Press Release SUMMIT FINANCIAL GROUP, INC. (NASDAQ - SMMF)

Summit Financial Group Reports Fourth Quarter and Full Year 2018 Results

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

Company Release - 1/29/2019 6:00 AM ET

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

  • Loan balances, excluding mortgage warehouse lines of credit, increased $46.1 million during the quarter, or 11.5 percent (on an annualized basis); excluding mortgage warehouse lines of credit, loans grew $80.4 million or 5.1 percent since year-end 2017;
  • Net interest margin for the quarter increased 8 basis points to 3.61 percent compared to Q3 2018;
  • Efficiency ratio improved to 51.02 percent compared to 54.25 percent for the linked-quarter as result of the improved net interest margin and well-controlled overhead;
  • Provision for loan losses remained unchanged at $500,000 compared to the prior quarter;
  • Realized securities losses of $205,000 in Q4 2018 compared to realized securities gains of $8,000 in Q3 2018; and
  • Write-downs of foreclosed properties were $318,000 in Q4 2018 compared to $39,000 in Q3 2018, while the net loss on sales of foreclosed properties increased to $70,000 in Q4 2018 from $18,000 in Q3 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 12/31/201812/31/2017 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 
  12/31/201812/31/2017 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 12/31/201812/31/2017 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 
  12/31/201812/31/2017 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 12/31/20189/30/20186/30/20183/31/201812/31/2017
 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 
  12/31/20189/30/20186/30/20183/31/201812/31/2017
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 12/31/20189/30/20186/30/20183/31/201812/31/2017
       
 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)     
       
  12/31/20189/30/20186/30/20183/31/201812/31/2017
Summit Financial Group, Inc.     
 CET1 Risk-based Capital11.1%11.1%11.0%10.7%10.6%
 Tier 1 Risk-based Capital12.2%12.2%12.1%11.8%11.8%
 Total Risk-based Capital12.9%12.9%12.8%12.5%12.5%
 Tier 1 Leverage Ratio10.1%10.1%9.9%9.5%9.4%
       
Summit Community Bank, Inc.     
 CET1 Risk-based Capital12.0%12.0%12.0%11.7%11.7%
 Tier 1 Risk-based Capital12.0%12.0%12.0%11.7%11.7%
 Total Risk-based Capital12.8%12.7%12.8%12.5%12.5%
 Tier 1 Leverage Ratio10.0%9.9%9.8%9.5%9.4%

 

SUMMIT FINANCIAL GROUP INC. (NASDAQ:  SMMF)    
Loan Composition (unaudited)      
        
Dollars in thousands12/31/20189/30/20186/30/20183/31/201812/31/2017 
        
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 12/31/20189/30/20186/30/20183/31/201812/31/2017
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 12/31/20189/30/20186/30/20183/31/201812/31/2017
       
 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 12/31/20189/30/20186/30/20183/31/201812/31/2017
       
 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
 AverageEarnings /Yield / AverageEarnings /Yield / AverageEarnings /Yield /
Dollars in thousandsBalancesExpenseRate BalancesExpenseRate BalancesExpenseRate
            
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
 AverageEarnings /Yield / AverageEarnings /Yield /
Dollars in thousandsBalancesExpenseRate BalancesExpenseRate
        
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.

Summit Financial Group, Inc.

Source: Summit Financial Group, Inc.