Summit Financial Group Reports Fourth Quarter and Full Year 2017 Results

Q4 2017 Diluted EPS $0.19 compared to $0.48 for Q3 2017 and $0.44 for Q4 2016

MOOREFIELD, W. Va., Jan. 26, 2018 (GLOBE NEWSWIRE) -- Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ:SMMF) today reported fourth quarter 2017 net income of $2.32 million, or $0.19 per diluted share. In comparison, earnings for third quarter 2017 were $5.93 million, or $0.48 per diluted share, and for fourth quarter 2016 were $4.71 million, or $0.44 per diluted share. 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, Summit recorded net income of $11.92 million, or $1.00 per diluted share, for 2017 compared with $17.30 million, or $1.61 per diluted share, for 2016. Earnings per diluted share for the full year of 2017 were negatively impacted (on an after-tax basis) by the following non-core or one-time items:  $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 2017 include:

• Recorded a $3.5 million charge to income tax expense to re-measure net deferred tax assets at the lower corporate federal income tax rate due to enactment of the TCJA;
  
  
• Loans, excluding mortgage warehouse lines of credit, grew $37.3 million during the quarter, or 9.7 percent (on an annualized basis); excluding mortgage warehouse lines of credit and First Century Bankshares, Inc.’s (“FCB”) purchased loan portfolio, loans grew $113.0 million, or 9.2 percent, since year-end 2016;
  
  
• Total revenues increased 0.6 percent compared to the linked-quarter and increased 29.9 percent compared to the year ago quarter, principally as result of the acquisitions of FCB and Highland County Bankshares, Inc. (“HCB”);
  
  
• Net interest margin was unchanged compared to Q3 2017, but increased 31 basis points compared to Q4 2016, reflecting FCB’s higher yielding loan portfolio and lower cost of funds as well as the positive impact from FOMC rate increases during 2017;
  
  
• Efficiency ratio improved to 51.47 percent compared to 53.73 percent for Q3 2017 and 56.67 percent for Q4 2016, as result of the improved net interest margin and well-controlled overhead;
  
  
• Provision for loan losses remained unchanged from the linked quarter at $375,000, compared to no provision for the year-ago quarter;
  
  
• Realized securities losses of $71,000 in Q4 2017 compared to realized securities gains of $291,000 in the year-ago quarter;
  
  
• Write-downs of foreclosed properties were $347,000 in Q4 2017 compared to $165,000 in Q4 2016, while gains on sales of foreclosed properties declined from $465,000 in Q4 2016 to $46,000 in Q4 2017;
  
  
• Nonperforming assets as a percentage of total assets declined to 1.73 percent compared to 1.84 percent for the linked quarter and to 2.22 percent a year-ago, reaching its lowest level since Q2 2008.

H. Charles Maddy, III, President and Chief Executive Officer of Summit, commented, “Despite the noise in this past quarter’s earnings as result of enactment of Tax Reform legislation, I was very pleased by our Q4 2017 core operating performance – the net interest margin remained stable, loan growth was strong and the efficiency ratio improved markedly. Furthermore, these results combined with our proven ability in 2017 to successfully execute on a disciplined M&A growth strategy gives us optimism as we look forward to 2018 and beyond.”

Acquisitions

On April 1, 2017, Summit completed its acquisition of FCB and its subsidiary, First Century Bank, headquartered in Bluefield, West Virginia.  Accordingly, FCB’s results of operations are included in Summit’s consolidated results of operation from the date of acquisition, and therefore Summit’s results for the three months and year ended December 31, 2017 reflect increased levels of average balances, income and expense compared to its same periods of 2016 results. At consummation, FCB had total assets of $404.8 million, loans of $229.0 million, and deposits of $350.0 million. In addition, our merger-related expenses totaled $1.59 million during 2017, with $1.46 million of those expenses incurred during second quarter 2017.

On October 1, 2016, Summit completed its acquisition of HCB and its subsidiary, First & Citizens Bank, headquartered in Monterey, Virginia. Accordingly, HCB’s results of operations are included in Summit’s consolidated results of operation from the date of acquisition, and therefore Summit’s results for the year ended December 31, 2017 reflect increased levels of average balances, income and expense as compared to 2016 results. At consummation, HCB had total assets of $122.8 million, loans of $60.8 million, and deposits of $106.9 million.

In conjunction with these acquisitions, Summit recognized net accretion income related to loan and time deposit fair value acquisition accounting adjustments totaling $113,000 and $70,000 in Q4 2017 and $825,000 and $237,000 for the year ended December 31, 2017, respectively.

Results of Operations

Total revenue for fourth quarter 2017, consisting of net interest income and noninterest income, grew 29.9 percent to $21.4 million, principally as result of the FCB acquisition, compared to $16.5 million for the fourth quarter 2016. For the year-to-date period ended December 31, 2017, total revenue was $80.6 million compared to $60.6 million for the same period of 2016, representing a 32.9 percent increase.

For the fourth quarter of 2017, net interest income was $17.4 million, an increase of 29.6 percent from the $13.5 million reported in the prior-year fourth quarter and increased $206,000 compared to the linked-quarter. The net interest margin for fourth quarter 2017 was 3.65 percent compared to 3.34 percent for the year-ago quarter, and 3.65 percent for Q3 2017. Excluding the impact of accretion and amortization of fair value acquisition accounting adjustments related to the interest earning assets and interest bearing liabilities acquired from FCB and HCB, Summit’s net interest margin was 3.60 percent for Q4 2017 and 3.61 percent for full year 2017. 

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 2017 was $3.93 million compared to $3.00 million for the comparable period of 2016. Excluding realized securities gains and losses, noninterest income was $4.00 million for fourth quarter 2017, compared to $2.71 million reported for fourth quarter 2016.

We recorded a $375,000 provision for loan losses during fourth quarter 2017 and none during fourth quarter 2016.

Q4 2017 total noninterest expense increased 31.5 percent to $12.35 million compared to $9.39 million for the prior-year fourth quarter principally due to the acquisition of FCB. Noninterest expense for full-year 2017 increased 65.9 percent compared to 2016. Summit recorded a $9.9 million charge to resolve fully all litigation with Residential Funding Company, LLC and ResCap Liquidating Trust (collectively “ResCap”) during Q1 2017. Excluding the impact of the ResCap litigation settlement charge, noninterest expense for 2017 increased 37.5 percent to $47.8 million compared to $34.8 million for 2016, principally as result of the acquisitions of HCB and FCB.

Balance Sheet

At December 31, 2017, total assets were $2.13 billion, an increase of $375.6 million, or 21.4 percent since December 31, 2016. Total loans, net of unearned fees and allowance for loan losses, were $1.59 billion at December 31, 2017, up $285.9 million, or 21.9 percent, from the $1.31 billion reported at year-end 2016.  Loans, excluding mortgage warehouse lines of credit, grew $37.3 million during the quarter, or 9.7 percent (on an annualized basis), and loans, excluding mortgage warehouse lines of credit and FCB’s purchased loan portfolio, have grown $113.0 million, or 9.2 percent year-to-date.

At December 31, 2017, deposits were $1.60 billion, an increase of $305.1 million, or 23.5 percent, since year end 2016. During 2017, checking deposits increased $215.8 million or 52.3 percent, time deposits grew by $68.5 million or 12.5 percent and savings deposits increased $20.8 million or 6.2 percent.

Shareholders’ equity was $201.5 million as of December 31, 2017 compared to $155.4 million at December 31, 2016. In conjunction with the acquisition of FCB on April 1, 2017, Summit issued 1,537,912 shares of common stock valued at $33.1 million to the former FCB shareholders.

Tangible book value per common share increased to $14.08 at December 31, 2017 compared to $13.20 at December 31, 2016. Summit had 12,358,562 outstanding common shares at year end 2017 compared to 10,736,970 at year end 2016.

Asset Quality

As of December 31, 2017, nonperforming assets (“NPAs”), consisting of nonperforming loans, foreclosed properties, and repossessed assets, were $36.9 million, or 1.73 percent of assets. This compares to $38.7 million, or 1.84 percent of assets at the linked quarter-end, and $39.1 million, or 2.22 percent of assets, at year end 2016.

Fourth quarter 2017 net loan charge-offs were $274,000, or 0.07 percent of average loans annualized; while we added $375,000 to the allowance for loan losses through the provision for loan losses. The allowance for loan losses stood at 0.78 percent of total loans at December 31, 2017, compared to 0.88 percent at year-end 2016.  If the acquired FCB and HCB loans which were recorded at fair value on the acquisition dates are excluded, the allowance for loan losses to total loans ratio at December 31, 2017 and December 31, 2016 would have been 0.91 percent and 0.92 percent, respectively.

About the Company

Summit Financial Group, Inc. is a $2.13 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 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.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)
Quarterly Performance Summary -- Q4 2017 vs Q4 2016
		For the Quarter Ended						Percent
Dollars in thousands		12/31/2017			12/31/2016			Change
Condensed Statements of Income
	Interest income
	Loans, including fees	$	20,031		$	15,780		26.9	%
	Securities		2,412			1,796		34.3	%
	Other		144			161		-10.6	%
	Total interest income		22,587			17,737		27.3	%
	Interest expense
	Deposits		3,224			2,430		32.7	%
	Borrowings		1,925			1,850		4.1	%
	Total interest expense		5,149			4,280		20.3	%
	Net interest income		17,438			13,457		29.6	%
	Provision for loan losses		375			-		n/a
	Net interest income after provision
	for loan losses		17,063			13,457		26.8	%
	Noninterest income
	Insurance commissions		1,005			992		1.3	%
	Trust and wealth management fees		578			91		535.2	%
	Service fees related to deposit accounts		1,906			1,194		59.6	%
	Realized securities (losses) gains		(71	)		291		-124.4	%
	Other income		513			430		19.3	%
	Total noninterest income		3,931			2,998		31.1	%
	Noninterest expense
	Salaries and employee benefits		6,520			5,308		22.8	%
	Net occupancy expense		772			522		47.9	%
	Equipment expense		1,095			700		56.4	%
	Professional fees		355			344		3.2	%
	Amortization of intangibles		435			97		348.5	%
	FDIC premiums		250			75		233.3	%
	Merger-related expense		14			588		-97.6	%
	Foreclosed properties expense		215			97		121.6	%
	Gain on sales of foreclosed properties		(46	)		(465	)	-90.1	%
	Write-downs of foreclosed properties		347			165		110.3	%
	Other expenses		2,389			1,961		21.8	%
	Total noninterest expense		12,346			9,392		31.5	%
	Income before income taxes		8,648			7,063		22.4	%
	Income taxes		6,325			2,353		168.8	%
	Net income	$	2,323		$	4,710		-50.7	%

 

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)
Quarterly Performance Summary -- Q4 2017 vs Q4 2016
		For the Quarter Ended						Percent
		12/31/2017			12/31/2016			Change
Per Share Data
	Earnings per common share
	Basic	$	0.19		$	0.44		-56.8	%
	Diluted	$	0.19		$	0.44		-56.8	%
	Cash dividends	$	0.11		$	0.10		10.0	%
	Average common shares outstanding
	Basic		12,325,067			10,710,164		15.1	%
	Diluted		12,371,507			10,762,445		15.0	%
	Common shares outstanding at period end		12,358,562			10,736,970		15.1	%
Performance Ratios
	Return on average equity		4.62	%		12.22	%	-62.2	%
	Return on average tangible equity		5.36	%		13.42	%	-60.1	%
	Return on average assets		0.44	%		1.07	%	-58.9	%
	Net interest margin		3.65	%		3.34	%	9.3	%
	Efficiency ratio (A)		51.47	%		56.67	%	-9.2	%

NOTE (A) – Computed on a tax equivalent basis excluding non-core or nonrecurring income and expense items and amortization of intangibles.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)
Annual Performance Summary -- 2017 vs 2016
		For the Year Ended						Percent
Dollars in thousands		12/31/2017			12/31/2016			Change
Condensed Statements of Income
	Interest income
	Loans, including fees	$	74,908		$	56,980		31.5	%
	Securities		9,010			6,938		29.9	%
	Other		609			173		252.0	%
	Total interest income		84,527			64,091		31.9	%
	Interest expense
	Deposits		11,210			8,964		25.1	%
	Borrowings		7,170			6,120		17.2	%
	Total interest expense		18,380			15,084		21.9	%
	Net interest income		66,147			49,007		35.0	%
	Provision for loan losses		1,250			500		150.0	%
	Net interest income after provision
	for loan losses		64,897			48,507		33.8	%
	Noninterest income
	Insurance commissions		4,005			4,022		-0.4	%
	Trust and wealth management fees		1,863			449		314.9	%
	Service fees related to deposit accounts		6,643			4,370		52.0	%
	Realized securities (losses) gains		(14	)		1,127		-101.2	%
	Other income		1,930			1,632		18.3	%
	Total noninterest income		14,427			11,600		24.4	%
	Noninterest expense
	Salaries and employee benefits		25,075			19,573		28.1	%
	Net occupancy expense		3,011			2,098		43.5	%
	Equipment expense		3,954			2,759		43.3	%
	Professional fees		1,367			1,515		-9.8	%
	Amortization of intangibles		1,410			247		470.9	%
	FDIC premiums		1,065			875		21.7	%
	Merger-related expense		1,589			933		70.3	%
	Foreclosed properties expense		611			414		47.6	%
	Gain on sales of foreclosed properties		(157	)		(916	)	-82.9	%
	Write-downs of foreclosed properties		885			668		32.5	%
	Litigation settlement		9,900			-		n/a
	Other expenses		9,035			6,636		36.2	%
	Total noninterest expense		57,745			34,802		65.9	%
	Income before income taxes		21,579			25,305		-14.7	%
	Income taxes		9,664			8,008		20.7	%
	Net income	$	11,915		$	17,297		-31.1	%

 

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)
Annual Performance Summary -- 2017 vs 2016
		For the Year Ended						Percent
		12/31/2017			12/31/2016			Change
Per Share Data
	Earnings per common share
	Basic	$	1.00		$	1.62		-38.3	%
	Diluted	$	1.00		$	1.61		-37.9	%
	Cash dividends	$	0.44		$	0.40		10.0	%
	Average common shares outstanding
	Basic		11,918,390			10,689,224		11.5	%
	Diluted		11,949,245			10,716,871		11.5	%
	Common shares outstanding at period end		12,358,562			10,736,970		15.1	%
Performance Ratios
	Return on average equity		6.40	%		11.53	%	-44.5	%
	Return on average tangible equity		7.35	%		12.27	%	-40.1	%
	Return on average assets		0.59	%		1.08	%	-45.4	%
	Net interest margin		3.67	%		3.39	%	8.3	%
	Efficiency ratio (A)		52.41	%		55.34	%	-5.3	%

NOTE (A) – Computed on a tax equivalent basis excluding non-core or nonrecurring income and expense items and amortization of intangibles.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)
Five Quarter Performance Summary
		For the Quarter Ended
Dollars in thousands		12/31/2017			9/30/2017			6/30/2017			3/31/2017			12/31/2016
Condensed Statements of Income (unaudited)
	Interest income
	Loans, including fees	$	20,031		$	19,490		$	19,717		$	15,671		$	15,780
	Securities		2,412			2,397			2,349			1,851			1,796
	Other		144			149			165			152			161
	Total interest income		22,587			22,036			22,231			17,674			17,737
	Interest expense
	Deposits		3,224			2,963			2,634			2,390			2,430
	Borrowings		1,925			1,841			1,749			1,654			1,850
	Total interest expense		5,149			4,804			4,383			4,044			4,280
	Net interest income		17,438			17,232			17,848			13,630			13,457
	Provision for loan losses		375			375			250			250			-
	Net interest income after provision
	for loan losses		17,063			16,857			17,598			13,380			13,457
	Noninterest income
	Insurance commissions		1,005			1,043			988			968			992
	Trust and wealth management fees		578			589			595			100			91
	Service fees related to deposit accounts		1,906			1,863			1,706			1,168			1,194
	Realized securities gains (losses)		(71	)		26			90			(58	)		291
	Other income		513			479			537			401			430
	Total noninterest income		3,931			4,000			3,916			2,579			2,998
	Noninterest expense
	Salaries and employee benefits		6,520			6,610			6,758			5,187			5,308
	Net occupancy expense		772			847			826			567			522
	Equipment expense		1,095			1,093			1,031			735			700
	Professional fees		355			373			354			285			344
	Amortization of intangibles		435			448			429			97			97
	FDIC premiums		250			310			295			210			75
	Merger-related expense		14			11			1,455			109			588
	Foreclosed properties expense		215			171			122			104			97
	(Gain) loss on sales of foreclosed properties		(46	)		(29	)		73			(156	)		(465	)
	Write-downs of foreclosed properties		347			91			29			418			165
	Litigation settlement		-			-			-			9,900			-
	Other expenses		2,389			2,522			2,564			1,560			1,961
	Total noninterest expense		12,346			12,447			13,936			19,016			9,392
	Income (loss) before income taxes		8,648			8,410			7,578			(3,057	)		7,063
	Income tax expense (benefit)		6,325			2,480			2,300			(1,441	)		2,353
	Net income (loss)	$	2,323		$	5,930		$	5,278		$	(1,616	)	$	4,710

 

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)
Five Quarter Performance Summary
		For the Quarter Ended
		12/31/2017			9/30/2017			6/30/2017			3/31/2017			12/31/2016
Per Share Data
	Earnings per common share
	Basic	$	0.19		$	0.48		$	0.43		$	(0.15	)	$	0.44
	Diluted	$	0.19		$	0.48		$	0.43		$	(0.15	)	$	0.44
	Cash dividends	$	0.11		$	0.11		$	0.11		$	0.11		$	0.10
	Average common shares outstanding
	Basic		12,325,067			12,299,987			12,288,514			10,738,365			10,710,164
	Diluted		12,371,507			12,318,959			12,299,187			10,738,365			10,762,445
	Common shares outstanding at period end		12,358,562			12,311,723			12,299,726			10,750,477			10,736,970
Performance Ratios
	Return on average equity		4.62	%		12.10	%		11.10	%		-4.11	%		12.22	%
	Return on average tangible equity		5.36	%		14.12	%		12.95	%		-4.51	%		13.42	%
	Return on average assets		0.44	%		1.14	%		1.01	%		-0.37	%		1.07	%
	Net interest margin		3.65	%		3.65	%		3.81	%		3.54	%		3.34	%
	Efficiency ratio (A)		51.47	%		53.73	%		53.00	%		51.16	%		56.67	%

 NOTE (A) – Computed on a tax equivalent basis excluding non-core or nonrecurring income and expense items and amortization of intangibles.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)
Selected Balance Sheet Data (unaudited)
Dollars in thousands, except per share amounts		12/31/2017			9/30/2017			6/30/2017			3/31/2017			12/31/2016
Assets
	Cash and due from banks	$	9,641		$	9,220		$	9,294		$	19,326		$	4,262
	Interest bearing deposits other banks		42,990			41,994			44,242			38,895			42,354
	Securities		328,723			328,726			336,811			282,028			266,542
	Loans, net		1,593,744			1,559,328			1,538,083			1,292,915			1,307,862
	Property held for sale		21,470			22,622			23,592			23,491			24,504
	Premises and equipment, net		34,209			34,220			33,234			26,377			23,737
	Goodwill and other intangible assets		27,513			27,879			28,214			13,587			13,652
	Cash surrender value of life insurance policies		41,358			41,076			41,189			39,412			39,143
	Other assets		34,592			36,071			40,641			40,411			36,591
	Total assets	$	2,134,240		$	2,101,136		$	2,095,300		$	1,776,442		$	1,758,647
Liabilities and Shareholders' Equity
	Deposits	$	1,600,601		$	1,616,768		$	1,613,919		$	1,301,241		$	1,295,519
	Short-term borrowings		250,499			202,988			205,728			228,868			224,461
	Long-term borrowings and
	subordinated debentures		65,340			65,344			65,348			65,804			66,259
	Other liabilities		16,295			17,254			17,173			26,910			17,048
	Shareholders' equity		201,505			198,782			193,132			153,619			155,360
	Total liabilities and shareholders' equity	$	2,134,240		$	2,101,136		$	2,095,300		$	1,776,442		$	1,758,647
	Book value per common share	$	16.30		$	16.15		$	15.70		$	14.29		$	14.47
	Tangible book value per common share	$	14.08		$	13.88		$	13.41		$	13.03		$	13.20
	Tangible common equity to tangible assets		8.3	%		8.2	%		8.0	%		7.9	%		8.1	%

 

SUMMIT FINANCIAL GROUP INC. (NASDAQ:  SMMF)
Regulatory Capital Ratios
		12/31/2017		9/30/2017		6/30/2017		3/31/2017		12/31/2016
Summit Financial Group, Inc.
	CET1 Risk-based Capital	10.6	%	10.8	%	10.5	%	10.3	%	10.5	%
	Tier 1 Risk-based Capital	11.8	%	11.9	%	11.7	%	11.5	%	11.8	%
	Total Risk-based Capital	12.5	%	12.7	%	12.4	%	12.3	%	12.6	%
	Tier 1 Leverage Ratio	9.4	%	9.5	%	9.2	%	9.4	%	9.4	%
Summit Community Bank, Inc.
	CET1 Risk-based Capital	11.7	%	11.8	%	11.6	%	11.6	%	11.9	%
	Tier 1 Risk-based Capital	11.7	%	11.8	%	11.6	%	11.6	%	11.9	%
	Total Risk-based Capital	12.5	%	12.6	%	12.4	%	12.4	%	12.7	%
	Tier 1 Leverage Ratio	9.4	%	9.4	%	9.2	%	9.4	%	9.5	%

 

SUMMIT FINANCIAL GROUP INC. (NASDAQ:  SMMF)
Loan Composition
Dollars in thousands		12/31/2017			9/30/2017			6/30/2017			3/31/2017			12/31/2016
Commercial		$	189,981		$	187,193		$	176,362		$	134,808		$	119,088
Mortgage warehouse lines			30,757			33,525			35,068			30,217			85,966
Commercial real estate
Owner occupied			250,202			239,840			239,108			217,733			203,047
Non-owner occupied			484,902			464,543			455,439			401,795			381,921
Construction and development
Land and development			67,219			71,412			74,155			68,079			72,042
Construction			33,412			28,756			22,967			16,511			16,584
Residential real estate
Non-jumbo			354,101			355,642			355,546			266,140			265,641
Jumbo			62,267			61,253			63,899			60,780			65,628
Home equity			84,028			82,720			81,192			75,299			74,596
Consumer			36,202			36,915			37,630			24,440			25,534
Other			13,238			9,994			9,049			8,831			9,489
Total loans, net of unearned fees			1,606,309			1,571,793			1,550,415			1,304,633			1,319,536
Less allowance for loan losses			12,565			12,465			12,332			11,718			11,674
Loans, net		$	1,593,744		$	1,559,328		$	1,538,083		$	1,292,915		$	1,307,862

 

SUMMIT FINANCIAL GROUP INC. (NASDAQ:  SMMF)
Deposit Composition
Dollars in thousands		12/31/2017			9/30/2017			6/30/2017			3/31/2017			12/31/2016
Non-interest bearing checking		$	217,493		$	215,910		$	234,173		$	152,086		$	149,737
Interest bearing checking			410,606			397,843			372,327			275,678			262,591
Savings			358,168			362,653			373,439			342,548			337,348
Time deposits			614,334			640,362			633,980			530,929			545,843
Total deposits		$	1,600,601		$	1,616,768		$	1,613,919		$	1,301,241		$	1,295,519

 

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)
Asset Quality Information
		For the Quarter Ended
Dollars in thousands		12/31/2017			9/30/2017			6/30/2017			3/31/2017			12/31/2016
	Gross loan charge-offs	$	550		$	309		$	114		$	315		$	400
	Gross loan recoveries		(276	)		(67	)		(478	)		(108	)		(456	)
	Net loan charge-offs (recoveries)	$	274		$	242		$	(364	)	$	207		$	(56	)
	Net loan charge-offs to average loans (annualized)		0.07	%		0.06	%		-0.09	%		0.06	%		-0.02	%
	Allowance for loan losses	$	12,565		$	12,465		$	12,332		$	11,718		$	11,674
	Allowance for loan losses as a percentage
	of period end loans		0.78	%		0.79	%		0.79	%		0.90	%		0.88	%
	Nonperforming assets:
	Nonperforming loans
	Commercial	$	696		$	757		$	786		$	226		$	298
	Commercial real estate		3,164			2,773			2,051			4,734			4,844
	Residential construction and development		3,569			3,931			3,613			3,936			4,465
	Residential real estate		7,656			8,082			6,860			5,886			4,815
	Consumer		238			529			391			162			152
	Total nonperforming loans		15,323			16,072			13,701			14,944			14,574
	Foreclosed properties
	Commercial real estate		1,789			1,988			2,126			1,749			1,749
	Commercial construction and development		7,392			7,392			7,527			8,276			8,610
	Residential construction and development		11,182			11,852			12,402			12,635			13,265
	Residential real estate		1,107			1,390			1,537			831			880
	Total foreclosed properties		21,470			22,622			23,592			23,491			24,504
	Other repossessed assets		68			12			57			12			12
	Total nonperforming assets	$	36,861		$	38,706		$	37,350		$	38,447		$	39,090
	Nonperforming loans to period end loans		0.95	%		1.02	%		0.88	%		1.15	%		1.10	%
	Nonperforming assets to period end assets		1.73	%		1.84	%		1.78	%		2.16	%		2.22	%
	Troubled debt restructurings
	Performing	$	28,347		$	28,304		$	26,472		$	28,183		$	28,066
	Nonperforming		26			760			464			719			564
	Total troubled debt restructurings	$	28,373		$	29,064		$	26,936		$	28,902		$	28,630

 

Loans Past Due 30-89 Days
		For the Quarter Ended
Dollars in thousands		12/31/2017			9/30/2017			6/30/2017			3/31/2017			12/31/2016
	Commercial	$	586		$	378		$	470		$	162		$	175
	Commercial real estate		1,082			944			976			2,758			434
	Construction and development		1,127			238			308			291			552
	Residential real estate		7,236			6,260			6,943			2,924			5,517
	Consumer		504			419			548			155			375
	Other		38			92			49			17			14
	Total	$	10,573		$	8,331		$	9,294		$	6,307		$	7,067

 

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q4 2017 vs Q4 2016
	Q4 2017									Q4 2016
	Average			Earnings /			Yield /			Average			Earnings /			Yield /
Dollars in thousands	Balances			Expense			Rate			Balances			Expense			Rate
ASSETS
Interest earning assets
Loans, net of unearned  interest
Taxable	$	1,562,978		$	19,879		5.05	%		$	1,308,418		$	15,650		4.76	%
Tax-exempt		16,902			234		5.49	%			13,845			195		5.60	%
Securities
Taxable		202,377			1,328		2.60	%			191,951			1,111		2.30	%
Tax-exempt		142,641			1,668		4.64	%			89,745			1,039		4.61	%
Interest bearing deposits other banks
and Federal funds sold		42,021			144		1.36	%			49,341			161		1.30	%
Total interest earning assets		1,966,919			23,253		4.69	%			1,653,300			18,156		4.37	%
Noninterest earning assets
Cash & due from banks		9,753									4,650
Premises & equipment		34,263									23,616
Other assets		111,596									96,165
Allowance for loan losses		(12,628	)								(11,905	)
Total assets	$	2,109,903								$	1,765,826
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	405,307		$	447		0.44	%		$	256,307		$	128		0.20	%
Savings deposits		360,630			684		0.75	%			335,658			633		0.75	%
Time deposits		629,871			2,093		1.32	%			542,602			1,669		1.22	%
Short-term borrowings		220,027			1,240		2.24	%			221,200			954		1.72	%
Long-term borrowings and
subordinated debentures		65,342			685		4.16	%			85,699			896		4.16	%
Total interest bearing liabilities		1,681,177			5,149		1.22	%			1,441,466			4,280		1.18	%
Noninterest bearing liabilities
Demand deposits		214,624									150,318
Other liabilities		12,886									19,902
Total liabilities		1,908,687									1,611,686
Shareholders' equity		201,216									154,140
Total liabilities and
shareholders' equity	$	2,109,903								$	1,765,826
NET INTEREST EARNINGS				$	18,104								$	13,876
NET INTEREST MARGIN							3.65	%								3.34	%

 

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q4 2017 vs Q3 2017
	Q4 2017									Q3 2017
	Average			Earnings /			Yield /			Average			Earnings /			Yield /
Dollars in thousands	Balances			Expense			Rate			Balances			Expense			Rate
ASSETS
Interest earning assets
Loans, net of unearned  interest
Taxable	$	1,562,978		$	19,879		5.05	%		$	1,539,945		$	19,387		4.99	%
Tax-exempt		16,902			234		5.49	%			16,314			158		3.84	%
Securities
Taxable		202,377			1,328		2.60	%			198,913			1,283		2.56	%
Tax-exempt		142,641			1,668		4.64	%			145,599			1,714		4.67	%
Interest bearing deposits other banks
and Federal funds sold		42,021			144		1.36	%			42,926			149		1.38	%
Total interest earning assets		1,966,919			23,253		4.69	%			1,943,697			22,691		4.63	%
Noninterest earning assets
Cash & due from banks		9,753									9,591
Premises & equipment		34,263									33,667
Other assets		111,596									113,723
Allowance for loan losses		(12,628	)								(12,418	)
Total assets	$	2,109,903								$	2,088,260
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	405,307		$	447		0.44	%		$	384,539		$	323		0.33	%
Savings deposits		360,630			684		0.75	%			365,150			637		0.69	%
Time deposits		629,871			2,093		1.32	%			636,424			2,003		1.25	%
Short-term borrowings		220,027			1,240		2.24	%			205,536			1,160		2.24	%
Long-term borrowings and
subordinated debentures		65,342			685		4.16	%			65,346			681		4.13	%
Total interest bearing liabilities		1,681,177			5,149		1.22	%			1,656,995			4,804		1.15	%
Noninterest bearing liabilities
Demand deposits		214,624									217,760
Other liabilities		12,886									17,414
Total liabilities		1,908,687									1,892,169
Shareholders' equity		201,216									196,091
Total liabilities and
shareholders' equity	$	2,109,903								$	2,088,260
NET INTEREST EARNINGS				$	18,104								$	17,887
NET INTEREST MARGIN							3.65	%								3.65	%

 

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
YTD 2017 vs YTD 2016
	YTD 2017									YTD 2016
	Average			Earnings /			Yield /			Average			Earnings /			Yield /
Dollars in thousands	Balances			Expense			Rate			Balances			Expense			Rate
ASSETS
Interest earning assets
Loans, net of unearned  interest
Taxable	$	1,480,601		$	74,365		5.02	%		$	1,177,445		$	56,439		4.79	%
Tax-exempt		14,899			835		5.60	%			14,628			820		5.61	%
Securities
Taxable		200,596			5,071		2.53	%			202,795			4,395		2.17	%
Tax-exempt		129,342			6,060		4.69	%			79,571			3,853		4.84	%
Interest bearing deposits other banks
and Federal funds sold		43,400			609		1.40	%			19,211			173		0.90	%
Total interest earning assets		1,868,838			86,940		4.65	%			1,493,650			65,680		4.40	%
Noninterest earning assets
Cash & due from banks		8,492									3,968
Premises & equipment		31,750									21,858
Other assets		109,456									90,957
Allowance for loan losses		(12,196	)								(10,836	)
Total assets	$	2,006,340								$	1,599,597
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	358,225		$	1,169		0.33	%		$	220,708		$	376		0.17	%
Savings deposits		363,949			2,563		0.70	%			306,312			2,296		0.75	%
Time deposits		609,156			7,478		1.23	%			491,652			6,292		1.28	%
Short-term borrowings		205,743			4,473		2.17	%			190,876			2,288		1.20	%
Long-term borrowings and
subordinated debentures		65,629			2,697		4.11	%			92,343			3,832		4.15	%
		1,602,702			18,380		1.15	%			1,301,891			15,084		1.16	%
Noninterest bearing liabilities
Demand deposits		200,707									128,894
Other liabilities		16,669									18,795
Total liabilities		1,820,078									1,449,580
Shareholders' equity		186,262									150,017
Total liabilities and
shareholders' equity	$	2,006,340								$	1,599,597
NET INTEREST EARNINGS				$	68,560								$	50,596
NET INTEREST MARGIN							3.67	%								3.39	%

 

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