Summit Financial Group Reports Second Quarter 2022 EPS of $0.92 on Revenue and Loan Growth

Jul 28, 2022

MOOREFIELD, W. Va., July 28, 2022 (GLOBE NEWSWIRE) -- Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ: SMMF) today reported financial results for the second quarter of 2022, including continued strong earnings on growth in total revenue and loans.

The Company, which serves commercial and individual clients across West Virginia, the Washington D.C. metropolitan area, Virginia and Kentucky through Summit Community Bank, Inc., reported net income applicable to common shares of $11.8 million, or $0.92 per diluted share, for the second quarter of 2022, as compared to $11.5 million, or $0.90 per diluted share, for the first quarter of 2022 and $10.4 million, or $0.80 per diluted share, for the second quarter of 2021.

“We are pleased to report another quarter of solid operating performance with improvements in both net interest margin and our efficiency ratio,” said H. Charles Maddy, III, President and Chief Executive Officer. “The continued growth in commercial and total loans, along with sustained strength in asset quality metrics, highlight our ongoing focus on meeting the credit needs of our customers while employing sound underwriting practices. Our solid financial performance during the first half of the year and projected loan growth give us confidence of continued strong operating results for the remainder of the year.”

Highlights for Q2 2022

  • Total loans of $2.80 billion, excluding mortgage warehouse lines of credit and Paycheck Protection Program (“PPP”) lending, increased 4.6 percent, or 18.5 percent annualized, during the quarter and 22.7 percent since June 30, 2021.
  • Net interest income increased 4.8 percent compared to the linked quarter, and increased 15.5 percent from the year-ago period, primarily due to loan growth.
  • Net interest margin (“NIM”) increased 5 basis points to 3.66 percent from the linked quarter and 11 basis points from the year-ago quarter, as increased yields on interest earning assets were partially offset by increased cost of deposits and other funding.
  • Total noninterest expense increased to $17.6 million in the quarter, up 2.4 percent from the linked quarter and up 3.4 percent from the year-ago quarter, as salary and benefits increases were largely offset by disciplined management of other operating costs.
  • Annualized non-interest expense was unchanged from the linked quarter at 1.91 percent of average assets, and down 18 basis points from the year-ago period.
  • Achieved an improved efficiency ratio of 47.45 percent compared to 49.44 percent in Q1 2022 and 48.82 percent in the year-ago quarter.
  • Incurred $2.00 million provision for credit losses in the quarter increasing period-end allowance for loan credit losses to $35.1 million, or 1.18 percent of total loans and 320.6 percent of nonperforming loans.
  • Foreclosed property held for sale declined by 22.9 percent during the quarter and 59.6 percent from the year-ago quarter to $5.32 million or 0.14 percent of assets at period end.
  • Nonperforming assets (“NPAs”) improved to 0.43 percent of total assets at period end, excluding restructured assets, down 8 basis points during the quarter and 67 basis points from June 30, 2021.
  • Tangible book value per common share (“TBVPS”) increased $0.28 to $20.07 during the quarter, despite unrealized net losses on debt securities available for sale (“AFS”) of $0.91 per common share (net of deferred income taxes) recorded in Other Comprehensive Income (“OCI”), partially offset by increases in the fair values of derivative financial instruments hedging against higher interest rates totaling $0.41 per common share (net of deferred income taxes) also recorded in OCI.

Results from Operations

Net interest income grew to $31.0 million in the second quarter of 2022, an increase of 4.8 percent from the linked quarter and 15.5 percent from the prior-year second quarter. NIM for second quarter 2022 was 3.66 percent compared to 3.61 percent for the linked quarter and 3.55 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 the second quarter of 2022, 3.60 percent for the linked quarter and 3.45 percent for the year-ago period.

Noninterest income, consisting primarily of service fee income from community banking activities and trust and wealth management fees, for second quarter 2022 was $3.86 million compared to $4.55 million for the linked quarter and $4.72 million for the comparable period of 2021. The Company recorded realized securities losses on debt securities of $289,000 in the second quarter of 2022 and $152,000 in the linked quarter. In addition, the Company recognized a loss on equity investments of $669,000 in second quarter 2022 compared to a gain of $372,000 in the linked quarter.

Mortgage origination revenue was $317,000 in the second quarter of 2022 compared to $339,000 in the linked quarter and $898,000 for the year-ago period.

Excluding gains and losses on debt securities and equity investments, noninterest income was $4.81 million for second quarter 2022 compared to $4.33 million for Q1 2022 and $4.59 million in the year-ago quarter primarily as result of higher deposit service charges and bank card fees.

Revenue from net interest income and noninterest income, excluding gains and losses on debt securities and equity investments, grew to $35.8 million, up 5.6 percent from $33.9 million in the linked quarter and 13.9 percent from $31.4 million in the year-ago quarter. Revenue, excluding gains and losses on debt securities and equity investments, for the first half of 2022, grew to $69.7 million, up 12.1 percent from the first half of 2021, outpacing the 4.0 percent noninterest expense increase recorded for the comparable six-month periods.

Total noninterest expense increased to $17.6 million in the second quarter of 2022, up 2.4 percent from $17.2 million in the linked quarter and 3.4 percent from $17.0 million for the prior-year second quarter. The sequential-quarter increase in total noninterest expense, primarily on higher salary and benefits expenses, reflected modest fluctuations in most other categories of operating costs.

Salary and benefit expenses of $10.0 million in the second quarter of 2022 increased from $9.70 million for the linked quarter and $8.23 million during the year-ago period. Higher group health insurance premiums and increased accruals for anticipated 2022 performance bonuses account for the primary reasons for the increases.

Net losses and expenses on foreclosed properties totaled $141,000 during second quarter 2022 compared to net gains in excess of expenses on foreclosed properties of $90,000 in the linked quarter and net losses and expenses on foreclosed properties of $746,000 in the year-ago period.

Other expenses were $2.36 million for Q2 2022 compared to $2.46 million for the linked quarter and $2.76 million in the year-ago period. The changes in these other expenses include:

  • Fraud and robbery losses of $143,000 during the second quarter of 2022 compared to $90,000 and $16,000 in the linked and year-ago quarters, respectively.
  • Virginia franchise tax of $170,000 during the second quarter of 2022 compared to $149,000 and $108,000 in the linked and year-ago quarters, respectively.
  • Deferred director compensation plan-related income of $726,000 during the second quarter of 2022 compared to $400,000 during the linked quarter and plan-related expense of $190,000 in the year-ago quarter.

Summit’s efficiency ratio improved to 47.45 percent in the second quarter of 2022 from 49.44 percent in the linked quarter and 48.82 percent for the year-ago period. Non-interest expense to average assets improved to 1.91 percent in both the second quarter of 2022 and the linked quarter compared to 2.09 percent in the year-ago period.

Balance Sheet

As of June 30, 2022, total assets were $3.8 billion, an increase of $186.1 million, or 5.2 percent, since December 31, 2021 and an increase of $490.3 million, or 15.0 percent, since June 30, 2021.

Total loans net of unearned fees grew to $2.98 billion on June 30, 2022, up 4.4 percent during the quarter and 22.5 percent from June 30, 2021. Excluding PPP and mortgage warehouse lending, total loans grew to $2.80 billion on June 30, 2022, up 4.6 percent during the second quarter, 11.2 percent year-to-date and 22.7 percent since June 30, 2021.

Total commercial loans, including commercial and industrial (C&I) and commercial real estate (CRE) but excluding PPP lending, grew to $1.9 billion on June 30, 2022, up 4.2 percent during the second quarter, 12.6 percent year-to-date and 31.1 percent since June 30, 2021.

Residential real estate and consumer lending totaled $562.7 million on June 30, 2022, up 0.6 percent during the second quarter and down 0.9 percent year-to-date and 2.2 percent from June 30, 2021.

PPP balances were paid down to $3.54 million on June 30, 2022 from a peak of $98.5 million on September 30, 2020. Mortgage warehouse lines of credit, sourced solely from a participation arrangement with a large regional bank, have paid down to $171.4 million on June 30, 2022 from a peak of $252.5 million on June 30, 2020.

Deposits totaled $3.0 billion on June 30, 2022, a 1.1 percent decrease during the second quarter, a 1.1 percent increase year-to-date and a 9.0 percent increase since June 30, 2021. Core deposits declined 0.8 percent during the second quarter to $2.9 billion at June 30, 2022, and increased 0.9 percent year-to-date and 9.3 percent since June 30, 2021.   Changes in core deposits by category are as follows:

  • Non-interest bearing deposit accounts decreased $28.2 million or 4.5 percent in the second quarter of 2022 and increased $97.7 million or 19.4 percent since June 30, 2021.
  • Interest bearing checking accounts grew $103.4 million or 9.1 percent in the second quarter of 2022 and $232.6 million or 23.1 percent since June 30, 2021.
  • Savings accounts declined $57.0 million or 8.1 percent in the second quarter of 2022 and $31.9 million or 4.7 percent since June 30, 2021.
  • Core time deposits declined $40.5 million or 9.5 percent in the second quarter of 2022 and $54.6 million or 12.4 percent since June 30, 2021.

Total shareholders’ equity was $333.9 million as of June 30, 2022 compared to $327.5 million at December 31, 2021 and $315.2 million at June 30, 2021.

Year-to-date 2022, TBVPS has increased $0.53. TBVPS was negatively impacted during the first six months of 2002 by unrealized net losses on debt securities AFS of $2.26 per common share (net of deferred income taxes) recorded in OCI during the first six months of 2022. However, these losses were partially offset by increased fair values of interest rate caps and swaps (also recorded in OCI) held as hedges against higher interest rates totaling $1.24 per common share (net of deferred income taxes), in the same period.

Summit had 12,763,422 outstanding common shares at the end of the second quarter of 2022 compared to 12,743,125 at year-end 2021.

As announced in the first quarter of 2020, the Board of Directors authorized the open market repurchase of up to 750,000 shares of the issued and outstanding shares of Summit's common stock, of which 323,577 shares have been repurchased to date. The timing and quantity of stock purchases under this repurchase plan are at the discretion of management. During the second quarter of 2022, no shares of Summit’s common stock were repurchased under the Plan.

Asset Quality

Net loan charge-offs (“NCOs”) declined to $159,000, or 0.02 percent of average loans annualized, in the second quarter of 2022. NCOs of $509,000 represented 0.07 percent of average loan annualized in the linked quarter and $202,000 or 0.03 percent of average loan annualized in the year-ago period.

Summit recorded a $2.00 million provision for credit losses in the second quarter of 2022, reflecting reserve build to support the Company’s substantial growth in both loans and unfunded loan commitments and increasing forecasted economic uncertainty. The provision for credit losses was $1.95 million for the linked quarter and $1.00 million for the year-ago quarter.

Summit’s allowance for loan credit losses was $35.1 million on June 30, 2022, $32.6 million at the end of the linked quarter and $33.9 million on June 30, 2021.

The allowance for loan credit losses stood at 1.18 percent of total loans at June 30, 2022 compared to 1.17 percent at year-end 2021 and 1.39 percent at June 30, 2021. The allowance was 320.6 percent of nonperforming loans at June 30, 2022, compared to 254.4 percent at year-end 2021 and 148.2 percent at June 30, 2021.

Summit’s allowance for credit losses on unfunded loan commitments was $7.79 million on June 30, 2022, $8.39 million at the end of the linked quarter and $4.66 million on June 30, 2021. The allowance for credit losses on unfunded loan commitments decreased $600,000 during the most recent quarter, principally as result of a change in mix of unfunded commitments, whereas construction loan commitments, which have a higher historical loss ratio than do other loans as a whole, decreased while commercial unfunded lines of credit, which carry a lower loss factor and lower utilization rates, increased.

As of June 30, 2022, nonperforming assets (“NPAs”), consisting of nonperforming loans, foreclosed properties and repossessed assets, totaled $16.3 million, or 0.43 percent of assets, compared to NPAs of $18.6 million, or 0.51 percent of assets at the linked quarter-end, $22.6 million or 0.63 percent of assets at year-end 2021 and $36.0 million, or 1.10 percent of assets at the end of second quarter 2021. A loan relationship of $9.5 million impacted by the COVID-19 pandemic and on nonaccrual at June 30, 2021 was restored to full accrual status in July 2021.

About the Company

Summit Financial Group, Inc. is the $3.76 billion financial holding company for Summit Community Bank, Inc. Its talented bankers serve commercial and individual clients throughout West Virginia, the Washington, D.C. metropolitan area, Virginia, and Kentucky. Summit’s focus on in-market commercial lending and providing other business banking services in dynamic markets is designed to leverage its highly efficient operations and core deposits in strong legacy locations. Residential and consumer lending, trust and wealth management, and other retail financial services are offered through convenient digital and mobile banking platforms, including MySummitBank.com and 45 full-service branch locations. More information on Summit Financial Group, Inc. (NASDAQ: SMMF), headquartered in West Virginia’s Eastern Panhandle in Moorefield, is available at SummitFGI.com.

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: the effect of the COVID-19 pandemic, including the negative impacts and disruptions on the communities we serve, and the domestic and global economy, which may have an adverse effect on our business; current and future economic and market conditions, including the effects of declines in housing prices, high unemployment rates, U.S. fiscal debt, budget and tax matters, geopolitical matters, and any slowdown in global economic growth; fiscal and monetary policies of the Federal Reserve; future provisions for credit losses on loans and debt securities; changes in nonperforming assets; changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; the successful integration of operations of our acquisitions; 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 2022 vs Q2 2021      
       
    For the Quarter Ended Percent
Dollars in thousands 6/30/2022 6/30/2021 Change
Statements of Income      
  Interest income      
     Loans, including fees $ 32,766   $ 27,697 18.3 %
     Securities   2,752     2,202 25.0 %
     Other   45     56 -19.6 %
  Total interest income   35,563     29,955 18.7 %
  Interest expense      
     Deposits   2,622     2,136 22.8 %
     Borrowings   1,976     1,008 96.0 %
  Total interest expense   4,598     3,144 46.2 %
  Net interest income   30,965     26,811 15.5 %
  Provision for credit losses   2,000     1,000 100.0 %
  Net interest income after provision      
      for credit losses   28,965     25,811 12.2 %
         
  Noninterest income      
     Trust and wealth management fees   745     683 9.1 %
     Mortgage origination revenue   317     898 -64.7 %
     Service charges on deposit accounts   1,674     1,093 53.2 %
     Bank card revenue   1,618     1,519 6.5 %
     (Losses) on equity investments   (669 )   - n/a  
     Realized gains/(losses) on debt securities   (289 )   127 -327.6 %
     Bank owned life insurance and annuity income   331     275 20.4 %
     Other income   129     120 7.5 %
  Total noninterest income   3,856     4,715 -18.2 %
  Noninterest expense      
      Salaries and employee benefits   10,030     8,230 21.9 %
      Net occupancy expense   1,258     1,131 11.2 %
      Equipment expense   1,791     1,598 12.1 %
      Professional fees   507     428 18.5 %
      Advertising and public relations   165     138 19.6 %
      Amortization of intangibles   355     382 -7.1 %
      FDIC premiums   190     488 -61.1 %
      Bank card expense   810     685 18.2 %
      Foreclosed properties expense, net of (gains)/losses   141     746 -81.1 %
      Acquisition-related expense   4     454 -99.1 %
      Other expenses   2,358     2,756 -14.4 %
  Total noninterest expense   17,609     17,036 3.4 %
  Income before income taxes   15,212     13,490 12.8 %
  Income taxes   3,198     2,930 9.1 %
  Net income   12,014     10,560 13.8 %
  Preferred stock dividends   225     139 61.9 %
         
  Net income applicable to common shares $ 11,789   $ 10,421 13.1 %

 

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)    
Quarterly Performance Summary (unaudited)    
Q2 2022 vs Q2 2021    
         
    For the Quarter Ended Percent
    6/30/2022 6/30/2021 Change
Per Share Data      
  Earnings per common share      
     Basic $ 0.92   $ 0.80   15.0 %
     Diluted $ 0.92   $ 0.80   15.0 %
         
  Cash dividends per common share $ 0.18   $ 0.17   5.9 %
  Common stock dividend payout ratio   19.5 %   21.2 % -8.0 %
         
  Average common shares outstanding      
     Basic   12,754,724     12,952,357   -1.5 %
     Diluted   12,810,174     13,013,714   -1.6 %
         
  Common shares outstanding at period end   12,763,422     12,963,057   -1.5 %
         
Performance Ratios      
  Return on average equity   14.48 %   13.67 % 5.9 %
  Return on average tangible equity (C)   18.28 %   17.03 % 7.3 %
  Return on average tangible common equity (D)   19.35 %   17.59 % 10.0 %
  Return on average assets   1.30 %   1.29 % 0.8 %
  Net interest margin (A)   3.66 %   3.55 % 3.1 %
  Efficiency ratio (B)   47.45 %   48.82 % -2.8 %
         

NOTES

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

(B) – Computed on a tax equivalent basis excluding acquisition-related expenses, gains/losses on sales of assets, write-downs of OREO properties to fair value and amortization of intangibles.

(C) – Return on average tangible equity = (Net income + Amortization of intangibles [after-tax]) / (Average shareholders’ equity – Average intangible assets).

(D) – Return on average tangible common equity = (Net income applicable to common shares + Amortization of intangibles [after-tax]) / (Average common shareholders’ equity – Average intangible assets).

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)    
Six Month Performance Summary (unaudited)      
2022 vs 2021      
         
    For the Six Months Ended Percent
Dollars in thousands 6/30/2022 6/30/2021 Change
Statements of Income      
  Interest income      
     Loans, including fees $ 62,991   $ 55,234 14.0 %
     Securities   5,374     4,359 23.3 %
     Other   91     123 -26.0 %
  Total interest income   68,456     59,716 14.6 %
  Interest expense      
     Deposits   4,349     4,632 -6.1 %
     Borrowings   3,587     2,022 77.4 %
  Total interest expense   7,936     6,654 19.3 %
  Net interest income   60,520     53,062 14.1 %
  Provision for credit losses   3,950     2,500 58.0 %
  Net interest income after provision      
      for credit losses   56,570     50,562 11.9 %
         
  Noninterest income      
     Trust and wealth management fees   1,503     1,321 13.8 %
     Mortgage origination revenue   656     1,896 -65.4 %
     Service charges on deposit accounts   3,074     2,193 40.2 %
     Bank card revenue   3,109     2,860 8.7 %
     (Losses) on equity investments   (297 )   - n/a  
     Realized gains/(losses) on debt securities, net   (442 )   602 -173.4 %
     Bank owned life insurance and annuity income   615     573 7.3 %
     Other income   183     244 -25.0 %
  Total noninterest income   8,401     9,689 -13.3 %
  Noninterest expense      
      Salaries and employee benefits   19,731     16,665 18.4 %
      Net occupancy expense   2,499     2,305 8.4 %
      Equipment expense   3,634     3,180 14.3 %
      Professional fees   869     766 13.4 %
      Advertising and public relations   337     228 47.8 %
      Amortization of intangibles   734     787 -6.7 %
      FDIC premiums   580     765 -24.2 %
      Bank card expense   1,524     1,259 21.0 %
      Foreclosed properties expense, net of (gains)/losses   51     972 -94.8 %
      Acquisition-related expense   33     893 -96.3 %
      Other expenses   4,817     5,649 -14.7 %
  Total noninterest expense   34,809     33,469 4.0 %
  Income before income taxes   30,162     26,782 12.6 %
  Income taxes   6,455     5,863 10.1 %
  Net income   23,707     20,919 13.3 %
  Preferred stock dividends   450     139 223.7 %
         
  Net income applicable to common shares $ 23,257   $ 20,780 11.9 %

 

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)    
Six Month Performance Summary (unaudited)      
2022 vs 2021    
         
    For the Six Months Ended Percent
    6/30/2022 6/30/2021 Change
Per Share Data      
  Earnings per common share      
     Basic $ 1.82   $ 1.61   13.0 %
     Diluted $ 1.82   $ 1.60   13.8 %
         
  Cash dividends per common share $ 0.36   $ 0.34   5.9 %
  Common stock dividend payout ratio   19.8 %   21.3 % -7.0 %
         
  Average common shares outstanding      
     Basic   12,750,037     12,947,228   -1.5 %
     Diluted   12,805,873     13,007,889   -1.6 %
         
  Common shares outstanding at period end   12,763,422     12,963,057   -1.5 %
         
Performance Ratios      
  Return on average equity   14.34 %   14.09 % 1.8 %
  Return on average tangible equity (C)   18.15 %   17.75 % 2.3 %
  Return on average tangible common equity (D)   18.87 %   18.06 % 4.5 %
  Return on average assets   1.30 %   1.30 % 0.0 %
  Net interest margin (A)   3.64 %   3.60 % 1.1 %
  Efficiency ratio (B)   48.42 %   49.18 % -1.5 %
         

NOTES

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

(B) – Computed on a tax equivalent basis excluding acquisition-related expenses, gains/losses on sales of assets, write-downs of OREO properties to fair value and amortization of intangibles.

(C) – Return on average tangible equity = (Net income + Amortization of intangibles [after-tax]) / (Average shareholders’ equity – Average intangible assets).

(D) – Return on average tangible common equity = (Net income applicable to common shares + Amortization of intangibles [after-tax]) / (Average common shareholders’ equity – Average intangible assets).

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)        
Five Quarter Performance Summary (unaudited)          
           
    For the Quarter Ended
Dollars in thousands 6/30/2022 3/31/2022 12/31/2021 9/30/2021 6/30/2021
Statements of Income          
  Interest income          
     Loans, including fees $ 32,766   $ 30,224   $ 28,979   $ 28,416   $ 27,697
     Securities   2,752     2,623     2,763     2,348     2,202
     Other   45     46     75     118     56
  Total interest income   35,563     32,893     31,817     30,882     29,955
  Interest expense          
     Deposits   2,622     1,727     1,718     1,832     2,136
     Borrowings   1,976     1,612     1,267     1,013     1,008
  Total interest expense   4,598     3,339     2,985     2,845     3,144
  Net interest income   30,965     29,554     28,832     28,037     26,811
  Provision for credit losses   2,000     1,950     1,500     -     1,000
  Net interest income after provision          
      for credit losses   28,965     27,604     27,332     28,037     25,811
  Noninterest income          
     Trust and wealth management fees   745     757     847     718     683
     Mortgage origination revenue   317     339     1,361     742     898
     Service charges on deposit accounts   1,674     1,401     1,501     1,338     1,093
     Bank card revenue   1,618     1,491     1,528     1,509     1,519
     (Losses)/gains on equity investments   (669 )   372     202     -     -
     Realized gains/(losses) on debt securities, net   (289 )   (152 )   (109 )   (68 )   127
     Bank owned life insurance and annuity income   331     283     293     160     275
     Other income   129     54     330     168     120
  Total noninterest income   3,856     4,545     5,953     4,567     4,715
  Noninterest expense          
     Salaries and employee benefits   10,030     9,700     8,977     8,745     8,230
     Net occupancy expense   1,258     1,242     1,265     1,254     1,131
     Equipment expense   1,791     1,843     1,902     1,908     1,598
     Professional fees   507     362     438     374     428
     Advertising and public relations   165     172     216     254     138
     Amortization of intangibles   355     378     387     390     382
     FDIC premiums   190     390     330     354     488
     Bank card expense   810     714     703     705     685
     Foreclosed properties expense, net of (gains)/losses   141     (90 )   403     370     746
     Acquisition-related expenses   4     29     57     273     454
     Other expenses   2,358     2,459     3,250     2,716     2,756
  Total noninterest expense   17,609     17,199     17,928     17,343     17,036
  Income before income taxes   15,212     14,950     15,357     15,261     13,490
  Income tax expense   3,198     3,257     2,777     3,023     2,930
  Net income   12,014     11,693     12,580     12,238     10,560
  Preferred stock dividends   225     225     225     225     139
             
  Net income applicable to common shares $ 11,789   $ 11,468   $ 12,355   $ 12,013   $ 10,421

 

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)          
Five Quarter Performance Summary (unaudited)            
             
    For the Quarter Ended  
    6/30/2022 3/31/2022 12/31/2021 9/30/2021 6/30/2021  
Per Share Data            
  Earnings per common share            
     Basic $ 0.92   $ 0.90   $ 0.96   $ 0.93   $ 0.80    
     Diluted $ 0.92   $ 0.90   $ 0.95   $ 0.92   $ 0.80    
               
  Cash dividends per common share $ 0.18   $ 0.18   $ 0.18   $ 0.18   $ 0.17    
  Common stock dividend payout ratio   19.1 %   19.7 %   18.5 %   19.1 %   21.2 %  
               
  Average common shares outstanding            
     Basic   12,754,724     12,745,297     12,916,555     12,964,575     12,952,357    
     Diluted   12,810,174     12,801,903     12,976,181     13,018,672     13,013,714    
               
  Common shares outstanding at period end   12,763,422     12,753,094     12,743,125     12,976,693     12,963,057    
               
Performance Ratios            
  Return on average equity   14.48 %   14.20 %   15.48 %   15.30 %   13.67 %  
  Return on average tangible equity (C)   18.28 %   18.02 %   19.72 %   19.51 %   17.03 %  
  Return on average tangible common equity (D)   19.35 %   18.74 %   20.55 %   20.34 %   17.59 %  
  Return on average assets   1.30 %   1.30 %   1.42 %   1.42 %   1.29 %  
  Net interest margin (A)   3.66 %   3.61 %   3.49 %   3.47 %   3.55 %  
  Efficiency ratio (B)   47.45 %   49.44 %   48.85 %   49.52 %   48.82 %  

NOTES

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

(B) – Computed on a tax equivalent basis excluding acquisition-related expenses, gains/losses on sales of assets, write-downs of OREO properties to fair value and amortization of intangibles.

(C) – Return on average tangible equity = (Net income + Amortization of intangibles [after-tax]) / (Average shareholders’ equity – Average intangible assets).

(D) – Return on average tangible common equity = (Net income applicable to common shares + Amortization of intangibles [after-tax]) / (Average common shareholders’ equity – Average intangible assets).

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)          
Selected Balance Sheet Data (unaudited)          
Dollars in thousands, except per share amounts 6/30/2022 3/31/2022 12/31/2021 9/30/2021 6/30/2021
Assets          
  Cash and due from banks $ 17,921   $ 18,404   $ 21,006   $ 21,247   $ 18,707  
  Interest bearing deposits other banks   31,680     42,853     57,452     189,862     176,282  
  Debt securities, available for sale   368,049     374,855     401,103     424,741     345,742  
  Debt securities, held to maturity   97,116     97,589     98,060     98,528     98,995  
  Equity investments   19,905     20,574     20,202     -     -  
  Other investments   18,329     10,974     11,304     10,649     10,661  
  Loans, net   2,941,813     2,817,998     2,729,093     2,521,704     2,395,885  
  Property held for sale   5,319     6,900     9,858     12,450     13,170  
  Premises and equipment, net   55,034     55,713     56,371     56,818     53,104  
  Goodwill and other intangible assets, net   62,856     63,212     63,590     63,977     53,858  
  Cash surrender value of life insurance policies and annuities   71,073     70,825     60,613     60,241     60,087  
  Derivative financial instruments   31,452     24,455     11,187     10,380     9,885  
  Other assets   42,252     39,339     36,880     38,354     36,157  
     Total assets $ 3,762,799   $ 3,643,691   $ 3,576,719   $ 3,508,951   $ 3,272,533  
Liabilities and Shareholders' Equity          
  Deposits $ 2,975,304   $ 3,008,063   $ 2,943,089   $ 2,955,940   $ 2,729,205  
  Short-term borrowings   291,447     140,146     140,146     140,146     140,146  
  Long-term borrowings and          
       subordinated debentures, net   123,311     123,260     123,159     49,739     49,710  
  Other liabilities   38,846     41,756     42,852     39,837     38,265  
  Shareholders' equity - preferred   14,920     14,920     14,920     14,920     14,920  
  Shareholders' equity - common   318,971     315,546     312,553     308,369     300,287  
     Total liabilities and shareholders' equity $ 3,762,799   $ 3,643,691   $ 3,576,719   $ 3,508,951   $ 3,272,533  
             
  Book value per common share $ 24.99   $ 24.74   $ 24.53   $ 23.76   $ 23.16  
  Tangible book value per common share (A) $ 20.07   $ 19.79   $ 19.54   $ 18.83   $ 19.01  
  Tangible common equity to tangible assets (B)   6.9 %   7.0 %   7.1 %   7.1 %   7.7 %
             

NOTES

(A) – Tangible book value per share = (Common shareholders’ equity – Intangible assets) / Common shares outstanding.
(B) – Tangible common equity to tangible assets = (Common shareholders’ equity – Intangible assets) / (Total assets – Intangible assets).

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)        
Regulatory Capital Ratios (unaudited)            
    6/30/2022 3/31/2022 12/31/2021 9/30/2021 6/30/2021  
Summit Financial Group, Inc.            
  CET1 Risk-based Capital 8.2 % 8.3 % 8.4 % 9.0 % 9.6 %  
  Tier 1 Risk-based Capital 9.2 % 9.3 % 9.5 % 10.2 % 10.9 %  
  Total Risk-based Capital 13.3 % 13.5 % 13.8 % 12.1 % 13.0 %  
  Tier 1 Leverage 8.4 % 8.4 % 8.3 % 8.4 % 8.9 %  
               
Summit Community Bank, Inc.            
  CET1 Risk-based Capital 11.4 % 11.6 % 11.9 % 11.2 % 11.9 %  
  Tier 1 Risk-based Capital 11.4 % 11.6 % 11.9 % 11.2 % 11.9 %  
  Total Risk-based Capital 12.4 % 12.5 % 12.8 % 12.1 % 12.9 %  
  Tier 1 Leverage 10.4 % 10.5 % 10.4 % 9.2 % 9.7 %  
               

 

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)        
Loan Composition (unaudited)            
               
Dollars in thousands 6/30/2022 3/31/2022 12/31/2021 9/30/2021 6/30/2021  
               
Commercial   $ 455,202 $ 447,482 $ 365,301 $ 317,855 $ 326,468  
Mortgage warehouse lines   171,399   164,895   227,869   161,628   105,288  
Commercial real estate            
     Owner occupied   502,152   491,059   484,708   439,202   392,164  
     Non-owner occupied   963,646   910,174   866,031   835,071   784,415  
Construction and development            
     Land and development   106,840   103,203   100,805   99,718   102,670  
     Construction     211,955   171,383   146,038   127,432   140,788  
Residential real estate            
     Conventional     377,980   375,240   384,794   394,889   398,239  
     Jumbo     79,803   81,443   79,108   71,977   71,694  
     Home equity     71,136   70,770   72,112   71,496   72,956  
Consumer     33,816   32,095   31,923   32,284   32,732  
Other     2,947   2,877   2,702   2,558   2,356  
Total loans, net of unearned fees   2,976,876   2,850,621   2,761,391   2,554,110   2,429,770  
Less allowance for loan credit losses     35,063   32,623   32,298   32,406   33,885  
Loans, net $ 2,941,813 $ 2,817,998 $ 2,729,093 $ 2,521,704 $ 2,395,885  
               
Unfunded loan commitments $ 876,157 $ 840,705 $ 688,493 $ 627,461 $ 535,587  
               

 

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)        
Deposit Composition (unaudited)          
               
Dollars in thousands   6/30/2022 3/31/2022 12/31/2021 9/30/2021 6/30/2021  
Core deposits              
   Non-interest bearing checking $ 600,791 $ 629,002 $ 568,986 $ 575,542 $ 503,097  
   Interest bearing checking   1,238,368   1,134,964   1,127,298   1,121,028   1,005,725  
   Savings     645,099   702,069   698,156   693,686   677,000  
   Time deposits     386,562   427,076   451,713   467,024   441,139  
Total core deposits   2,870,820   2,893,111   2,846,153   2,857,280   2,626,961  
               
Brokered time deposits   32,767   32,755   14,677   14,671   23,521  
Other non-core time deposits   71,717   82,197   82,259   83,989   78,723  
Total deposits $ 2,975,304 $ 3,008,063 $ 2,943,089 $ 2,955,940 $ 2,729,205  
               

 

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)        
Asset Quality Information (unaudited)          
    For the Quarter Ended
Dollars in thousands 6/30/2022 3/31/2022 12/31/2021 9/30/2021 6/30/2021
  Gross loan charge-offs $ 306   $ 618   $ 282   $ 528   $ 343  
  Gross loan recoveries   (147 )   (109 )   (89 )   (158 )   (141 )
     Net loan charge-offs $ 159   $ 509   $ 193   $ 370   $ 202  
             
  Net loan charge-offs to average loans (annualized)   0.02 %   0.07 %   0.03 %   0.06 %   0.03 %
             
  Allowance for loan credit losses $ 35,063   $ 32,623   $ 32,298   $ 32,406   $ 33,885  
  Allowance for loan credit losses as a percentage          
      of period end loans   1.18 %   1.14 %   1.17 %   1.27 %   1.39 %
             
  Allowance for credit losses on          
      unfunded loan commitments ("ULC") $ 7,792   $ 8,392   $ 7,275   $ 5,860   $ 4,660  
  Allowance for credit losses on ULC          
      as a percentage of period end ULC   0.89 %   1.00 %   1.06 %   0.93 %   0.87 %
             
  Nonperforming assets:          
     Nonperforming loans          
         Commercial $ 345   $ 433   $ 740   $ 459   $ 968  
         Commercial real estate   2,703     4,765     4,603     4,643     14,430  
         Residential construction and development   1,053     968     1,560     448     621  
         Residential real estate   6,799     5,549     5,772     5,514     6,800  
         Consumer   37     20     21     48     38  
  Total nonperforming loans   10,937     11,735     12,696     11,112     22,857  
     Foreclosed properties          
         Commercial real estate   440     1,251     1,389     2,192     2,281  
         Commercial construction and development   2,332     2,332     2,332     2,925     3,146  
         Residential construction and development   2,293     3,018     5,561     6,712     6,859  
         Residential real estate   254     299     576     621     884  
  Total foreclosed properties   5,319     6,900     9,858     12,450     13,170  
    Other repossessed assets   -     -     -     -     -  
  Total nonperforming assets $ 16,256   $ 18,635   $ 22,554   $ 23,562   $ 36,027  
             
  Nonperforming loans to period end loans   0.37 %   0.41 %   0.46 %   0.44 %   0.94 %
  Nonperforming assets to period end assets   0.43 %   0.51 %   0.63 %   0.67 %   1.10 %
             
  Troubled debt restructurings          
       Performing $ 18,657   $ 18,971   $ 18,887   $ 20,535   $ 20,799  
       Nonperforming   2,236     1,822     2,039     1,141     1,235  
  Total troubled debt restructurings $ 20,893   $ 20,793   $ 20,926   $ 21,676   $ 22,034  

 

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)        
Loans Past Due 30-89 Days (unaudited)          
             
Dollars in thousands 6/30/2022 3/31/2022 12/31/2021 9/30/2021 6/30/2021
             
  Commercial $ 989 $ 388 $ 751 $ 304 $ 414
  Commercial real estate   4,084   1,446   683   281   733
  Construction and development   821   645   45   1,215   1,911
  Residential real estate   3,452   3,407   3,552   2,643   3,594
  Consumer   196   69   190   193   404
  Other   14   28   22   1   -
     Total $ 9,556 $ 5,983 $ 5,243 $ 4,637 $ 7,056
             

 

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)                      
Average Balance Sheet, Interest Earnings & Expenses and Average Rates                
Q2 2022 vs Q1 2022 vs Q2 2021 (unaudited)                      
                           
  Q2 2022   Q1 2022   Q2 2021    
  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 $ 2,902,370   $ 32,721 4.52 %   $ 2,771,842   $ 30,178 4.42 %   $ 2,455,757   $ 27,593 4.51 %    
    Tax-exempt (2)   5,127     57 4.46 %     5,369     58 4.38 %     11,370     132 4.66 %    
  Securities                          
    Taxable   297,701     1,765 2.38 %     320,170     1,657 2.10 %     285,092     1,351 1.90 %    
    Tax-exempt (2)   178,043     1,249 2.81 %     180,473     1,223 2.75 %     147,703     1,078 2.93 %    
   Interest bearing deposits other banks                        
        and Federal funds sold   37,757     45 0.48 %     72,883     46 0.26 %     154,677     56 0.15 %    
Total interest earning assets   3,420,998     35,837 4.20 %     3,350,737     33,162 4.01 %     3,054,599     30,210 3.97 %    
                           
Noninterest earning assets                          
  Cash & due from banks   16,351           19,226           19,095          
  Premises & equipment   55,449           56,043           53,210          
  Intangible assets   63,058           63,429           54,072          
  Other assets   165,788           142,719           116,398          
  Allowance for credit losses   (33,232 )         (32,462 )         (34,674 )        
    Total assets $ 3,688,412         $ 3,599,692         $ 3,262,700          
                           
 LIABILITIES AND SHAREHOLDERS' EQUITY                      
                           
Liabilities                          
Interest bearing liabilities                          
  Interest bearing                          
    demand deposits $ 1,189,324   $ 1,274 0.43 %   $ 1,135,068   $ 465 0.17 %   $ 995,673   $ 371 0.15 %    
  Savings deposits   672,353     689 0.41 %     700,115     573 0.33 %     665,735     634 0.38 %    
  Time deposits   517,360     659 0.51 %     542,360     689 0.52 %     562,605     1,131 0.81 %    
  Short-term borrowings   207,227     696 1.35 %     140,230     373 1.08 %     140,146     464 1.33 %    
  Long-term borrowings and                          
     subordinated debentures   123,263     1,280 4.17 %     123,203     1,239 4.08 %     49,694     544 4.39 %    
Total interest bearing liabilities   2,709,527     4,598 0.68 %     2,640,976     3,339 0.51 %     2,413,853     3,144 0.52 %    
                           
Noninterest bearing liabilities                          
  Demand deposits   605,724           586,903           503,116          
  Other liabilities   41,307           42,493           36,842          
    Total liabilities   3,356,558           3,270,372           2,953,811          
                           
Shareholders' equity - preferred   14,920           14,921           11,254          
Shareholders' equity - common   316,934           314,399           297,635          
  Total liabilities and                          
    shareholders' equity $ 3,688,412         $ 3,599,692         $ 3,262,700          
                           
NET INTEREST EARNINGS   $ 31,239       $ 29,823       $ 27,066      
                           
NET INTEREST MARGIN     3.66 %       3.61 %       3.55 %    
                           
(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 $274,000, $269,000, and $255,000 for Q2 2022, Q1 2022 and Q2 2021, respectively.  
                           

 

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)            
Average Balance Sheet, Interest Earnings & Expenses and Average Rates          
YTD 2022 vs YTD 2021 (unaudited)                
     
  YTD 2022   YTD 2021  
  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 $ 2,837,467   $ 62,900 4.47 %   $ 2,406,007   $ 55,012 4.61 %  
    Tax-exempt (2)   5,248     115 4.42 %     12,021     281 4.71 %  
  Securities                
    Taxable   308,872     3,420 2.23 %     275,742     2,646 1.94 %  
    Tax-exempt (2)   179,252     2,473 2.78 %     146,300     2,168 2.99 %  
   Interest bearing deposits other banks              
        and Federal funds sold   55,222     91 0.33 %     160,592     123 0.15 %  
Total interest earning assets   3,386,061     68,999 4.11 %     3,000,662     60,230 4.05 %  
                 
Noninterest earning assets                
  Cash & due from banks   17,781           18,592        
  Premises & equipment   55,746           53,263        
  Intangible assets   63,242           54,496        
  Other assets   154,200           114,014        
  Allowance for loan losses   (32,849 )         (33,696 )      
    Total assets $ 3,644,181         $ 3,207,331        
                 
 LIABILITIES AND SHAREHOLDERS' EQUITY              
                 
Liabilities                
Interest bearing liabilities                
  Interest bearing                
    demand deposits $ 1,162,346   $ 1,739 0.30 %   $ 978,029   $ 765 0.16 %  
  Savings deposits   686,157     1,262 0.37 %     654,053     1,279 0.39 %  
  Time deposits   529,791     1,348 0.51 %     573,107     2,588 0.91 %  
  Short-term borrowings   173,914     1,068 1.24 %     140,146     933 1.34 %  
  Long-term borrowings and                
     subordinated debentures   123,234     2,519 4.12 %     49,679     1,089 4.42 %  
    2,675,442     7,936 0.60 %     2,395,014     6,654 0.56 %  
Noninterest bearing liabilities                
  Demand deposits   596,365           477,766        
  Other liabilities   41,779           37,614        
    Total liabilities   3,313,586           2,910,394        
                 
Shareholders' equity - preferred   14,920           5,658        
Shareholders' equity - common   315,675           291,279        
  Total liabilities and                
    shareholders' equity $ 3,644,181         $ 3,207,331        
                 
NET INTEREST EARNINGS   $ 61,063       $ 53,576    
                 
NET INTEREST MARGIN     3.64 %       3.60 %  
                 
(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 $543,000 and $514,000 for the      
       YTD 2022 and YTD 2021 periods, respectively.              
                 

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

 


summit-financial-group-inc

Source: Summit Financial Group, Inc.