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

Summit Financial Group Reports Record Second Quarter and First Half 2019 Results

Q2 2019 Diluted EPS $0.68 compared to $0.56 for Q1 2019 and $0.51 for Q2 2018

Company Release - 7/25/2019 6:00 AM ET

MOOREFIELD, W. Va., July 25, 2019 (GLOBE NEWSWIRE) -- Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ: SMMF) today reported record second quarter 2019 net income of $8.56 million, or $0.68 per diluted share. In comparison, earnings for first quarter 2019 were $7.09 million, or $0.56 per diluted share, and for second quarter 2018 were $6.28 million, or $0.51 per diluted share.

For the six months ended June 30, 2019, Summit recorded net income of $15.7 million, or $1.23 per diluted share, compared with $13.7 million, or $1.10 per diluted share, for the comparable 2018 six-month period, representing an increase of 14.1 percent or 11.8 percent per diluted share. 

Both quarterly and six-month 2019 earnings were positively impacted by increased net interest income resulting primarily from loan growth as well as a higher net interest margin, significant realized securities gains, and the previously announced gain on sale of our insurance agency, Summit Insurance Services, LLC (“SIS”) in Q2. These results were partially offset by larger write-downs on foreclosed properties in Q2 with the goal of selling such properties more rapidly.

Summit completed its acquisition of Peoples Bankshares, Inc. (“PBI”) and its subsidiary, First Peoples Bank, headquartered in Mullens, West Virginia on January 1, 2019 and converted its business processes and accounts to that of Summit’s during Q2 2019; accordingly, PBI’s results of operations are included in Summit’s consolidated results of operations from the date of acquisition.  Therefore, Summit’s second quarter and six months ended June 30, 2019 period results reflect increased levels of average balances, income and expenses compared to the same periods of 2018.  At consummation, PBI had total assets of $133.1 million, loans of $42.4 million, and deposits of $112.9 million. In addition, our merger-related expenses totaled $382,000 in Q2 2019 versus $63,000 in the prior quarter.

Highlights for Q2 2019

  • Loan balances, excluding mortgage warehouse lines of credit, grew $28.6 million during the quarter, and $61.5 million year-to-date;
  • Net interest income increased 14.90 percent (annualized) primarily as result of loan growth and higher loan yields, while funding costs remained well controlled; these factors also contributed to the 6 basis points increase in net interest margin to 3.72 percent;
  • Efficiency ratio was 56.21 percent compared to 55.88 percent for Q2 2018;
  • Provision for loan losses was $300,000 for the quarter compared to $250,000 for the linked quarter;
  • Realized securities gains of $1.09 million in Q2 2019;
  • Write-downs of foreclosed properties were $1.20 million in Q2 2019 compared to $249,000 in Q1 2019, while the net gain on sales of foreclosed properties increased from $1,000 in Q1 2019 to $156,000 in Q2 2019; and
  • Recognized a $1.91 million pre-tax gain on the sale of SIS.

H. Charles Maddy, III, President and Chief Executive Officer of Summit, commented, “I am very pleased to report that Summit achieved record earnings both for the quarter and the six-month periods just ended. I am particularly gratified by this past quarter’s solid core operating performance highlighted by our quarter-over-quarter strong lending activity, growth in net interest income and higher net interest margin. Further, this past quarter’s sale of SIS unlocked significant value for our shareholders, as the transaction resulted in a $0.54 increase in the Company’s tangible book value per share, while the entity’s earnings historically accounted for less than $0.01 per share of our quarterly earnings.”

Results from Operations

Total revenue for second quarter 2019, consisting of net interest income and noninterest income, increased 21.7 percent to $26.1 million, principally as a result of higher net interest income, increased realized securities gains and the gain on the sale of Summit Insurance Services, LLC, compared to $21.4 million for the second quarter 2018. For the year-to-date period ended June 30, 2019, total revenue was $48.9 million compared to $43.6 million for the same period of 2018, representing a 12.2 percent increase primarily as a result of higher net interest income and the gain on the sale of Summit Insurance Services, LLC.

For the second quarter of 2019, net interest income was $19.3 million, an increase of 11.5 percent from the $17.3 million reported in the prior-year second quarter and a 3.7 percent increase compared to the linked quarter. The net interest margin for second quarter 2019 was 3.72 percent compared to 3.66 percent for the linked quarter and 3.58 percent for the year-ago quarter. Excluding the impact of accretion and amortization of fair value acquisition accounting adjustments, Summit’s net interest margin would have been 3.62 percent for Q2 2019, 3.64 percent for Q1 2019 and 3.56 percent for Q2 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 second quarter 2019 was $6.81 million compared to $4.15 million for the comparable period of 2018. Excluding realized securities gains and the gain on the sale of Summit Insurance Services, LLC, noninterest income was $3.82 million for second quarter 2019, compared to $4.06 million reported for second quarter 2018 and $4.23 million for the linked quarter.

We recorded a $300,000 provision for loan losses during second quarter 2019 and $750,000 in Q2 2018. Our provision continues to be directionally consistent with changes in the credit quality in our loan portfolio.

Q2 2019 total noninterest expense increased 20.4 percent to $15.3 million compared to $12.7 million for the prior-year second quarter and increased 10.6 percent compared to the linked quarter.  Our increased noninterest expense is principally due to higher foreclosed properties expense due to increased write-downs on foreclosed properties with the goal of selling such properties more rapidly and to merger-related expenses.

Noninterest expense for the first half of 2019 increased 16.5 percent compared to the first half of 2018. Our increased noninterest expense is principally due to expenses associated with the acquired PBI operations (including merger-related expenses), increased write-downs of foreclosed properties and to deferred director compensation plan expense of $594,000 for the first six months of 2019 compared to $145,000 for the same period of 2018.  Under our director deferred compensation plans, directors optionally elect to defer their director fees into a "phantom" investment plan whereby the Company recognizes expense or benefit relative to the phantom returns or losses of such investments. As result of the stock market’s exceptionally robust performance during Q1 2019, we recognized significantly greater quarterly deferred director compensation expense than we recognized previously when market values were lower.

Balance Sheet

At June 30, 2019, total assets were $2.30 billion, an increase of $98.6 million, or 4.5 percent since December 31, 2018. Total loans, net of unearned fees and allowance for loan losses, were $1.81 billion at June 30, 2019, up $123.8 million, or 7.4 percent, from the $1.68 billion reported at year-end 2018.  Loans, excluding mortgage warehouse lines of credit, increased $28.6 million during the quarter, or 6.8 percent (on an annualized basis), and have increased $61.5 million, or 7.4 percent (on an annualized basis) since year-end 2018.

At June 30, 2019, deposits were $1.80 billion, an increase of $162.7 million, or 10.0 percent, since year end 2018. During first half 2019, checking deposits increased $78.0 million or 10.5 percent, time deposits grew by $67.5 million or 11.1 percent and savings deposits increased $17.2 million or 6.1 percent.

Shareholders’ equity was $235.7 million as of June 30, 2019 compared to $219.8 million at December 31, 2018.  In conjunction with the acquisition of PBI on January 1, 2019, Summit issued 465,931 shares of common stock valued at $9.0 million to the former PBI shareholders.

Tangible book value per common share increased to $17.04 at June 30, 2019 compared to $15.75 at December 31, 2018. Summit had 12,449,986 outstanding common shares at Q2 2019 quarter end compared to 12,312,933 at year end 2018.

As 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 stock purchases under this 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 Q2 2019, 235,717 shares of our common stock were repurchased under the Plan at an average price of $25.74 per share. Through June 30, 2019, the Company has repurchased 447,540 shares under the Plan since its inception at an average price of $23.99 per share.

Asset Quality

As of June 30, 2019, nonperforming assets (“NPAs”), consisting of nonperforming loans, foreclosed properties, and repossessed assets, were $34.9 million, or 1.52 percent of assets. This compares to $34.4 million, or 1.53 percent of assets at the linked quarter-end, and $36.5 million, or 1.66 percent of assets at year end 2018. During Q2 2019, nonperforming loans increased $3.50 million as result of two commercial real estate loan relationships in Virginia totaling $3.85 million that became nonperforming, while foreclosed properties declined by $3.00 million as result of sales activity and the prior noted write-downs.

Second quarter 2019 net loan charge-offs were $280,000, or 0.06 percent of average loans annualized; while adding $300,000 to the allowance for loan losses through the provision for loan losses. The allowance for loan losses stood at 0.72 percent of total loans at June 30, 2019, compared to 0.77 percent at year-end 2018. 

About the Company

Summit Financial Group, Inc. is a $2.30 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-two banking locations.

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.

 

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)  
Quarterly Performance Summary (unaudited)   
Q2 2019 vs Q2 2018   
    
   For the Quarter Ended  Percent 
 Dollars in thousands 6/30/20196/30/2018 Change 
 Statements of Income    
  Interest income    
   Loans, including fees $  24,352 $  20,96216.2%
   Securities    2,396    2,3034.0%
   Other    134    1340.0%
  Total interest income    26,882    23,39914.9%
  Interest expense    
   Deposits    5,967    4,30938.5%
   Borrowings    1,652    1,815-9.0%
  Total interest expense    7,619    6,12424.4%
  Net interest income    19,263    17,27511.5%
  Provision for loan losses    300    750-60.0%
  Net interest income after provision    
   for loan losses    18,963    16,52514.8%
     
  Noninterest income    
   Insurance commissions    606    1,013-40.2%
   Trust and wealth management fees    612    672-8.9%
   Service charges on deposit accounts    1,224    1,1169.7%
   Bank card revenue    893    80111.5%
   Realized securities gains    1,086    87n/m 
   Gain on sale of Summit Insurance Services, LLC    1,906    -n/a 
   Bank owned life insurance income    248    249-0.4%
   Other income    235    21011.9%
 Total noninterest income   6,810    4,14864.2%
  Noninterest expense    
   Salaries and employee benefits   7,576    6,9229.4%
   Net occupancy expense   880    8404.8%
   Equipment expense   1,219    1,07113.8%
   Professional fees   475    38523.4%
   Advertising and public relations   155    188-17.6%
   Amortization of intangibles   420    4131.7%
   FDIC premiums   88    240-63.3%
   Bank card expense   473    36131.0%
   Foreclosed properties expense, net of losses   1,545    350341.4%
   Merger-related expense   382    -n/a 
   Other expenses   2,116    1,9657.7%
 Total noninterest expense   15,329    12,73520.4%
  Income before income taxes    10,444    7,93831.6%
  Income taxes    1,880    1,65813.4%
  Net income $  8,564 $  6,28036.4%


SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)  
Quarterly Performance Summary (unaudited)   
Q2 2019 vs Q2 2018  
     
   For the Quarter Ended  Percent 
  6/30/20196/30/2018 Change 
 Per Share Data    
  Earnings per common share    
   Basic $  0.68 $  0.51 33.3%
   Diluted $  0.68 $  0.51 33.3%
     
  Cash dividends $  0.15 $  0.13 15.4%
     
  Average common shares outstanding    
   Basic    12,539,095    12,366,522 1.4%
   Diluted    12,600,071    12,431,984 1.4%
     
  Common shares outstanding at period end    12,449,986    12,373,747 0.6%
     
 Performance Ratios    
  Return on average equity  14.62% 12.16%20.2%
  Return on average tangible equity  17.02% 14.68%15.9%
  Return on average assets  1.52% 1.19%27.7%
  Net interest margin (A)  3.72% 3.58%3.9%
  Efficiency ratio (B)  56.21% 55.88%0.6%
     

NOTE (A) – Presented on a tax-equivalent basis assuming a federal tax rate of 21%.

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)  
Six Month Performance Summary (unaudited)   
2019 vs 2018   
     
   For the Six Months Ended  Percent 
 Dollars in thousands 6/30/20196/30/2018 Change 
 Statements of Income    
  Interest income    
   Loans, including fees $  47,404 $  41,32914.7%
   Securities    4,981    4,6946.1%
   Other    365    27433.2%
  Total interest income    52,750    46,29713.9%
  Interest expense    
   Deposits    11,531    7,85846.7%
   Borrowings    3,383    3,906-13.4%
  Total interest expense    14,914    11,76426.8%
  Net interest income    37,836    34,5339.6%
  Provision for loan losses    550    1,250-56.0%
  Net interest income after provision    
   for loan losses    37,286    33,28312.0%
     
  Noninterest income    
   Insurance commissions    1,780    2,126-16.3%
   Trust and wealth management fees    1,198    1,339-10.5%
   Service charges on deposit accounts    2,405    2,2079.0%
   Bank card revenue    1,707    1,55010.1%
   Realized securities gains    1,082    81932.1%
   Gain on sale of Summit Insurance Services, LLC    1,906    -n/a 
   Bank owned life insurance income    486    523-7.1%
   Other income    476    4593.7%
 Total noninterest income   11,040    9,02322.4%
  Noninterest expense    
   Salaries and employee benefits   14,923    13,7448.6%
   Net occupancy expense   1,803    1,6727.8%
   Equipment expense   2,398    2,15311.4%
   Professional fees   878    71922.1%
   Advertising and public relations   308    2915.8%
   Amortization of intangibles   897    8485.8%
   FDIC premiums   88    480-81.7%
   Bank card expense   911    69630.9%
   Foreclosed properties expense, net of losses   1,930    675185.9%
   Merger-related expense   445    -n/a 
   Other expenses   4,608    3,77122.2%
 Total noninterest expense   29,189    25,04916.5%
  Income before income taxes    19,137    17,25710.9%
  Income taxes    3,481    3,534-1.5%
  Net income $  15,656 $  13,72314.1%
     


SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)  
Six Month Performance Summary (unaudited)   
2019 vs 2018  
     
   For the Six Months Ended  Percent 
  6/30/20196/30/2018 Change 
 Per Share Data    
  Earnings per common share    
   Basic $  1.24 $  1.11 11.7%
   Diluted $  1.23 $  1.10 11.8%
     
  Cash dividends $  0.29 $  0.26 11.5%
     
  Average common shares outstanding    
   Basic    12,627,806    12,362,679 2.1%
   Diluted    12,688,865    12,425,751 2.1%
     
  Common shares outstanding at period end    12,449,986    12,373,747 0.6%
     
 Performance Ratios    
  Return on average equity  13.46% 13.43%0.2%
  Return on average tangible equity  15.93% 16.21%-1.7%
  Return on average assets  1.39% 1.29%7.8%
  Net interest margin (A)  3.69% 3.58%3.1%
  Efficiency ratio (B)  56.35% 54.86%2.7%
     

NOTE (A) – Presented on a tax-equivalent basis assuming a federal tax rate of 21%.

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 6/30/20193/31/201912/31/20189/30/20186/30/2018
 Statements of Income      
  Interest income      
   Loans, including fees $  24,352 $  23,051  $  22,659  $  21,295 $  20,962
   Securities    2,396    2,586     2,527     2,367    2,303
   Other    134    231     127     138    134
  Total interest income    26,882    25,868     25,313     23,800    23,399
  Interest expense      
   Deposits    5,967    5,564     5,103     4,714    4,309
   Borrowings    1,652    1,731     2,158     1,873    1,815
  Total interest expense    7,619    7,295     7,261     6,587    6,124
  Net interest income    19,263    18,573     18,052     17,213    17,275
  Provision for loan losses    300    250     500     500    750
  Net interest income after provision      
   for loan losses    18,963    18,323     17,552     16,713    16,525
  Noninterest income      
   Insurance commissions    606    1,174     1,132     1,062    1,013
   Trust and wealth management fees    612    586     627     687    672
   Service charges on deposit accounts    1,224    1,180     1,209     1,215    1,116
   Bank card revenue    893    814     809     793    801
   Realized securities gains (losses)    1,086    (3)    (205)    8    87
   Gain on sale of Summit Insurance Services, LLC    1,906    -     -     -    -
   Bank owned life insurance income    248    238     248     250    249
   Other income    235    241     367     196    210
 Total noninterest income   6,810    4,230     4,187     4,211    4,148
  Noninterest expense      
   Salaries and employee benefits   7,576    7,347     6,928     6,806    6,922
   Net occupancy expense   880    924     836     856    840
   Equipment expense   1,219    1,179     1,139     1,118    1,071
   Professional fees   475    403     385     503    385
   Advertising and public relations   155    153     193     170    188
   Amortization of intangibles   420    476     410     413    413
   FDIC premiums   88    -     140     210    240
   Bank card expense   473    439     395     384    361
   Foreclosed properties expense, net of losses   1,545    384     507     169    350
   Merger-related expense   382    63     59     86    -
   Other expenses   2,116    2,492     1,474     1,643    1,965
 Total noninterest expense   15,329    13,860     12,466     12,358    12,735
  Income before income taxes    10,444    8,693     9,273     8,566    7,938
  Income tax expense    1,880    1,601     1,823     1,667    1,658
  Net income $  8,564 $  7,092  $  7,450  $  6,899 $  6,280


SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)     
Five Quarter Performance Summary (unaudited)     
      
   For the Quarter Ended 
  6/30/20193/31/201912/31/20189/30/20186/30/2018
 Per Share Data      
  Earnings per common share      
   Basic $  0.68 $  0.56 $  0.60 $  0.56 $  0.51 
   Diluted $  0.68 $  0.56 $  0.60 $  0.55 $  0.51 
       
  Cash dividends $  0.15 $  0.14 $  0.14 $  0.13 $  0.13 
       
  Average common shares outstanding      
   Basic    12,539,095    12,717,501    12,358,104    12,374,350    12,366,522 
   Diluted    12,600,071    12,778,644    12,407,678    12,439,051    12,431,984 
       
  Common shares outstanding at period end    12,449,986    12,661,528    12,312,933    12,382,450    12,373,747 
       
 Performance Ratios      
  Return on average equity  14.62% 12.28% 13.85% 13.00% 12.16%
  Return on average tangible equity  17.02% 14.80% 16.41% 15.53% 14.68%
  Return on average assets  1.52% 1.27% 1.38% 1.31% 1.19%
  Net interest margin (A)  3.72% 3.66% 3.61% 3.53% 3.58%
  Efficiency ratio (B)  56.21% 56.50% 51.02% 54.25% 55.88%
       

NOTE (A) – Presented on a tax-equivalent basis assuming a federal tax rate of 21%.

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 6/30/20193/31/201912/31/20189/30/20186/30/2018
       
 Assets      
 Cash and due from banks$  13,481 $  14,265 $  23,061 $  9,382 $  8,314 
 Interest bearing deposits other banks   42,994    43,689    36,479    44,452    38,097 
 Securities   269,920    297,126    293,284    288,040    283,221 
 Loans, net   1,805,850    1,725,064    1,682,005    1,632,747    1,617,373 
 Property held for sale   21,390    24,393    21,432    22,017    21,606 
 Premises and equipment, net   42,896    39,345    37,553    36,888    36,017 
 Goodwill and other intangible assets   23,585    29,349    25,842    26,252    26,665 
 Cash surrender value of life insurance policies   42,976    42,714    42,420    42,208    41,932 
 Other assets   36,022    33,696    38,510    36,741    34,427 
   Total assets$  2,299,114 $  2,249,641 $  2,200,586 $  2,138,727 $  2,107,652 
                 
 Liabilities and Shareholders' Equity      
 Deposits$  1,797,493 $  1,789,032 $  1,634,826 $  1,651,064 $  1,639,996 
 Short-term borrowings   225,343    186,292    309,084    238,403    202,429 
 Long-term borrowings and     
   subordinated debentures   20,315    20,319    20,324    20,328    40,332 
 Other liabilities   20,262    20,368    16,522    15,376    15,016 
 Shareholders' equity   235,701    233,630    219,830    213,556    209,879 
   Total liabilities and shareholders' equity$  2,299,114 $  2,249,641 $  2,200,586 $  2,138,727 $  2,107,652 
                 
 Book value per common share$  18.93 $  18.45 $  17.85 $  17.25 $  16.96 
 Tangible book value per common share$  17.04 $  16.13 $  15.75 $  15.13 $  14.81 
 Tangible common equity to tangible assets 9.3% 9.2% 8.9% 8.9% 8.8%
       


SUMMIT FINANCIAL GROUP INC. (NASDAQ:  SMMF)     
Regulatory Capital Ratios (unaudited)      
        
  6/30/20193/31/201912/31/20189/30/20186/30/2018 
Summit Financial Group, Inc.      
 CET1 Risk-based Capital11.1%11.4%11.1%11.1%11.0% 
 Tier 1 Risk-based Capital12.1%12.5%12.2%12.2%12.1% 
 Total Risk-based Capital12.8%13.2%12.9%12.9%12.8% 
 Tier 1 Leverage10.4%10.2%10.1%10.1%9.9% 
        
Summit Community Bank, Inc.      
 CET1 Risk-based Capital11.9%12.3%12.0%12.0%12.0% 
 Tier 1 Risk-based Capital11.9%12.3%12.0%12.0%12.0% 
 Total Risk-based Capital12.6%13.0%12.8%12.7%12.8% 
 Tier 1 Leverage10.2%10.0%10.0%9.9%9.8% 
        

 

 

SUMMIT FINANCIAL GROUP INC. (NASDAQ:  SMMF)    
Loan Composition (unaudited)      
        
Dollars in thousands6/30/20193/31/201912/31/20189/30/20186/30/2018 
        
Commercial $  204,138 $  189,248 $  194,315 $  167,972 $  171,410 
Mortgage warehouse lines   101,607    49,355    39,140    35,910    54,332 
Commercial real estate      
  Owner occupied   262,901    256,671    257,256    261,290    256,827 
  Non-owner occupied   574,677    585,809    573,932    541,753    508,394 
Construction and development      
  Land and development   67,769    64,192    68,833    71,819    74,018 
  Construction    46,975    36,040    24,731    25,703    25,711 
Residential real estate      
  Non-jumbo    360,752    359,107    336,977    340,783    343,044 
  Jumbo    70,171    69,313    73,599    72,327    66,831 
  Home equity    81,373    80,370    80,910    82,018    82,409 
Consumer    36,715    36,046    32,460    33,664    34,249 
Other    11,924    12,045    12,899    12,452    12,728 
Total loans, net of unearned fees   1,819,002    1,738,196    1,695,052    1,645,691    1,629,953 
Less allowance for loan losses   13,152    13,132    13,047    12,944    12,580 
Loans, net$  1,805,850 $  1,725,064 $  1,682,005 $  1,632,747 $  1,617,373 
        


SUMMIT FINANCIAL GROUP INC. (NASDAQ:  SMMF)    
Deposit Composition (unaudited)     
        
Dollars in thousands 6/30/20193/31/201912/31/20189/30/20186/30/2018 
Core deposits       
  Non-interest bearing checking$  234,397 $  258,679 $  222,120 $  232,697 $  217,134 
  Interest bearing checking   588,948    560,800    523,257    505,411    472,041 
  Savings    301,403    310,646    284,173    301,269    322,940 
  Time deposits    365,275    359,141    316,914    316,941    322,801 
Total core deposits   1,490,023    1,489,266    1,346,464    1,356,318    1,334,916 
        
Brokered time deposits   222,901    218,913    220,497    227,312    238,662 
Other non-core time deposits   84,569    80,852    67,866    67,434    66,418 
Total deposits$  1,797,493 $  1,789,031 $  1,634,827 $  1,651,064 $  1,639,996 
        


SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)    
Asset Quality Information (unaudited)     
       
   For the Quarter Ended 
 Dollars in thousands 6/30/20193/31/201912/31/20189/30/20186/30/2018
       
 Gross loan charge-offs$  391 $  414 $  705 $  413 $  525 
 Gross loan recoveries   (111)   (249)   (307)   (278)   (97)
   Net loan charge-offs (recoveries)$  280 $  165 $  398 $  135 $  428 
                 
 Net loan charge-offs to average loans (annualized) 0.06% 0.04% 0.10% 0.03% 0.10%
 Allowance for loan losses$  13,152 $  13,132 $  13,047 $  12,944 $  12,580 
 Allowance for loan losses as a percentage     
   of period end loans 0.72% 0.76% 0.77% 0.79% 0.77%
 Nonperforming assets:     
   Nonperforming loans     
   Commercial$  948 $  729 $  935 $  801 $  954 
   Commercial real estate   6,544    2,981    3,239    5,090    3,238 
   Residential construction and development   66    24    3,198    3,200    3,233 
   Residential real estate   5,657    5,928    7,506    7,760    8,241 
   Consumer   160    182    147    118    110 
   Other   100    130    -    -    - 
 Total nonperforming loans   13,475    9,974    15,025    16,969    15,776 
   Foreclosed properties               
   Commercial real estate   1,544    1,841    1,762    1,762    1,818 
   Commercial construction and development   4,910    6,326    6,479    6,790    6,815 
   Residential construction and development   13,132    14,347    11,543    11,614    11,517 
   Residential real estate   1,804    1,879    1,648    1,851    1,456 
 Total foreclosed properties   21,390    24,393    21,432    22,017    21,606 
   Other repossessed assets   12    34    5    5    12 
 Total nonperforming assets$  34,877 $  34,401 $  36,462 $  38,991 $  37,394 
                 
 Nonperforming loans to period end loans 0.74% 0.57% 0.89% 1.03% 0.97%
 Nonperforming assets to period end assets 1.52% 1.53% 1.66% 1.82% 1.77%
       

 

Loans Past Due 30-89 Days (unaudited)     
   For the Quarter Ended 
 Dollars in thousands 6/30/20193/31/201912/31/20189/30/20186/30/2018
       
 Commercial$  375 $  264 $  219 $  607 $  319
 Commercial real estate   1,719    4,128    161    988    546
 Construction and development   235    179    194    393    264
 Residential real estate   5,670    2,944    6,249    5,513    4,125
 Consumer   234    432    593    345    337
 Other   9    52    38    11    8
   Total$  8,242 $  7,999 $  7,454 $  7,857 $  5,599
       


SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)          
Average Balance Sheet, Interest Earnings & Expenses and Average Rates       
Q2 2019 vs Q1 2019 vs Q2 2018 (unaudited)           
 Q2 2019 Q1 2019 Q2 2018 
 AverageEarnings /Yield / AverageEarnings /Yield / AverageEarnings /Yield / 
Dollars in thousandsBalancesExpenseRate BalancesExpenseRate BalancesExpenseRate 
             
ASSETS            
Interest earning assets            
  Loans, net of unearned  interest (1)           
  Taxable$  1,749,032 $  24,184 5.55% $  1,712,286 $ 22,907 5.43% $  1,618,726 $  20,820 5.16% 
  Tax-exempt (2)   14,695    213 5.81%    14,907    184 5.01%    15,800    180 4.57% 
  Securities            
  Taxable   203,049    1,607 3.17%    195,932    1,687 3.49%    160,632    1,240 3.10% 
  Tax-exempt (2)   100,307    999 3.99%    114,831    1,139 4.02%    136,984    1,346 3.94% 
  Interest bearing deposits other banks           
  and Federal funds sold   38,214    134 1.41%    51,187    230 1.82%    38,936    134 1.38% 
Total interest earning assets   2,105,297    27,137 5.17%    2,089,143    26,147 5.08%    1,971,078    23,720 4.83% 
             
Noninterest earning assets            
  Cash & due from banks   14,124       12,825       9,100    
  Premises & equipment   41,318       38,834       35,721    
  Other assets   109,642       112,910       108,073    
  Allowance for loan losses   (13,260)      (13,309)      (12,541)   
  Total assets$  2,257,121    $  2,240,403    $  2,111,431    
                   
 LIABILITIES AND SHAREHOLDERS' EQUITY          
             
Liabilities            
Interest bearing liabilities            
  Interest bearing             
  demand deposits$  575,240 $  1,731 1.21% $  556,766 $  1,663 1.21% $  457,016 $  901 0.79% 
  Savings deposits   305,342    921 1.21%    310,848    898 1.17%    332,809    798 0.96% 
  Time deposits   673,272    3,315 1.97%    654,404    3,003 1.86%    640,626    2,610 1.63% 
  Short-term borrowings   187,120    1,397 2.99%    200,297    1,472 2.98%    187,475    1,242 2.66% 
  Long-term borrowings and            
  subordinated debentures   20,317    255 5.03%    20,321    259 5.17%    52,147    573 4.41% 
Total interest bearing liabilities   1,761,291    7,619 1.74%    1,742,636    7,295 1.70%    1,670,073    6,124 1.47% 
             
Noninterest bearing liabilities            
  Demand deposits   241,811       248,354       219,134    
  Other liabilities   19,750       18,322       15,608    
  Total liabilities   2,022,852       2,009,312       1,904,815    
             
Shareholders' equity   234,269       231,091       206,616    
  Total liabilities and            
  shareholders' equity$  2,257,121    $  2,240,403    $  2,111,431    
             
NET INTEREST EARNINGS $  19,518   $ 18,852   $  17,596  
             
NET INTEREST MARGIN   3.72%    3.66%    3.58% 
             
(1) - For purposes of this table, nonaccrual loans are included in average loan balances. 
(2) - Interest income on tax-exempt securities and loans has been adjusted assuming a Federal tax rate of 21% for all periods presented. 
  The tax equivalent adjustment resulted in an increase in interest income of $255,000, $279,000, and $321,000 for Q2 2019, 
  Q1 2019 and Q2 2018, respectively. 
             


SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)      
Average Balance Sheet, Interest Earnings & Expenses and Average Rates     
YTD 2019 vs YTD 2018 (unaudited)        
   
 YTD 2019 YTD 2018 
 AverageEarnings /Yield / AverageEarnings /Yield / 
Dollars in thousandsBalancesExpenseRate BalancesExpenseRate 
         
ASSETS        
Interest earning assets        
  Loans, net of unearned  interest (1)        
  Taxable$  1,730,801 $  47,090 5.49% $  1,615,289 $  41,043 5.12% 
  Tax-exempt (2)   14,801    397 5.41%    16,052    362 4.55% 
  Securities        
  Taxable   199,759    3,292 3.32%    176,091    2,612 2.99% 
  Tax-exempt (2)   107,586    2,138 4.01%    134,658    2,635 3.95% 
  Interest bearing deposits other banks        
  and Federal funds sold   44,910    365 1.64%    39,294    274 1.41% 
Total interest earning assets   2,097,857    53,282 5.12%    1,981,384    46,926 4.78% 
         
Noninterest earning assets        
  Cash & due from banks   13,005       9,528    
  Premises & equipment   39,877       35,156    
  Other assets   111,334       107,603    
  Allowance for loan losses   (13,287)      (12,639)   
  Total assets$  2,248,786    $  2,121,032    
             
 LIABILITIES AND SHAREHOLDERS' EQUITY       
         
Liabilities        
Interest bearing liabilities        
  Interest bearing         
  demand deposits$  566,183 $  3,395 1.21% $  440,149 $  1,533 0.70% 
  Savings deposits   307,990    1,819 1.19%    339,546    1,515 0.90% 
  Time deposits   663,853    6,317 1.92%    631,634    4,810 1.54% 
  Short-term borrowings   193,672    2,869 2.99%    215,425    2,647 2.48% 
  Long-term borrowings and        
  subordinated debentures   20,319    514 5.10%    58,706    1,259 4.32% 
    1,752,017    14,914 1.72%    1,685,460    11,764 1.41% 
Noninterest bearing liabilities        
  Demand deposits   244,984       215,031    
  Other liabilities   19,096       16,188    
  Total liabilities   2,016,097       1,916,679    
         
Shareholders' equity   232,689       204,353    
  Total liabilities and            
  shareholders' equity$  2,248,786    $  2,121,032    
             
NET INTEREST EARNINGS $  38,368   $  35,162  
         
NET INTEREST MARGIN   3.69%    3.58% 
         
(1) - For purposes of this table, nonaccrual loans are included in average loan balances.    
(2) - Interest income on tax-exempt securities and loans has been adjusted assuming a Federal tax rate of 21%.  
  The tax equivalent adjustment resulted in an increase in interest income of $532,000 and $629,000 for the   
  YTD 2019 and YTD 2018, respectively.       
         

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

Summit Financial Group, Inc.

Source: Summit Financial Group, Inc.