       337       425       504
  Other     38       11       8       15       38
  Total $   7,454   $   7,857   $   5,599   $   6,972   $   10,573

 

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)                
Average Balance Sheet, Interest Earnings & Expenses and Average Rates            
Q4 2018 vs Q3 2018 vs Q4 2017 (unaudited)                    
  Q4 2018   Q3 2018   Q4 2017
  Average Earnings / Yield /   Average Earnings / Yield /   Average Earnings / Yield /
Dollars in thousands Balances Expense Rate   Balances Expense Rate   Balances Expense Rate
                       
ASSETS                      
Interest earning assets                      
Loans, net of unearned  interest (1)                    
Taxable $   1,660,250   $  22,519   5.38 %   $   1,615,700   $   21,154   5.19 %   $   1,562,978   $   19,879   5.05 %
Tax-exempt (2)     15,322       177   4.58 %       15,688       178   4.50 %       16,902       234   5.49 %
Securities                      
Taxable     176,059       1,502   3.38 %       155,574       1,227   3.13 %       202,377       1,328   2.60 %
Tax-exempt (2)     132,088       1,296   3.89 %       146,174       1,443   3.92 %       142,641       1,668   4.64 %
Interest bearing deposits other banks and Federal funds sold     35,402       127   1.42 %       38,642       138   1.42 %       42,021       144   1.36 %
Total interest earning assets     2,019,121       25,621   5.03 %       1,971,778       24,140   4.86 %       1,966,919       23,253   4.69 %
Noninterest earning assets                      
Cash & due from banks     9,686             9,326             9,753      
Premises & equipment     37,224             36,533             34,263      
Other assets     109,228             108,628             111,596      
Allowance for loan losses     (13,172 )           (12,865 )           (12,628 )    
Total assets $   2,162,087         $   2,113,400         $   2,109,903      
                                   
                       
 LIABILITIES AND SHAREHOLDERS’ EQUITY                  
                       
Liabilities                      
Interest bearing liabilities                      
Interest bearing demand deposits $   519,465   $   1,504   1.15 %   $   486,107   $   1,168   0.95 %   $   405,307   $   447   0.44 %
Savings deposits     289,809       861   1.18 %       312,467       857   1.09 %       360,630       684   0.75 %
Time deposits     607,037       2,738   1.79 %       616,657       2,689   1.73 %       629,871       2,093   1.32 %
Short-term borrowings     270,092       1,909   2.80 %       211,211       1,436   2.70 %       220,027       1,240   2.24 %
Long-term borrowings and subordinated debentures     20,326       249   4.86 %       39,265       437   4.42 %       65,342       685   4.16 %
Total interest bearing liabilities     1,706,729       7,261   1.69 %       1,665,707       6,587   1.57 %       1,681,177       5,149   1.22 %
                       
Noninterest bearing liabilities                      
Demand deposits     223,999             219,986             214,624      
Other liabilities     16,138             15,447             12,886      
Total liabilities     1,946,866             1,901,140             1,908,687      
                       
Shareholders’ equity – common     215,221             212,260             201,216      
Total liabilities and shareholders’ equity $   2,162,087         $   2,113,400         $   2,109,903      
                                   
                       
NET INTEREST EARNINGS   $  18,360       $   17,553       $   18,104  
                       
NET INTEREST MARGIN       3.61 %         3.53 %         3.65 %
                       
(1)  For purposes of this table, nonaccrual loans are included in average loan balances.
                       
(2)  For purposes of this table, interest income on tax-exempt securities and loans has been adjusted assuming a Federal tax rate of 21% for 2018 periods and 35% for 2017 period. The taxable equivalent adjustment results in an increase in interest income of  $309,000, $340,000 and $666,000 for Q4 2018, Q3 2018 and Q4 2017, respectively.

 

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)          
Average Balance Sheet, Interest Earnings & Expenses and Average Rates        
YTD 2018 vs YTD 2017 (unaudited)              
   
  YTD 2018   YTD 2017
  Average Earnings / Yield /   Average Earnings / Yield /
Dollars in thousands Balances Expense Rate   Balances Expense Rate
               
ASSETS              
Interest earning assets              
Loans, net of unearned  interest (1)              
Taxable $   1,626,725   $   84,716   5.21 %   $   1,480,601   $   74,365   5.02 %
Tax-exempt (2)     15,776       718   4.55 %       14,899       835   5.60 %
Securities              
Taxable     170,912       5,341   3.13 %       200,596       5,071   2.53 %
Tax-exempt (2)     136,913       5,375   3.93 %       129,342       6,060   4.69 %
Interest bearing deposits other banks and Federal funds sold     38,148       539   1.41 %       43,400       609   1.40 %
Total interest earning assets     1,988,474       96,689   4.86 %       1,868,838       86,940   4.65 %
               
Noninterest earning assets              
Cash & due from banks     9,517             8,492      
Premises & equipment     36,025             31,750      
Other assets     107,856             109,456      
Allowance for loan losses     (12,830 )           (12,196 )    
Total assets $   2,129,042         $   2,006,340      
                       
               
 LIABILITIES AND SHAREHOLDERS’ EQUITY            
               
Liabilities              
Interest bearing liabilities              
Interest bearing demand deposits $   471,725   $   4,205   0.89 %   $   358,225   $   1,169   0.33 %
Savings deposits     320,184       3,233   1.01 %       363,949       2,563   0.70 %
Time deposits     621,659       10,237   1.65 %       609,156       7,478   1.23 %
Short-term borrowings     228,142       5,993   2.63 %       205,743       4,473   2.17 %
Long-term borrowings and subordinated debentures     44,132       1,944   4.40 %       65,629       2,697   4.11 %
      1,685,842       25,612   1.52 %       1,602,702       18,380   1.15 %
Noninterest bearing liabilities              
Demand deposits     218,541             200,707      
Other liabilities     15,574             16,669      
Total liabilities     1,919,957             1,820,078      
               
Shareholders’ equity – common     209,085             186,262      
Total liabilities and shareholders’ equity $   2,129,042         $   2,006,340      
               
NET INTEREST EARNINGS   $   71,077       $   68,560  
               
NET INTEREST MARGIN       3.57 %         3.67 %
               
(1)  For purposes of this table, nonaccrual loans are included in average loan balances.
               
(2)  For purposes of this table, interest income on tax-exempt securities and loans has been adjusted assuming a Federal tax rate of 21% for 2018 and 35% for 2017. The taxable equivalent adjustment results in an increase in interest income of $1,280,000 and $2,413,000, respectively.