MOOREFIELD, W.Va., Oct. 25, 2018 (GLOBE NEWSWIRE) -- Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ: SMMF) today reported record third quarter 2018 net income of $6.90 million, or $0.55 per diluted share, compared to $5.93 million, or $0.48 per diluted share, for the third quarter of 2017, an increase of 16.3 percent, or 14.6 percent per diluted share.

For the nine months ended September 30, 2018, Summit recorded net income of $20.62 million, or $1.66 per diluted share, compared with $9.59 million, or $0.81 per diluted share, for the comparable 2017 nine-month period, representing an increase of 115.0 percent or 104.9 percent per diluted share.  The lower earnings in the 2017 period were principally attributable to a legal settlement during first quarter 2017 which reduced earnings by $0.54 per diluted share.

Highlights for Q3 2018 include:

  • Loan balances, excluding mortgage warehouse lines of credit, increased $34.2 million during the quarter, or 8.7 percent (on an annualized basis);
  • Core deposits grew $21.4 million quarter-over-quarter, or 6.4 percent (on an annualized basis);
  • Net interest margin for the quarter declined 5 basis points to 3.53 percent compared to Q2 2018;
  • Efficiency ratio improved to 54.25 percent compared to 55.88 percent for the linked-quarter;
  • Provision for loan losses decreased $250,000 compared to the prior quarter; and
  • Write-downs of foreclosed properties were $39,000 in Q3 2018 compared to $163,000 in Q2 2018, while the net loss on sales of foreclosed properties decreased to $18,000 in Q3 2018 from a net loss of $58,000 in Q2 2018.

H. Charles Maddy, III, President and Chief Executive Officer of Summit, commented, “I am very pleased to report that Summit achieved record third quarter earnings for the quarter just ended. Further, I am particularly gratified by this past quarter’s robust lending activity, solid deposit growth and strong core operating performance, and I optimistically look forward to the remainder of the year and beyond into 2019 as we seek to be a consistent, high-performing community banking institution. Our pending acquisition of Peoples Bankshares, Inc., expected to close at beginning of 2019, will serve to combine Summit with a financially strong bank that has a similar culture, core values and guiding principles as ours, and shares the same commitment to build long-term client relationships by providing ‘Service Beyond Expectations’.”

Results from Operations

Total revenue for third quarter 2018, consisting of net interest income and noninterest income, increased 0.9 percent to $21.4 million compared to $21.2 million for the third quarter 2017. For the year-to-date period ended September 30, 2018, total revenue was $65.0 million compared to $59.2 million for the same period of 2017, representing a 9.8 percent increase primarily due to the acquisition of First Century Bankshares, Inc. in Q2 2017.

For the third quarter of 2018, net interest income was unchanged at $17.2 million compared to the prior-year third quarter and remained nearly unchanged compared to the linked quarter. The net interest margin for third quarter 2018 was 3.53 percent compared to 3.65 percent for the same year-ago quarter, and 3.58 percent for the linked quarter. 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 3.51 percent for Q3 2018 and 3.54 percent for first nine months of 2018.  

Noninterest income, consisting primarily of insurance commissions from Summit's insurance agency subsidiary, trust and wealth management fees and service fee income from community banking activities, for third quarter 2018 was $4.21 million compared to $4.00 million for the comparable period of 2017. Excluding realized securities gains, noninterest income was $4.20 million for third quarter 2018, compared to $3.97 million reported for third quarter 2017 and $4.06 million for the linked quarter.

We recorded a $500,000 provision for loan losses during third quarter 2018 and $375,000 in Q3 2017.  The need for increased loan loss provisioning during 2018 is directionally consistent with changes in the credit quality in our loan portfolio.

Q3 2018 total noninterest expense decreased 0.7 percent to $12.36 million compared to $12.45 million for the prior-year third quarter. Noninterest expense for the first nine months of 2018 decreased 17.6 percent compared to the first nine months of 2017 principally due to 1) $86,000 in merger expenses being incurred in 2018 through September 30 compared to $1.58 million in the 2017 nine-month period and 2) 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 first nine months of 2018 increased 5.4 percent to $37.4 million compared to $35.5 million for the first nine months of 2017, principally as result of the FCB acquisition.

Balance Sheet

At September 30, 2018, total assets were $2.14 billion, an increase of $4.5 million, or 0.2 percent since December 31, 2017. Total loans, net of unearned fees and allowance for loan losses, were $1.63 billion at September 30, 2018, up $39.0 million, or 2.4 percent, from the $1.59 billion reported at year-end 2017.  Loans, excluding mortgage warehouse lines of credit, increased $34.2 million during the quarter, or 8.7 percent (on an annualized basis), and have grown $34.2 million or 2.9 percent (on an annualized basis) since year-end 2017.

At September 30, 2018, deposits were $1.65 billion, an increase of $50.5 million, or 3.2 percent, since year end 2017. During first nine months of 2018, checking deposits increased $110.0 million or 17.5 percent, time deposits declined by $2.6 million or 0.4 percent and savings deposits declined $56.9 million or 15.9 percent.

Shareholders’ equity was $213.6 million as of September 30, 2018 compared to $201.5 million at December 31, 2017.

Tangible book value per common share increased to $15.13 at September 30, 2018 compared to $14.08 at December 31, 2017. Summit had 12,382,450 outstanding common shares at Q3 2018 quarter end compared to 12,358,562 at year end 2017.

Asset Quality

As of September 30, 2018, nonperforming assets (“NPAs”), consisting of nonperforming loans, foreclosed properties, and repossessed assets, were $39.0 million, or 1.82 percent of assets. This compares to $37.4 million, or 1.77 percent of assets at the linked quarter-end, and $38.7 million, or 1.84 percent of assets, at third quarter-end 2017.

Third quarter 2018 net loan charge-offs were $135,000, or 0.03 percent of average loans annualized; while adding $500,000 to the allowance for loan losses through the provision for loan losses. The allowance for loan losses stood at 0.79 percent of total loans at September 30, 2018, compared to 0.78 percent at year-end 2017.  If the acquired FCB and HCB loans which were recorded at fair value on the acquisition dates were excluded, the allowance for loan losses to total loans ratio at September 30, 2018 and December 31, 2017 would have been 0.87 percent and 0.91 percent, respectively.

About the Company

Summit Financial Group, Inc. is a $2.14 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.

ADDITIONAL INFORMATION ABOUT THE MERGER WITH PEOPLES BANKSHARES, INC. (“PEOPLES”) AND WHERE TO FIND IT

This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. In connection with the proposed Merger, Summit has filed with the SEC a Registration Statement on Form S-4 with respect to the offering of Summit common stock as the Merger Consideration under the Securities Act, which includes a proxy statement of Peoples seeking approval of the Merger by Peoples’ shareholders and a prospectus of Summit. Peoples delivered the proxy statement/prospectus to its shareholders. In addition, Summit may file other relevant documents concerning the proposed Merger with the SEC. Investors and security holders are urged to read the registration statement and proxy statement/prospectus and other relevant documents because they contain important information about the proposed Merger.

Investors and security holders may obtain free copies of these documents through the website maintained by the SEC at http://www.sec.gov. Security holders of Summit and Peoples may also obtain free copies of these documents by directing a request to Ms. Teresa Ely, Summit’s Director of Shareholder Relations, by telephone at (304) 530-0526 or by email at tely@summitfgi.com or by accessing these documents at Summit’s website: www.summitfgi.com.

     
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)    
Quarterly Performance Summary (unaudited)      
Q3 2018 vs Q3 2017      
       
     For the Quarter Ended  Percent 
Change 
Dollars in thousands  9/30/2018 9/30/2017
 Statements of Income       
  Interest income      
  Loans, including fees $   21,295 $   19,490 9.3 %
  Securities     2,367     2,397 -1.3 %
  Other     138     149 -7.4 %
  Total interest income     23,800     22,036 8.0 %
  Interest expense      
  Deposits     4,714     2,963 59.1 %
  Borrowings     1,873     1,841 1.7 %
  Total interest expense     6,587     4,804 37.1 %
  Net interest income     17,213     17,232 -0.1 %
  Provision for loan losses     500     375 33.3 %
  Net interest income after provision for loan losses     16,713     16,857 -0.9 %
         
  Noninterest income      
  Insurance commissions     1,062     1,043 1.8 %
  Trust and wealth management fees     687     589 16.6 %
  Service charges on deposit accounts     1,215     1,162 4.6 %
  Bank card revenue     793     738 7.5 %
  Realized securities gains     8     26 -69.2 %
  Bank owned life insurance income     250     255 -2.0 %
  Other income     196     187 4.8 %
  Total noninterest income     4,211     4,000 5.3 %
  Noninterest expense      
  Salaries and employee benefits     6,806     6,610 3.0 %
  Net occupancy expense     856     847 1.1 %
  Equipment expense     1,118     1,093 2.3 %
  Professional fees     503     373 34.9 %
  Advertising and public relations     170     137 24.1 %
  Amortization of intangibles     413     448 -7.8 %
  FDIC premiums     210     310 -32.3 %
  Bank card expense     384     395 -2.8 %
  Foreclosed properties expense, net of losses     169     233 -27.5 %
  Merger-related expense     86     11 681.8 %
  Other expenses     1,643     1,990 -17.4 %
  Total noninterest expense     12,358     12,447 -0.7 %
  Income before income taxes     8,566     8,410 1.9 %
  Income taxes     1,667     2,480 -32.8 %
  Net income $   6,899 $   5,930 16.3 %
               


     
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)    
Quarterly Performance Summary (unaudited)      
Q3 2018 vs Q3 2017    
         
     For the Quarter Ended   Percent 
 Change 
    9/30/2018 9/30/2017
 Per Share Data       
  Earnings per common share      
  Basic $   0.56   $   0.48   16.7 %
  Diluted $   0.55   $   0.48   14.6 %
         
  Cash dividends $   0.13   $   0.11   18.2 %
         
  Average common shares outstanding      
  Basic     12,374,350       12,299,987   0.6 %
  Diluted     12,439,051       12,318,959   1.0 %
         
  Common shares outstanding at period end     12,382,450       12,311,723   0.6 %
         
 Performance Ratios       
  Return on average equity   13.00 %   12.10 % 7.4 %
  Return on average tangible equity   14.85 %   14.12 % 5.2 %
  Return on average assets   1.31 %   1.14 % 14.9 %
  Net interest margin   3.53 %   3.65 % -3.3 %
  Efficiency ratio (A)   54.25 %   54.51 % -0.5 %
         

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

     
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)    
Nine Month Performance Summary (unaudited)      
2018 vs 2017      
         
     For the Nine Months Ended   Percent 
 Change 
 Dollars in thousands  9/30/2018 9/30/2017
 Statements of Income       
  Interest income      
  Loans, including fees $   62,624 $   54,878 14.1 %
  Securities     7,060     6,597 7.0 %
  Other     412     466 -11.6 %
  Total interest income     70,096     61,941 13.2 %
  Interest expense      
  Deposits     12,572     7,987 57.4 %
  Borrowings     5,779     5,245 10.2 %
  Total interest expense     18,351     13,232 38.7 %
  Net interest income     51,745     48,709 6.2 %
  Provision for loan losses     1,750     875 100.0 %
  Net interest income after provision for loan losses     49,995     47,834 4.5 %
         
  Noninterest income      
  Insurance commissions     3,188     3,000 6.3 %
  Trust and wealth management fees     2,026     1,284 57.8 %
  Service charges on deposit accounts     3,421     2,910 17.6 %
  Bank card revenue     2,343     1,955 19.8 %
  Realized securities gains     828     58 n/m
  Bank owned life insurance income     773     758 2.0 %
  Other income     656     531 23.5 %
  Total noninterest income     13,235     10,496 26.1 %
  Noninterest expense      
  Salaries and employee benefits     20,550     18,555 10.8 %
  Net occupancy expense     2,528     2,239 12.9 %
  Equipment expense     3,271     2,859 14.4 %
  Professional fees     1,222     1,012 20.8 %
  Advertising and public relations     461     393 17.3 %
  Amortization of intangibles     1,261     974 29.5 %
  FDIC premiums     690     815 -15.3 %
  Bank card expense     1,080     1,113 -3.0 %
  Foreclosed properties expense, net of losses     843     824 2.3 %
  Litigation settlement     -     9,900 n/a
  Merger-related expense     86     1,575 n/m
  Other expenses     5,415     5,140 5.4 %
  Total noninterest expense     37,407     45,399 -17.6 %
  Income before income taxes     25,823     12,931 99.7 %
  Income taxes     5,201     3,339 55.8 %
  Net income $   20,622 $   9,592 115.0 %
         


     
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)    
Nine Month Performance Summary (unaudited)      
2018 vs 2017    
         
     For the Nine Months Ended   Percent 
 Change 
    9/30/2018 9/30/2017
Per Share Data       
  Earnings per common share      
  Basic $   1.67   $   0.81   106.2 %
  Diluted $   1.66   $   0.81   104.9 %
         
  Cash dividends $   0.39   $   0.33   18.2 %
         
  Average common shares outstanding      
  Basic     12,366,612       11,781,342   5.0 %
  Diluted     12,430,227       11,807,002   5.3 %
         
  Common shares outstanding at period end     12,382,450       12,311,723   0.6 %
         
Performance Ratios       
  Return on average equity   13.28 %   7.06 % 88.1 %
  Return on average tangible equity   15.27 %   8.08 % 89.0 %
  Return on average assets   1.30 %   0.65 % 100.0 %
  Net interest margin   3.56 %   3.67 % -3.0 %
  Efficiency ratio (A)   54.66 %   52.76 % 3.6 %
         

NOTE (A) – Computed on a tax equivalent basis excluding gains/losses on sales of assets, litigation settlement, write-downs of OREO properties to fair value and amortization of intangibles.

         
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)        
Five Quarter Performance Summary (unaudited)        
           
     For the Quarter Ended 
Dollars in thousands  9/30/2018 6/30/2018 3/31/2018 12/31/2017 9/30/2017
Statements of Income           
  Interest income          
  Loans, including fees $   21,295 $   20,962 $   20,366 $   20,031   $   19,490
  Securities     2,367     2,303     2,391     2,412       2,397
  Other     138     134     140     144       149
  Total interest income     23,800     23,399     22,897     22,587       22,036
  Interest expense          
  Deposits     4,714     4,309     3,549     3,224       2,963
  Borrowings     1,873     1,815     2,091     1,925       1,841
  Total interest expense     6,587     6,124     5,640     5,149       4,804
  Net interest income     17,213     17,275     17,257     17,438       17,232
  Provision for loan losses     500     750     500     375       375
  Net interest income after provision for loan losses     16,713     16,525     16,757     17,063       16,857
  Noninterest income          
  Insurance commissions     1,062     1,013     1,113     1,005       1,043
  Trust and wealth management fees     687     672     667     578       589
  Service charges on deposit accounts     1,215     1,116     1,091     1,200       1,162
  Bank card revenue     793     801     749     742       738
  Realized securities gains (losses)     8     87     732     (71 )     26
  Bank owned life insurance income     250     249     275     258       255
  Other income     196     210     249     219       187
  Total noninterest income     4,211     4,148     4,876     3,931       4,000
  Noninterest expense          
  Salaries and employee benefits     6,806     6,922     6,821     6,520       6,610
  Net occupancy expense     856     840     832     772       847
  Equipment expense     1,118     1,071     1,083     1,095       1,093
  Professional fees     503     385     333     355       373
  Advertising and public relations     170     188     103     185       137
  Amortization of intangibles     413     413     436     435       448
  FDIC premiums     210     240     240     250       310
  Bank card expense     384     361     335     319       395
  Foreclosed properties expense, net of losses     169     350     325     516       233
  Merger-related expense     86     -     -     14       11
  Other expenses     1,643     1,965     1,806     1,885       1,990
  Total noninterest expense     12,358     12,735     12,314     12,346       12,447
  Income before income taxes     8,566     7,938     9,319     8,648       8,410
  Income tax expense     1,667     1,658     1,876     6,325       2,480
  Net income $   6,899 $   6,280 $   7,443 $   2,323   $   5,930

 

           
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)          
Five Quarter Performance Summary (unaudited)          
             
    For the Quarter Ended
    9/30/2018 6/30/2018 3/31/2018 12/31/2017 9/30/2017
Per Share Data           
  Earnings per common share          
  Basic $   0.56 $   0.51 $   0.60 $           0.19 $   0.48
  Diluted $   0.55 $   0.51 $   0.60 $   0.19 $   0.48
             
  Cash dividends $   0.13 $   0.13 $   0.13 $   0.11 $   0.11
             
  Average common shares outstanding          
  Basic 12,374,350 12,366,522 12,358,849 12,325,067 12,299,987
  Diluted 12,439,051 12,431,984 12,383,757 12,371,507 12,318,959
             
  Common shares outstanding at period end 12,382,450 12,373,747 12,366,360 12,358,562 12,311,723
             
Performance Ratios           
  Return on average equity 13.00% 12.16% 14.73% 4.62% 12.10%
  Return on average tangible equity 14.85% 13.98% 17.04% 5.36% 14.12%
  Return on average assets 1.31% 1.19% 1.40% 0.44% 1.14%
  Net interest margin 3.53% 3.58% 3.58% 3.65% 3.65%
  Efficiency ratio (A) 54.25% 55.88% 53.84% 52.44% 54.51%
             

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

         
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)        
Selected Balance Sheet Data (unaudited)          
             
Dollars in thousands, except per share amounts  9/30/2018 6/30/2018 3/31/2018 12/31/2017 9/30/2017
             
Assets           
  Cash and due from banks $   9,382   $   8,314   $   9,042   $   9,641   $   9,220  
  Interest bearing deposits other banks     44,452       38,097       38,365       42,990       41,994  
  Securities     288,040       283,221       296,890       328,723       328,726  
  Loans, net     1,632,747       1,617,373       1,631,150       1,593,744       1,559,328  
  Property held for sale     22,017       21,606       21,442       21,470       22,622  
  Premises and equipment, net     36,888       36,017       35,554       34,209       34,220  
  Goodwill and other intangible assets     26,252       26,665       27,077       27,513       27,879  
  Cash surrender value of life insurance policies     42,208       41,932       41,668       41,358       41,076  
  Other assets     36,741       34,427       33,707       34,592       36,071  
    Total assets $   2,138,727   $   2,107,652   $   2,134,895   $   2,134,240   $   2,101,136  
             
Liabilities and Shareholders' Equity           
  Deposits $   1,651,064   $   1,639,996   $   1,654,523   $   1,600,601   $   1,616,768  
  Short-term borrowings     238,403       202,429       193,513       250,499       202,988  
  Long-term borrowings and subordinated debentures     20,328       40,332       65,336       65,340       65,344  
  Other liabilities     15,376       15,016       16,514       16,295       17,254  
  Shareholders' equity     213,556       209,879       205,009       201,505       198,782  
    Total liabilities and shareholders' equity $   2,138,727   $   2,107,652   $   2,134,895   $   2,134,240   $   2,101,136  
             
  Book value per common share $   17.25   $   16.96   $   16.55   $   16.30   $   16.15  
  Tangible book value per common share $   15.13   $   14.81   $   14.36   $   14.08   $   13.88  
  Tangible common equity to tangible assets   8.9 %   8.8 %   8.4 %   8.3 %   8.2 %
             


           
SUMMIT FINANCIAL GROUP INC. (NASDAQ:  SMMF)
          
Regulatory Capital Ratios (unaudited)          
             
    9/30/2018 6/30/2018 3/31/2018 12/31/2017 9/30/2017
Summit Financial Group, Inc.          
  CET1 Risk-based Capital 11.1% 11.0% 10.7% 10.6% 10.8%
  Tier 1 Risk-based Capital 12.2% 12.1% 11.8% 11.8% 11.9%
  Total Risk-based Capital 12.9% 12.8% 12.5% 12.5% 12.7%
  Tier 1 Leverage Ratio 10.1% 9.9% 9.5% 9.4% 9.5%
             
Summit Community Bank, Inc.          
  CET1 Risk-based Capital 12.0% 12.0% 11.7% 11.7% 11.8%
  Tier 1 Risk-based Capital 12.0% 12.0% 11.7% 11.7% 11.8%
  Total Risk-based Capital 12.7% 12.8% 12.5% 12.5% 12.6%
  Tier 1 Leverage Ratio 9.9% 9.8% 9.5% 9.4% 9.4%
             


       
SUMMIT FINANCIAL GROUP INC. (NASDAQ:  SMMF)      
Loan Composition (unaudited)          
           
Dollars in thousands 9/30/2018 6/30/2018 3/31/2018 12/31/2017 9/30/2017
           
Commercial $   167,972 $   171,410 $   189,586 $   189,981 $   187,193
Mortgage warehouse lines     35,910     54,332     45,702     30,757     33,525
Commercial real estate          
Owner occupied     272,475     262,174     265,075     250,202     239,840
Non-owner occupied     530,568     503,047     498,445     484,902     464,543
Construction and development          
Land and development     71,819     74,018     66,841     67,219     71,412
Construction     25,703     25,711     33,327     33,412     28,756
Residential real estate          
Non-jumbo     340,783     343,044     346,477     354,101     355,642
Jumbo     72,327     66,831     67,169     62,267     61,253
Home equity     82,018     82,409     83,382     84,028     82,720
Consumer     33,664     34,249     34,825     36,202     36,915
Other     12,452     12,728     12,578     13,238     9,994
Total loans, net of unearned fees     1,645,691     1,629,953     1,643,407     1,606,309     1,571,793
Less allowance for loan losses     12,944     12,580     12,257     12,565     12,465
Loans, net $   1,632,747 $   1,617,373 $   1,631,150 $   1,593,744 $   1,559,328
           


       
SUMMIT FINANCIAL GROUP INC. (NASDAQ:  SMMF)      
Deposit Composition (unaudited)        
           
Dollars in thousands 9/30/2018 6/30/2018 3/31/2018 12/31/2017 9/30/2017
Core deposits          
  Non-interest bearing checking $   232,697 $   217,134 $   219,293 $   217,493 $   215,910
  Interest bearing checking     505,411     472,041     447,172     410,606     397,843
  Savings     301,269     322,940     346,962     358,168     362,653
  Time deposits     316,941     322,801     318,556     318,036     322,338
Total core deposits     1,356,318     1,334,916     1,331,983     1,304,303     1,298,744
           
  Brokered deposits     227,312     238,662     242,049     202,509     205,274
  Other non-core time deposits     67,434     66,418     80,491     93,789     112,750
Total deposits $   1,651,064 $   1,639,996 $   1,654,523 $   1,600,601 $   1,616,768
           


         
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)        
Asset Quality Information (unaudited)          
             
     For the Quarter Ended 
 Dollars in thousands  9/30/2018 6/30/2018 3/31/2018 12/31/2017 9/30/2017
             
  Gross loan charge-offs $   413   $   525   $   960   $   550   $   309  
  Gross loan recoveries     (278 )     (97 )     (153 )     (276 )     (67 )
  Net loan charge-offs (recoveries) $   135   $   428   $   807   $   274   $   242  
             
  Net loan charge-offs to average loans (annualized)   0.03 %   0.10 %   0.20 %   0.07 %   0.06 %
                                 
  Allowance for loan losses $   12,944   $   12,580   $   12,257   $   12,565   $   12,465  
  Allowance for loan losses as a percentage of period end loans   0.79 %   0.77 %   0.75 %   0.78 %   0.79 %
             
  Nonperforming assets:          
  Nonperforming loans          
  Commercial $   801   $   954   $   734   $   696   $   757  
  Commercial real estate     5,090       3,238       3,400       3,164       2,773  
  Residential construction and development     3,200       3,233       3,642       3,569       3,931  
  Residential real estate     7,760       8,241       7,521       7,656       8,082  
  Consumer     118       110       160       238       529  
  Total nonperforming loans     16,969       15,776       15,457       15,323       16,072  
  Foreclosed properties          
  Commercial real estate     1,762       1,818       1,875       1,789       1,988  
  Commercial construction and development     6,790       6,815       7,140       7,392       7,392  
  Residential construction and development     11,614       11,517       11,053       11,182       11,852  
  Residential real estate     1,851       1,456       1,374       1,107       1,390  
  Total foreclosed properties     22,017       21,606       21,442       21,470       22,622  
  Other repossessed assets     5       12       18       68       12  
  Total nonperforming assets $   38,991   $   37,394   $   36,917   $   36,861   $   38,706  
             
  Nonperforming loans to period end loans   1.03 %   0.97 %   0.94 %   0.95 %   1.02 %
  Nonperforming assets to period end assets   1.82 %   1.77 %   1.73 %   1.73 %   1.84 %
             
  Troubled debt restructurings          
  Performing $   27,441   $   27,559   $   27,408   $   28,347   $   28,304  
  Nonperforming     113       281       76       26       760  
  Total troubled debt restructurings $   27,554   $   27,840   $   27,484   $   28,373   $   29,064  
                                 


Loans Past Due 30-89 Days (unaudited)          
     For the Quarter Ended 
 Dollars in thousands  9/30/2018 6/30/2018 3/31/2018 12/31/2017 9/30/2017
             
  Commercial $   607 $   319 $   539 $   586 $   378
  Commercial real estate     988     546     601     1,082     944
  Construction and development     393     264     174     1,127     238
  Residential real estate     5,513     4,125     5,218     7,236     6,260
  Consumer     345     337     425     504     419
  Other     11     8     15     38     92
  Total $   7,857 $   5,599 $   6,972 $   10,573 $   8,331
             

  

                   
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)                  
Average Balance Sheet, Interest Earnings & Expenses and Average Rates            
Q3 2018 vs Q2 2018 vs Q3 2017 (unaudited)                    
  Q3 2018   Q2 2018   Q3 2017
  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                      
Taxable $   1,615,700   $   21,154   5.19 %   $   1,618,726   $   20,820   5.16 %   $   1,539,945   $   19,387   4.99 %
Tax-exempt     15,688       178   4.50 %       15,800       180   4.57 %       16,314       158   3.84 %
Securities                      
Taxable     155,574       1,227   3.13 %       160,632       1,240   3.10 %       198,913       1,283   2.56 %
Tax-exempt     146,174       1,443   3.92 %       136,984       1,346   3.94 %       145,599       1,714   4.67 %
Interest bearing deposits other banks and Federal funds sold     38,642       138   1.42 %       38,936       134   1.38 %       42,926       149   1.38 %
Total interest earning assets     1,971,778       24,140   4.86 %       1,971,078       23,720   4.83 %       1,943,697       22,691   4.63 %
                       
Noninterest earning assets                      
Cash & due from banks     9,326             9,100             9,591      
Premises & equipment     36,533             35,721             33,667      
Other assets     108,628             108,073             113,723      
Allowance for loan losses     (12,865 )           (12,541 )           (12,418 )    
Total assets $   2,113,400         $   2,111,431         $   2,088,260      
                       
 LIABILITIES AND SHAREHOLDERS' EQUITY                  
                       
Liabilities                      
Interest bearing liabilities                      
Interest bearing demand deposits $   486,107   $   1,168   0.95 %   $   457,016   $   901   0.79 %   $   384,539   $   323   0.33 %
Savings deposits     312,467       857   1.09 %       332,809       798   0.96 %       365,150       637   0.69 %
Time deposits     616,657       2,689   1.73 %       640,626       2,610   1.63 %       636,424       2,003   1.25 %
Short-term borrowings     211,211       1,436   2.70 %       187,475       1,242   2.66 %       205,536       1,160   2.24 %
Long-term borrowings and subordinated debentures     39,265       437   4.42 %       52,147       572   4.40 %       65,346       681   4.13 %
Total interest bearing liabilities     1,665,707       6,587   1.57 %       1,670,073       6,123   1.47 %       1,656,995       4,804   1.15 %
                       
Noninterest bearing liabilities                      
Demand deposits     219,986             219,134             217,760      
Other liabilities     15,447             15,608             17,414      
Total liabilities     1,901,140             1,904,815             1,892,169      
                       
Shareholders' equity - common     212,260             206,616             196,091      
Total liabilities and shareholders' equity $   2,113,400         $   2,111,431         $   2,088,260      
                       
NET INTEREST EARNINGS   $   17,553       $   17,597       $   17,887  
                       
NET INTEREST MARGIN       3.53 %         3.58 %         3.65 %
                                   


           
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)          
Average Balance Sheet, Interest Earnings & Expenses and Average Rates        
YTD 2018 vs YTD 2017 (unaudited)              
   
  YTD 2018   YTD 2017
  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 $   1,615,427   $   62,196   5.15 %   $   1,452,840   $   54,487   5.01 %
Tax-exempt     15,929       542   4.55 %       14,223       602   5.66 %
Securities              
Taxable     169,177       3,839   3.03 %       199,995       3,742   2.50 %
Tax-exempt     138,539       4,078   3.94 %       124,860       4,392   4.70 %
Interest bearing deposits other banks and Federal funds sold     39,075       412   1.41 %       43,862       466   1.42 %
Total interest earning assets     1,978,147       71,067   4.80 %       1,835,780       63,689   4.64 %
               
Noninterest earning assets              
Cash & due from banks     9,459             8,071      
Premises & equipment     35,620             30,904      
Other assets     107,789             108,783      
Allowance for loan losses     (12,715 )           (12,051 )    
Total assets $   2,118,300         $   1,971,487      
               
 LIABILITIES AND SHAREHOLDERS' EQUITY            
               
Liabilities              
Interest bearing liabilities              
Interest bearing demand deposits $   455,637   $   2,701   0.79 %   $   342,358   $   722   0.28 %
Savings deposits     330,420       2,373   0.96 %       365,068       1,879   0.69 %
Time deposits     626,587       7,498   1.60 %       602,175       5,386   1.20 %
Short-term borrowings     214,005       4,084   2.55 %       200,929       3,233   2.15 %
Long-term borrowings and subordinated debentures     52,155       1,696   4.35 %       65,725       2,012   4.09 %
      1,678,804       18,352   1.46 %       1,576,255       13,232   1.12 %
Noninterest bearing liabilities              
Demand deposits     216,701             196,019      
Other liabilities     15,778             17,990      
Total liabilities     1,911,283             1,790,264      
               
Shareholders' equity - common     207,017             181,223      
Total liabilities and shareholders' equity $   2,118,300         $   1,971,487      
               
NET INTEREST EARNINGS   $   52,715       $   50,457  
               
NET INTEREST MARGIN       3.56 %         3.67 %
                       

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

Summit Financial Group, Inc.

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