SMMF Summit Financial Group Inc

Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ:SMMF) today reported first quarter 2016 net income of $4.06 million, or $0.38 per diluted share, representing a decrease of 5.2 percent, or 7.3 percent per diluted share, compared to the $4.29 million, or $0.41 per diluted share, reported for the first quarter of 2015, and a decrease of 2.0 percent, or 2.6 percent per diluted share, compared to the $4.15 million, or $0.39 per diluted share, reported for the fourth quarter of 2015. Q1 2016 earnings compared to Q1 2015 and Q4 2015 were negatively impacted by increased personnel costs and other noninterest expenses as well as reductions in insurance commission revenue, which were partially offset by increased net interest earnings and reductions in write-downs of foreclosed properties.

Excluding from first quarter 2016 one-time items of income, gain, expense and loss, Q1 2016 core earnings approximated $3.96 million, or $0.37 per diluted share compared to Q1 2015 core earnings of $4.33 million, or $0.40 per diluted share, and to Q4 2015 core earnings of $4.08 million, or $0.38 per diluted share.

Highlights for Q1 2016 include:

• Net interest margin remained stable compared to the linked quarter, but has declined 9 basis points since Q1 2015.
• Achieved loan growth of $17.3 million or 6.3 percent (on an annualized basis). Loans have grown $57.6 million or 5.5 percent since Q1 2015.
• Core revenue for the quarter is unchanged compared to Q4 2015, and is up $189,000 or 1.3 percent compared to Q1 2015.
• Nonperforming assets as a percentage of total assets declined to 2.66 percent compared to 2.77 percent for the linked quarter, and 3.18 percent at Q1 2015; foreclosed properties are at the lowest level since Q2 2009.
• Recorded charges of $109,000 to write-down foreclosed properties compared to $636,000 in Q4 2015 and $572,000 in Q1 2015.
• Announced our entering into a definitive merger agreement to acquire Highland County Bankshares, Inc. headquartered in Monterey, Virginia.

H. Charles Maddy III, President and Chief Executive Officer of Summit, commented, “I am pleased to report Summit achieved another quarter of solid performance, despite the challenges of higher overhead costs resulting from important investments we are making in both our people and in our infrastructure to assist to maintain our growth momentum. Our solid core earnings, growing loan portfolio and continued reductions in our portfolio of problem assets are all very gratifying to note; but I am particularly gratified by the opportunity represented by our pending acquisition of Highland County Bankshares. This deal will combine two financially strong banks with similar cultures, core values and guiding principles, as well as a shared commitment to build long-term client relationships by providing service beyond expectations.”

Results from Operations

Total revenue for first quarter 2016, consisting of net interest income and noninterest income, declined 0.5 percent to $14.6 million compared to $14.7 million for the first quarter 2015, and was unchanged compared to the linked quarter.

Total core revenue (excluding nonrecurring items, enumerated above) was $14.2 million for first quarter 2015, $14.0 million for the same prior-year quarter and $14.2 million for the linked quarter.

For the first quarter of 2016, net interest income was $11.8 million, an increase of 2.2 percent from the $11.5 million reported in the prior-year first quarter and increased $46,000 compared to the linked quarter. The net interest margin for first quarter 2016 was 3.50 percent compared to 3.59 percent for the year-ago quarter, and 3.51 percent for the linked quarter.  

Noninterest income, consisting primarily of insurance commissions from Summit's insurance agency subsidiary and service fee income from community banking activities, for first quarter 2016 was $2.81 million compared to $3.14 million for the comparable period of 2015 and $2.87 million for Q4 2015. Excluding realized securities gains, noninterest income was $2.41 million for first quarter 2016 compared to $2.66 million reported for first quarter 2015 and $2.45 million for linked quarter. The quarter over year-ago quarter decline principally resulted from decreased insurance commission revenues, while the decline compared to the linked quarter was due to lower service fees on deposit accounts.

Summit recognized $250,000 provision for loan losses in first quarter 2016, as well as for the linked quarter and for the year-ago quarter.

Total noninterest expense increased 4.3% to $8.55 million compared to $8.20 million for the prior-year first quarter and increased 0.7 percent compared to $8.49 million for the linked quarter.  Excluding from noninterest expense merger expenses, gains and losses on sales of foreclosed properties and write-downs of foreclosed properties, noninterest expense would have approximated $8.34 million for Q1 2016, $7.48 million for the comparable period of 2015 and $8.17 million for linked quarter. The Q1 2016 compared to Q1 2015 increase is primarily due to net additions of staff, general merit raises and higher incentive compensation.

Balance Sheet

At March 31, 2016, total assets were $1.51 billion, an increase of $16.1 million, or 1.1 percent since December 31, 2015. Total loans, net of unearned fees and allowance for loan losses, were $1.10 billion at March 31, 2016, up $17.5 million, or 1.6 percent, from the $1.08 billion reported at year-end 2015.

At March 31, 2016, deposits were $1.09 billion, an increase of $27.8 million, or 2.6 percent, since year end 2015. During Q1 2016, checking deposits declined by $1.5 million or 0.4 percent, while savings deposits increased $19.9 million, or 7.4 percent.

Asset Quality

As of March 31, 2016, nonperforming assets (“NPAs”), consisting of nonperforming loans, foreclosed properties, and repossessed assets, were $40.1 million, or 2.66 percent of assets. This compares to $41.3 million, or 2.77 percent of assets at the linked quarter, and $46.4 million, or 3.18 percent of assets, at first quarter 2015.

First quarter 2016 net loan charge-offs were $407,000, or 0.15 percent of average loans on an annualized basis. The allowance for loan losses stood at $11.3 million, or 1.02 percent of total loans at March 31, 2016, compared to 1.05 percent at year-end 2015.

Capital Adequacy

Shareholders’ equity was $146.1 million as of March 31, 2016 compared to $143.7 million December 31, 2015. Tangible book value per common share increased to $12.98 at March 31, 2016 compared to $12.78 at December 31, 2015. Summit had 10,681,880 outstanding common shares at Q1 2016 quarter end compared to 10,671,744 at year end 2015.

Summit's depository institution, Summit Community Bank, Inc. (the “Bank”), is well in excess of regulatory requirements for a "well capitalized" institution at March 31, 2016. The Bank’s total risk-based capital ratio was 14.5 percent at both March 31, 2016 and December 31, 2015, while its Tier 1 leverage capital ratio was 10.7 percent at March 31, 2016 compared to the 10.8 percent reported at December 31, 2015.

About the Company

Summit Financial Group, Inc. is a $1.51 billion financial holding company headquartered in Moorefield, West Virginia. Summit provides community banking services primarily in the Eastern Panhandle and South Central regions of West Virginia and the Northern and Shenandoah Valley regions of Virginia, through its bank subsidiary, Summit Community Bank, Inc., which operates fifteen 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.

NON-GAAP FINANCIAL MEASURES

This press release contains financial information determined by methods other than in accordance with generally accepted accounting principles in the United States of America ("GAAP").  Specifically, Summit adjusted GAAP performance measures to exclude the effects of realized and unrealized securities gains and losses, gains/losses on sales of assets, and write-downs of foreclosed properties to estimated fair value included in its Statements of Income.  Management believes presentations of financial measures excluding the impact of these items provide useful supplemental information that is important for a proper understanding of the operating results of Summit's core business. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Quarterly Performance Summary -- Q1 2016 vs Q1 2015
		For the Quarter Ended						Percent
Dollars in thousands		3/31/2016			3/31/2015			Change
Condensed Statements of Income
	Interest income
	Loans, including fees	$	13,436		$	12,848			4.6	%
	Securities		1,726			1,894			-8.9	%
	Other		3			1			200.0	%
	Total interest income		15,165			14,743			2.9	%
	Interest expense
	Deposits		2,170			2,071			4.8	%
	Borrowings		1,216			1,152			5.6	%
	Total interest expense		3,386			3,223			5.1	%
	Net interest income		11,779			11,520			2.2	%
	Provision for loan losses		250			250			0.0	%
	Net interest income after provision
	for loan losses		11,529			11,270			2.3	%
	Noninterest income
	Insurance commissions		924			1,128			-18.1	%
	Service fees related to deposit accounts		978			976			0.2	%
	Realized securities gains (losses)		393			480			-18.1	%
	Other income		511			555			-7.9	%
	Total noninterest income		2,806			3,139			-10.6	%
	Noninterest expense
	Salaries and employee benefits		4,682			4,187			11.8	%
	Net occupancy expense		540			498			8.4	%
	Equipment expense		656			535			22.6	%
	Professional fees		472			335			40.9	%
	FDIC premiums		300			330			-9.1	%
	Merger expense		112			-		n/a
	Foreclosed properties expense		124			208			-40.4	%
	Loss (gain) on sales of foreclosed properties		(6	)		150		n/a
	Write-downs of foreclosed properties		109			572			-80.9	%
	Other expenses		1,565			1,389			12.7	%
	Total noninterest expense		8,554			8,204			4.3	%
	Income before income taxes		5,781			6,205			-6.8	%
	Income taxes		1,719			1,920			-10.5	%
	Net income	$	4,062		$	4,285			-5.2	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Quarterly Performance Summary -- Q1 2016 vs Q1 2015
		For the Quarter Ended						Percent
		3/31/2016			3/31/2015			Change
Per Share Data
	Earnings per common share
	Basic	$	0.38		$	0.49			-22.4	%
	Diluted	$	0.38		$	0.41			-7.3	%
	Cash dividends	$	0.10		$	0.08			25.0	%
	Average common shares outstanding
	Basic		10,671,856			8,815,961			21.1	%
	Diluted		10,679,301			10,493,323			1.8	%
	Common shares outstanding at period end		10,681,880			10,586,242			0.9	%
Performance Ratios
	Return on average equity		11.10	%		12.79	%		-13.2	%
	Return on average tangible equity		11.70	%		13.56	%		-13.7	%
	Return on average assets		1.08	%		1.18	%		-8.5	%
	Net interest margin		3.50	%		3.59	%		-2.5	%
	Efficiency ratio (A)		55.93	%		49.27	%		13.5	%
NOTE (A) – Computed on a tax equivalent basis excluding 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		3/31/2016			12/31/2015			9/30/2015			6/30/2015			3/31/2015
Condensed Statements of Income
	Interest income
	Loans, including fees	$	13,436		$	13,265		$	12,983		$	12,972		$	12,848
	Securities		1,726			1,685			1,543			1,685			1,894
	Other		3			1			5			1			1
	Total interest income		15,165			14,951			14,531			14,658			14,743
	Interest expense
	Deposits		2,170			2,085			2,106			2,074			2,071
	Borrowings		1,216			1,133			1,120			1,126			1,152
	Total interest expense		3,386			3,218			3,226			3,200			3,223
	Net interest income		11,779			11,733			11,305			11,458			11,520
	Provision for loan losses		250			250			250			500			250
	Net interest income after provision
	for loan losses		11,529			11,483			11,055			10,958			11,270
	Noninterest income
	Insurance commissions		924			851			983			1,080			1,128
	Service fees related to deposit accounts		978			1,126			1,111			1,072			976
	Realized securities gains (losses)		393			421			372			170			480
	Other income		511			471			527			538			555
	Total noninterest income		2,806			2,869			2,993			2,860			3,139
	Noninterest expense
	Salaries and employee benefits		4,682			4,530			4,479			4,442			4,187
	Net occupancy expense		540			481			496			489			498
	Equipment expense		656			617			582			560			535
	Professional fees		472			507			402			372			335
	FDIC premiums		300			270			300			320			330
	Merger expense		112			-			-			-			-
	Foreclosed properties expense		124			150			168			158			208
	Loss (gain) on sale of foreclosed properties		(6	)		(314	)		35			103			150
	Write-downs of foreclosed properties		109			636			1,046			160			572
	Other expenses		1,565			1,617			1,364			1,457			1,389
	Total noninterest expense		8,554			8,494			8,872			8,061			8,204
	Income before income taxes		5,781			5,858			5,176			5,757			6,205
	Income taxes		1,719			1,712			1,515			1,747			1,920
	Net income	$	4,062		$	4,146		$	3,661		$	4,010		$	4,285

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Five Quarter Performance Summary
		For the Quarter Ended
		3/31/16			12/31/2015			9/30/2015			6/30/2015			3/31/2015
Per Share Data
	Earnings per common share
	Basic	$	0.38		$	0.39		$	0.34		$	0.38		$	0.49
	Diluted	$	0.38		$	0.39		$	0.34		$	0.38		$	0.41
	Cash dividends	$	0.10		$	0.08		$	0.08		$	0.08		$	0.08
	Average common shares outstanding
	Basic		10,671,856			10,661,700			10,703,526			10,667,892			8,815,961
	Diluted		10,679,301			10,669,192			10,712,203			10,676,474			10,493,323
	Common shares outstanding at period end		10,681,880			10,671,744			10,658,199			10,843,676			10,586,242
Performance Ratios
	Return on average equity		11.10	%		11.66	%		10.42	%		11.67	%		12.79	%
	Return on average tangible equity		11.70	%		12.31	%		11.01	%		12.36	%		13.56	%
	Return on average assets		1.08	%		1.12	%		1.00	%		1.09	%		1.18	%
	Net interest margin		3.50	%		3.51	%		3.41	%		3.49	%		3.59	%
	Efficiency ratio (A)		55.93	%		54.46	%		52.93	%		52.05	%		49.27	%
NOTE (A) – Computed on a tax equivalent basis excluding nonrecurring income and expense items and amortization of intangibles

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Selected Balance Sheet Data
		For the Quarter Ended
Dollars in thousands, except per share amounts		3/31/2016			12/31/2015			9/30/2015			6/30/2015			3/31/2015
Assets
	Cash and due from banks	$	4,005		$	3,625		$	4,232		$	3,988		$	3,850
	Interest bearing deposits other banks		12,655			5,862			8,057			9,274			8,437
	Securities		271,515			280,792			272,127			276,661			282,135
	Loans, net		1,096,790			1,079,331			1,062,348			1,064,472			1,039,669
	Property held for sale		24,684			25,567			29,713			31,500			34,368
	Premises and equipment, net		21,589			21,572			20,457			20,490			20,208
	Intangible assets		7,448			7,498			7,548			7,598			7,648
	Cash surrender value of life insurance policies		37,989			37,732			37,482			37,222			36,961
	Other assets		31,893			30,450			27,340			28,764			27,216
	Total assets	$	1,508,568		$	1,492,429		$	1,469,304		$	1,479,969		$	1,460,492
Liabilities and Shareholders' Equity
	Deposits	$	1,094,544		$	1,066,709		$	1,072,091		$	1,053,310		$	1,058,308
	Short-term borrowings		153,448			171,394			145,291			174,599			148,985
	Long-term borrowings and
	subordinated debentures		94,692			95,170			95,648			98,625			101,602
	Other liabilities		19,755			15,412			15,985			13,363			15,708
	Shareholders' equity		146,129			143,744			140,289			140,072			135,889
	Total liabilities and shareholders' equity	$	1,508,568		$	1,492,429		$	1,469,304		$	1,479,969		$	1,460,492
	Book value per common share (A)	$	13.68		$	13.48		$	13.16		$	12.92		$	12.84
	Tangible book value per common share (A)	$	12.98		$	12.78		$	12.45		$	12.22		$	12.11
	Tangible equity to tangible assets		9.2	%		9.2	%		9.1	%		9.0	%		8.8	%
	Tangible common equity to tangible assets		9.2	%		9.2	%		9.1	%		9.0	%		8.8	%
NOTE (A) – Computed on a fully-diluted basis assuming conversion of convertible preferred stock

SUMMIT FINANCIAL GROUP INC. (NASDAQ:SMMF)
Regulatory Capital Ratios (A)
		3/31/2016			12/31/2015			9/30/2015			6/30/2015			3/31/2015
Summit Financial Group, Inc.
	CET1 Risk-based Capital		11.9	%		11.8	%		11.7	%		11.6	%		11.3	%
	Tier 1 Risk-based Capital		13.5	%		13.4	%		13.4	%		13.2	%		13.0	%
	Total Risk-based Capital		14.5	%		14.4	%		14.4	%		14.2	%		14.0	%
	Tier 1 Leverage Ratio		10.7	%		10.7	%		10.5	%		10.4	%		10.1	%
Summit Community Bank, Inc.
	CET1 Risk-based Capital		13.6	%		13.6	%		13.6	%		13.4	%		13.5	%
	Tier 1 Risk-based Capital		13.6	%		13.6	%		13.6	%		13.4	%		13.5	%
	Total Risk-based Capital		14.5	%		14.5	%		14.6	%		14.4	%		14.5	%
	Tier 1 Leverage Ratio		10.7	%		10.8	%		10.7	%		10.6	%		10.5	%
NOTE (A) – Computed in accordance with Basel III regulatory capital guidelines beginning January 1, 2015

SUMMIT FINANCIAL GROUP INC. (NASDAQ:SMMF)
Loan Composition
Dollars in thousands		3/31/2016			12/31/2015			9/30/2015			6/30/2015			3/31/2015
Commercial		$	101,743		$	97,201		$	89,250		$	97,284		$	89,928
Commercial real estate
Owner occupied			202,680			203,555			199,068			191,743			180,269
Non-owner occupied			353,350			337,295			336,550			331,056			325,764
Construction and development
Land and development			66,483			65,500			66,164			64,435			66,558
Construction			7,997			9,970			8,419			18,214			19,094
Residential real estate
Non-jumbo			221,368			221,749			222,739			220,199			219,938
Jumbo			50,057			50,313			46,092			49,203			50,492
Home equity			74,097			74,300			73,652			72,504			68,894
Consumer			19,095			19,251			19,124			18,683			18,485
Other			11,235			11,669			12,518			12,423			11,074
Total loans, net of unearned fees			1,108,105			1,090,803			1,073,576			1,075,744			1,050,496
Less allowance for loan losses			11,315			11,472			11,228			11,272			10,827
Loans, net		$	1,096,790		$	1,079,331		$	1,062,348		$	1,064,472		$	1,039,669

SUMMIT FINANCIAL GROUP INC. (NASDAQ:SMMF)
Deposit Composition
Dollars in thousands		3/31/2016			12/31/2015			9/30/2015			6/30/2015			3/31/2015
Non interest bearing checking		$	122,378		$	119,010		$	118,887		$	113,256		$	117,049
Interest bearing checking			210,878			215,721			217,242			202,957			196,606
Savings			286,695			266,825			259,185			246,949			257,687
Time deposits			474,593			465,153			476,777			490,148			486,966
Total deposits		$	1,094,544		$	1,066,709		$	1,072,091		$	1,053,310		$	1,058,308

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Asset Quality Information
		For the Quarter Ended
Dollars in thousands		3/31/2016			12/31/2015			9/30/2015			6/30/2015			3/31/2015
	Gross loan charge-offs	$	561		$	132		$	774		$	463		$	782
	Gross loan recoveries		(154	)		(126	)		(481	)		(407	)		(192	)
	Net loan charge-offs	$	407		$	6		$	293		$	56		$	590
	Net loan charge-offs to average loans (annualized)		0.15	%		0.00	%		0.11	%		0.02	%		0.23	%
	Allowance for loan losses	$	11,315		$	11,472		$	11,228		$	11,272		$	10,827
	Allowance for loan losses as a percentage
	of period end loans		1.02	%		1.05	%		1.05	%		1.05	%		1.03	%
	Nonperforming assets:
	Nonperforming loans
	Commercial	$	430		$	853		$	884		$	1,065		$	788
	Commercial real estate		6,140			5,955			5,294			2,421			1,340
	Commercial construction and development		-			-			-			-			-
	Residential construction and development		5,467			5,623			5,345			5,627			5,333
	Residential real estate		3,248			3,245			3,881			4,433			4,491
	Consumer		121			92			53			45			65
	Total nonperforming loans		15,406			15,768			15,457			13,591			12,017
	Foreclosed properties
	Commercial		-			-			-			-			110
	Commercial real estate		976			1,300			3,209			3,279			3,657
	Commercial construction and development		8,717			8,717			9,328			10,178			10,191
	Residential construction and development		13,808			14,068			14,965			15,839			17,590
	Residential real estate		1,183			1,482			2,211			2,204			2,819
	Total foreclosed properties		24,684			25,567			29,713			31,500			34,367
	Other repossessed assets		-			5			-			55			55
	Total nonperforming assets	$	40,090		$	41,340		$	45,170		$	45,146		$	46,439
	Nonperforming loans to period end loans		1.39	%		1.45	%		1.44	%		1.26	%		1.14	%
	Nonperforming assets to period end assets		2.66	%		2.77	%		3.07	%		3.05	%		3.18	%

Loans Past Due 30-89 Days
		For the Quarter Ended
In thousands		3/31/2016			12/31/2015			9/30/2015			6/30/2015			3/31/2015
	Commercial	$	465		$	339		$	42		$	344		$	387
	Commercial real estate		920			543			1,926			4,945			783
	Construction and development		218			1,182			39			21			2,735
	Residential real estate		3,055			4,442			3,888			3,932			3,614
	Consumer		73			186			216			211			148
	Other		14			9			9			7			18
	Total	$	4,745		$	6,701		$	6,120		$	9,460		$	7,685

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q1 2016 vs Q1 2015
	Q1 2016										Q1 2015
	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	$	1,089,083		$	13,291			4.91	%		$	1,035,610		$	12,734			4.99	%
Tax-exempt		15,824			220			5.59	%			12,567			174			5.62	%
Securities
Taxable		209,365			1,083			2.08	%			211,471			1,281			2.46	%
Tax-exempt		79,314			974			4.94	%			76,012			927			4.95	%
Interest bearing deposits other banks
and Federal funds sold		8,092			3			0.15	%			7,081			1			0.06	%
Total interest earning assets		1,401,678			15,571			4.47	%			1,342,741			15,117			4.57	%
Noninterest earning assets
Cash & due from banks		3,762										3,679
Premises & equipment		21,594										20,203
Other assets		89,642										98,685
Allowance for loan losses		(11,562	)									(11,237	)
Total assets	$	1,505,114									$	1,454,071
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	209,733		$	83			0.16	%		$	199,840		$	58			0.12	%
Savings deposits		277,396			506			0.73	%			254,398			428			0.68	%
Time deposits		471,597			1,581			1.35	%			485,975			1,585			1.32	%
Short-term borrowings		168,548			240			0.57	%			144,779			112			0.31	%
Long-term borrowings and
subordinated debentures		95,052			976			4.13	%			105,741			1,040			3.99	%
Total interest bearing liabilities		1,222,326			3,386			1.11	%			1,190,733			3,223			1.10	%
Noninterest bearing liabilities
Demand deposits		120,464										115,198
Other liabilities		15,928										14,096
Total liabilities		1,358,718										1,320,027
Shareholders' equity - preferred		-										7,244
Shareholders' equity - common		146,396										126,800
Total liabilities and
shareholders' equity	$	1,505,114									$	1,454,071
NET INTEREST EARNINGS				$	12,185									$	11,894
NET INTEREST MARGIN								3.50	%									3.59	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures
	For the Quarter Ended
Dollars in thousands	3/31/2016			12/31/2015			3/31/2015
Core earnings applicable to common shares	$	3,950		$	4,084		$	4,326
FHLB special dividend		-			-			176
Applicable income tax effect		-			-			(65	)
Realized securities gains (losses)		393			421			480
Applicable income tax effect		(145	)		(156	)		(178	)
Merger expense		(112	)		-			-
Applicable income tax effect		41			-			-
Gain (loss) on sale of foreclosed properties		6			314			(150	)
Applicable income tax effect		(2	)		(116	)		56
Write-downs foreclosed properties		(109	)		(636	)		(572	)
Applicable income tax effect		40			235			212
		112			62			(41	)
GAAP net income applicable to common shares	$	4,062		$	4,146		$	4,285
Core diluted earnings per common share	$	0.37		$	0.38		$	0.40
FHLB special dividend		-			-			0.02
Applicable income tax effect		-			-			-
Realized securities gains (losses)		0.04			0.04			0.05
Applicable income tax effect		(0.01	)		(0.01	)		(0.02	)
Merger expense		(0.01	)		-			-
Applicable income tax effect		-			-			-
Gain (loss) on sale of foreclosed properties		-			0.03			(0.01	)
Applicable income tax effect		-			(0.01	)		-
Write-downs of foreclosed properties		(0.01	)		(0.06	)		(0.05	)
Applicable income tax effect		-			0.02			0.02
		0.01			0.01			0.01
GAAP diluted earnings per common share	$	0.38		$	0.39		$	0.41

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures
	For the Quarter Ended
Dollars in thousands	3/31/2016			12/31/2015			3/31/2015
Total core revenue	$	14,192		$	14,181		$	14,003
FHLB special dividend		-			-			176
Realized securities gains (losses)		393			421			480
GAAP total revenue	$	14,585		$	14,602		$	14,659
Total core noninterest income	$	2,413		$	2,448		$	2,659
Realized securities gains (losses)		393			421			480
GAAP total noninterest income	$	2,806		$	2,869		$	3,139
Total core noninterest expense	$	8,339		$	8,172		$	7,482
Merger expense		112			-			-
(Gains) losses on sales of foreclosed properties		(6	)		(314	)		150
Write-downs of foreclosed properties		109			636			572
		215			322			722
GAAP total noninterest expense	$	8,554		$	8,494		$	8,204

 

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