SMMF Summit Financial Group Inc

Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ: SMMF) today reported fourth quarter 2019 net income of $8.15 million, or $0.65 per diluted share. In comparison, earnings for third quarter 2019 were $8.06 million, or $0.65 per diluted share, and for fourth quarter 2018 were $7.45 million, or $0.60 per diluted share. Summit achieved returns on average assets and average tangible equity in fourth quarter 2019 of 1.39 percent and 15.25 percent, respectively, compared to 1.38 percent and 16.41 percent, respectively, in the same period of 2018.

Fourth quarter 2019 earnings compared to the linked quarter were positively impacted by increased net interest income resulting primarily from lower funding costs. Also positively impacting fourth quarter 2019 results compared to third quarter 2019 were $312,000 in gains on sales of foreclosed properties compared to $66,000 losses in the linked quarter. 

For the full year 2019, Summit achieved record net income of $31.9 million, or $2.53 per diluted share, compared with $28.1 million, or $2.26 per diluted share, for 2018. Our returns on average assets and average tangible equity for 2019 were 1.40 percent and 15.65 percent, respectively, compared to 1.32 percent and 16.09 percent, respectively, for 2018.

Earnings for 2019 were positively impacted by increased net interest income resulting primarily from loan growth as well as lower funding costs, increased realized securities gains and the gain on the sale of our former insurance agency, Summit Insurance Services, LLC (“SIS”). These results were partially offset by larger write-downs on foreclosed properties in Q2 2019 with the goal of selling such properties more rapidly, lower insurance commission revenue during 2019 and increased merger-related expenses.

H. Charles Maddy, III, President and Chief Executive Officer of Summit, commented, “I am very gratified Summit achieved a new annual earnings record both in net income and on a per share basis in 2019. In addition, I am particularly pleased by our continued strong core operating performance in this past quarter, highlighted by our exceptional growth in both our core loans and deposits, while at the same time maintaining a stable net interest margin. Our acquisition of Cornerstone Financial Services, Inc. closed at the beginning of 2020, and it serves to combine Summit with a financially strong bank that shares the same commitment to build long-term client relationships by providing ‘Service Beyond Expectations’. The financial synergies relative to this transaction are already evident. Looking forward to 2020 and beyond, I am optimistic as we gain momentum towards our goal to be a consistent growing, high-performing community banking institution."

Summit completed its acquisition of Peoples Bankshares, Inc. (“PBI”) and its subsidiary, First Peoples Bank, headquartered in Mullens, West Virginia on January 1, 2019 and converted its business processes and accounts to that of Summit’s during Q2 2019; accordingly, PBI’s results of operations are included in Summit’s consolidated results of operations from the date of acquisition. Therefore, Summit’s fourth quarter and annual 2019 period results reflect increased levels of average balances, income and expenses compared to the same periods of 2018. At consummation, PBI had total assets of $133.1 million, loans of $42.4 million, and deposits of $112.9 million.

Highlights for Q4 2019

• Net interest income increased 8.40 percent (annualized) compared to Q3 2019 and increased 10.4 percent year-to-date 2019 versus the same period in 2018, primarily due to our loan growth;
• Net interest margin in Q4 2019 remained unchanged at 3.63 percent as compared to Q3 2019 while yields on loans declined 13 basis points and deposit and other funding costs declined 15 basis points;
• Loan balances, excluding mortgage warehouse lines of credit, increased $80.5 million during the quarter, and grew $131.4 million in 2019, principally in the commercial real estate and construction and development portfolios;
• Mortgage warehouse lines of credit decreased $18.8 million during the quarter, but grew $87.1 million during 2019;
• Efficiency ratio was 52.25 percent compared to 52.91 percent in the linked quarter and 51.02 percent for Q4 2018;
• Write-downs of foreclosed properties were $497,000 in Q4 2019 compared to $133,000 in Q3 2019, while the realized gains/losses on sales of foreclosed properties increased from a net loss of $66,000 in Q3 2019 to $312,000 net gains in Q4 2019; and
• Nonperforming assets as a percentage of total assets improved to 1.28 percent from 1.45 percent for the linked quarter and 1.66 percent at year end 2018.
• Announced our entering into a definitive agreement to acquire four MVB Bank branches in Berkeley and Jefferson Counties, West Virginia having aggregate approximate deposits and loans of $181 million and $46 million, respectively.  This transaction is expected to close early in Q2 2020.

Results of Operations

Total revenue for fourth quarter 2019, consisting of net interest income and noninterest income, increased 9.0 percent to $24.2 million, principally as a result of higher net interest income compared to $22.2 million for the fourth quarter 2018. For full year 2019, total revenue was $96.3 million compared to $87.2 million for 2018, a 10.4 percent increase primarily as a result of higher net interest income, increased realized securities gains and the gain on the sale of SIS.

For the fourth quarter of 2019, net interest income was $19.8 million, an increase of 9.8 percent from the $18.1 million reported in the prior-year fourth quarter and a 2.1 percent increase compared to the linked quarter. The net interest margin for fourth quarter 2019 remained unchanged from the linked quarter at 3.63 and increased from 3.61 percent for the year-ago quarter. Excluding the impact of accretion and amortization of fair value acquisition accounting adjustments, Summit’s net interest margin would have been 3.60 percent for Q4 2019, 3.59 percent for Q3 2019 and 3.57 percent for Q4 2018.  

Noninterest income, consisting primarily of service fee income from community banking activities and trust and wealth management fees, for fourth quarter 2019 was $4.40 million compared to $4.19 million for the comparable period of 2018. Excluding realized securities gains, noninterest income was $4.00 million for fourth quarter 2019, compared to $4.39 million reported for fourth quarter 2018 and was $3.31 million for the linked quarter. The lower levels of 2019 noninterest income compared to 2018 periods are primarily due to the elimination of insurance commission revenue as result of SIS’ sale in Q2 2019.

We recorded a $500,000 provision for loan losses during fourth quarter 2019 and 2018. Our provision continues to be directionally consistent with changes in the credit quality in our loan portfolio.

Q4 2019 total noninterest expense increased 5.6 percent to $13.2 million compared to $12.5 million for the prior-year fourth quarter and increased 2.8 percent compared to the linked quarter. 

Noninterest expense for full year 2019 increased 10.6 percent compared to 2018. Our increased noninterest expense is principally due to expenses associated with the acquired PBI operations (including merger-related expenses), increased write-downs of foreclosed properties and to deferred director compensation plan expense, which totaled $800,000 in 2019 compared to income of $250,000 during 2018.

Balance Sheet

At December 31, 2019, total assets were $2.40 billion, an increase of $202.6 million, or 9.2 percent since December 31, 2018. Total loans, net of unearned fees and allowance for loan losses, were $1.90 billion at December 31, 2019, up $218.4 million, or 13.0 percent, from the $1.68 billion reported at year-end 2018. Loans, excluding mortgage warehouse lines of credit, increased $80.5 million during the quarter, or 18.9 percent (on an annualized basis), and have increased $131.4 million, or 7.9 percent (on an annualized basis) since year-end 2018.

At December 31, 2019, core deposits were $1.68 billion, an increase of $161.0 million or 10.6 percent during fourth quarter 2019 -- as checking deposits increased $46.8 million or 5.6 percent, core time deposits increase by $1.9 million or 0.5 percent and savings deposits increased $112.2 million or 36.7 percent, principally attributable to the growth in our online savings product.

Shareholders’ equity was $247.8 million as of December 31, 2019 compared to $219.8 million at December 31, 2018. Tangible book value per common share increased to $18.11 at December 31, 2019 compared to $15.75 at December 31, 2018. Summit had 12,408,542 outstanding common shares at year end 2019 compared to 12,312,933 at year end 2018.

Asset Quality

As of December 31, 2019, nonperforming assets (“NPAs”), consisting of nonperforming loans, foreclosed properties and repossessed assets, improved to $30.8 million, or 1.28 percent of assets. This compares to $33.7 million, or 1.45 percent of assets at the linked quarter-end, and $36.5 million, or 1.66 percent of assets at year end 2018.

Fourth quarter 2019 net loan charge-offs were $367,000, or 0.08 percent of average loans annualized, while $500,000 was added to the allowance for loan losses through the provision for loan losses. The allowance for loan losses stood at 0.68 percent of total loans at December 31, 2019, compared to 0.77 percent at year-end 2018. 

About the Company

Summit Financial Group, Inc. is a $2.40 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-six banking locations.

FORWARD-LOOKING STATEMENTS

This press release contains comments or information that constitute forward-looking statements (within the meaning of the Private Securities Litigation Act of 1995) that are based on current expectations that involve a number of risks and uncertainties. Words such as “expects”, “anticipates”, “believes”, “estimates” and other similar expressions or future or conditional verbs such as “will”, “should”, “would” and “could” are intended to identify such forward-looking statements.

Although we believe the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially.  Factors that might cause such a difference include changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking laws and regulations; changes in tax laws; the impact of technological advances; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; and changes in the national and local economies.  We undertake no obligation to revise these statements following the date of this press release.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary (unaudited)
Q4 2019 vs Q4 2018
		For the Quarter Ended					Percent
Dollars in thousands		12/31/2019		12/31/18			Change
Statements of Income
	Interest income
	Loans, including fees	$	24,772	$	22,659		9.3	%
	Securities		2,195		2,527		-13.1	%
	Other		105		127		-17.3	%
	Total interest income		27,072		25,313		6.9	%
	Interest expense
	Deposits		5,952		5,103		16.6	%
	Borrowings		1,292		2,158		-40.1	%
	Total interest expense		7,244		7,261		-0.2	%
	Net interest income		19,828		18,052		9.8	%
	Provision for loan losses		500		500		0.0	%
	Net interest income after provision
	for loan losses		19,328		17,552		10.1	%
	Noninterest income
	Insurance commissions		90		1,132		-92.0	%
	Trust and wealth management fees		734		627		17.1	%
	Service charges on deposit accounts		1,377		1,209		13.9	%
	Bank card revenue		906		809		12.0	%
	Realized securities gains (losses)		403		(205	)	n/m
	Bank owned life insurance income		310		248		25.0	%
	Other income		584		367		59.1	%
	Total noninterest income		4,404		4,187		5.2	%
	Noninterest expense
	Salaries and employee benefits		7,099		6,928		2.5	%
	Net occupancy expense		815		836		-2.5	%
	Equipment expense		1,278		1,139		12.2	%
	Professional fees		412		385		7.0	%
	Advertising and public relations		214		193		10.9	%
	Amortization of intangibles		401		410		-2.2	%
	FDIC premiums		-		140		n/m
	Bank card expense		454		395		14.9	%
	Foreclosed properties expense, net		262		507		-48.3	%
	Merger-related expenses		98		59		66.1	%
	Other expenses		2,126		1,474		44.2	%
	Total noninterest expense		13,159		12,466		5.6	%
	Income before income taxes		10,573		9,273		14.0	%
	Income taxes		2,424		1,823		33.0	%
	Net income	$	8,149	$	7,450		9.4	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary (unaudited)
Q4 2019 vs Q4 2018
		For the Quarter Ended						Percent
		12/31/19			12/31/18			Change
Per Share Data
	Earnings per common share
	Basic	$	0.66		$	0.60		10.0	%
	Diluted	$	0.65		$	0.60		8.3	%
	Cash dividends	$	0.15		$	0.14		7.1	%
	Dividend payout ratio		22.3	%		23.3	%	-4.3	%
	Average common shares outstanding
	Basic		12,400,932			12,358,104		0.3	%
	Diluted		12,458,702			12,407,678		0.4	%
	Common shares outstanding at period end		12,408,542			12,312,933		0.8	%
Performance Ratios
	Return on average equity		13.32	%		13.85	%	-3.8	%
	Return on average tangible equity		15.25	%		16.41	%	-7.1	%
	Return on average assets		1.39	%		1.38	%	0.7	%
	Net interest margin (A)		3.63	%		3.61	%	0.6	%
	Efficiency ratio (B)		52.25	%		51.02	%	2.4	%

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

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

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Annual Performance Summary (unaudited)
2019 vs 2018
		For the Year Ended				Percent
Dollars in thousands		12/31/19		12/31/18		Change
Statements of Income
	Interest income
	Loans, including fees	$	97,115	$	85,283	13.9	%
	Securities		9,361		9,587	-2.4	%
	Other		595		539	10.4	%
	Total interest income		107,071		95,409	12.2	%
	Interest expense
	Deposits		23,697		17,675	34.1	%
	Borrowings		6,290		7,937	-20.8	%
	Total interest expense		29,987		25,612	17.1	%
	Net interest income		77,084		69,797	10.4	%
	Provision for loan losses		1,550		2,250	-31.1	%
	Net interest income after provision
	for loan losses		75,534		67,547	11.8	%
	Noninterest income
	Insurance commissions		1,911		4,320	-55.8	%
	Trust and wealth management fees		2,564		2,653	-3.4	%
	Service charges on deposit accounts		5,094		4,631	10.0	%
	Bank card revenue		3,536		3,152	12.2	%
	Realized securities gains		1,938		622	211.6	%
	Gain on sale of Summit Insurance Services, LLC		1,906		-	n/a
	Bank owned life insurance income		1,044		1,022	2.2	%
	Other income		1,210		1,022	18.4	%
	Total noninterest income		19,203		17,422	10.2	%
	Noninterest expense
	Salaries and employee benefits		29,066		27,478	5.8	%
	Net occupancy expense		3,417		3,364	1.6	%
	Equipment expense		4,972		4,411	12.7	%
	Professional fees		1,678		1,607	4.4	%
	Advertising and public relations		698		654	6.7	%
	Amortization of intangibles		1,701		1,671	1.8	%
	FDIC premiums		88		830	-89.4	%
	Bank card expense		1,820		1,475	23.4	%
	Foreclosed properties expense, net		2,498		1,350	85.0	%
	Merger-related expenses		617		144	328.5	%
	Other expenses		8,599		6,889	24.8	%
	Total noninterest expense		55,154		49,873	10.6	%
	Income before income taxes		39,583		35,096	12.8	%
	Income taxes		7,717		7,024	9.9	%
	Net income	$	31,866	$	28,072	13.5	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Annual Performance Summary (unaudited)
2019 vs 2018
		For the Year Ended						Percent
		12/31/19			12/31/18			Change
Per Share Data
	Earnings per common share
	Basic	$	2.55		$	2.27		12.3	%
	Diluted	$	2.53		$	2.26		11.9	%
	Cash dividends	$	0.59		$	0.53		11.3	%
	Dividend payout ratio		23.1	%		23.3	%	-0.9	%
	Average common shares outstanding
	Basic		12,516,474			12,364,468		1.2	%
	Diluted		12,575,145			12,424,573		1.2	%
	Common shares outstanding at period end		12,408,542			12,312,933		0.8	%
Performance Ratios
	Return on average equity		13.43	%		13.43	%	0.0	%
	Return on average tangible equity		15.65	%		16.09	%	-2.7	%
	Return on average assets		1.40	%		1.32	%	6.1	%
	Net interest margin (A)		3.66	%		3.57	%	2.5	%
	Efficiency ratio (B)		54.55	%		53.72	%	1.5	%

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

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

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Five Quarter Performance Summary (unaudited)
		For the Quarter Ended
Dollars in thousands		12/31/19		9/30/19		6/30/19		3/31/19			12/31/18
Statements of Income
	Interest income
	Loans, including fees	$	24,772	$	24,940	$	24,352	$	23,051		$	22,659
	Securities		2,195		2,184		2,396		2,586			2,527
	Other		105		125		134		231			127
	Total interest income		27,072		27,249		26,882		25,868			25,313
	Interest expense
	Deposits		5,952		6,214		5,967		5,564			5,103
	Borrowings		1,292		1,615		1,652		1,731			2,158
	Total interest expense		7,244		7,829		7,619		7,295			7,261
	Net interest income		19,828		19,420		19,263		18,573			18,052
	Provision for loan losses		500		500		300		250			500
	Net interest income after provision
	for loan losses		19,328		18,920		18,963		18,323			17,552
	Noninterest income
	Insurance commissions		90		40		606		1,174			1,132
	Trust and wealth management fees		734		632		612		586			627
	Service charges on deposit accounts		1,377		1,312		1,224		1,180			1,209
	Bank card revenue		906		924		893		814			809
	Realized securities gains (losses)		403		453		1,086		(3	)		(205	)
	Gain on sale of Summit Insurance Services, LLC		-		-		1,906		-			-
	Bank owned life insurance income		310		247		248		238			248
	Other income		584		151		235		241			367
	Total noninterest income		4,404		3,759		6,810		4,230			4,187
	Noninterest expense
	Salaries and employee benefits		7,099		7,044		7,576		7,347			6,928
	Net occupancy expense		815		799		880		924			836
	Equipment expense		1,278		1,296		1,219		1,179			1,139
	Professional fees		412		388		475		403			385
	Advertising and public relations		214		177		155		153			193
	Amortization of intangibles		401		404		420		476			410
	FDIC premiums		-		-		88		-			140
	Bank card expense		454		455		473		439			395
	Foreclosed properties expense, net		262		305		1,545		384			507
	Merger-related expenses		98		74		382		63			59
	Other expenses		2,126		1,864		2,116		2,492			1,474
	Total noninterest expense		13,159		12,806		15,329		13,860			12,466
	Income before income taxes		10,573		9,873		10,444		8,693			9,273
	Income tax expense		2,424		1,812		1,880		1,601			1,823
	Net income	$	8,149	$	8,061	$	8,564	$	7,092		$	7,450

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Five Quarter Performance Summary (unaudited)
		For the Quarter Ended
		12/31/19			9/30/19			6/30/19			3/31/19			12/31/18
Per Share Data
	Earnings per common share
	Basic	$	0.66		$	0.65		$	0.68		$	0.56		$	0.60
	Diluted	$	0.65		$	0.65		$	0.68		$	0.56		$	0.60
	Cash dividends	$	0.15		$	0.15		$	0.15		$	0.14		$	0.14
	Dividend payout ratio		22.3	%		23.0	%		21.9	%		25.0	%		23.3	%
	Average common shares outstanding
	Basic		12,400,932			12,412,982			12,539,095			12,717,501			12,358,104
	Diluted		12,458,702			12,467,777			12,600,071			12,778,644			12,407,678
	Common shares outstanding at period end		12,408,542			12,400,804			12,449,986			12,661,528			12,312,933
Performance Ratios
	Return on average equity		13.32	%		13.51	%		14.62	%		12.28	%		13.85	%
	Return on average tangible equity		15.25	%		15.55	%		17.02	%		14.80	%		16.41	%
	Return on average assets		1.39	%		1.41	%		1.52	%		1.27	%		1.38	%
	Net interest margin (A)		3.63	%		3.63	%		3.72	%		3.66	%		3.61	%
	Efficiency ratio (B)		52.25	%		52.91	%		56.45	%		56.63	%		51.02	%

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

NOTE (B) – Computed on a tax equivalent basis excluding merger-related expenses, 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		12/31/19			9/30/19			6/30/19			3/31/19			12/31/18
Assets
	Cash and due from banks	$	28,137		$	12,374		$	13,481		$	14,265		$	23,061
	Interest bearing deposits other banks		33,751			40,296			42,994			43,689			36,479
	Securities		276,355			265,347			269,920			297,126			293,284
	Loans, net		1,900,425			1,838,891			1,805,850			1,725,064			1,682,005
	Property held for sale		19,276			20,979			21,390			24,393			21,432
	Premises and equipment, net		44,168			43,592			42,896			39,345			37,553
	Goodwill and other intangible assets		23,022			23,182			23,585			29,349			25,842
	Cash surrender value of life insurance policies		43,603			43,216			42,976			42,714			42,420
	Other assets		34,755			35,732			36,022			33,696			38,510
	Total assets	$	2,403,492		$	2,323,609		$	2,299,114		$	2,249,641		$	2,200,586
Liabilities and Shareholders' Equity
	Deposits	$	1,913,237		$	1,832,285		$	1,797,493		$	1,789,032		$	1,634,826
	Short-term borrowings		199,345			206,694			225,343			186,292			309,084
	Long-term borrowings and
	subordinated debentures		20,306			20,311			20,315			20,319			20,324
	Other liabilities		22,840			21,897			20,262			20,368			16,522
	Shareholders' equity		247,764			242,422			235,701			233,630			219,830
	Total liabilities and shareholders' equity	$	2,403,492		$	2,323,609		$	2,299,114		$	2,249,641		$	2,200,586
	Book value per common share	$	19.97		$	19.55		$	18.93		$	18.45		$	17.85
	Tangible book value per common share	$	18.11		$	17.68		$	17.04		$	16.13		$	15.75
	Tangible common equity to tangible assets		9.4	%		9.5	%		9.3	%		9.2	%		8.9	%

 

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Regulatory Capital Ratios (unaudited)
		12/31/2019		9/30/2019		6/30/2019		3/31/2019		12/31/2018
Summit Financial Group, Inc.
	CET1 Risk-based Capital	11.1	%	11.2	%	11.1	%	11.4	%	11.1	%
	Tier 1 Risk-based Capital	12.1	%	12.2	%	12.1	%	12.5	%	12.2	%
	Total Risk-based Capital	12.7	%	12.8	%	12.8	%	13.2	%	12.9	%
	Tier 1 Leverage	10.5	%	10.4	%	10.4	%	10.2	%	10.1	%
Summit Community Bank, Inc.
	CET1 Risk-based Capital	12.1	%	12.2	%	11.9	%	12.3	%	12.0	%
	Tier 1 Risk-based Capital	12.1	%	12.2	%	11.9	%	12.3	%	12.0	%
	Total Risk-based Capital	12.7	%	12.9	%	12.6	%	13.0	%	12.8	%
	Tier 1 Leverage	10.6	%	10.4	%	10.2	%	10.0	%	10.0	%

 

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Loan Composition (unaudited)
Dollars in thousands		12/31/2019		9/30/2019		6/30/2019		3/31/2019		12/31/2018
Commercial		$	207,138	$	199,391	$	204,138	$	189,248	$	194,315
Mortgage warehouse lines			126,237		145,039		101,607		49,355		39,140
Commercial real estate
Owner occupied			276,218		255,828		262,901		256,671		257,256
Non-owner occupied			629,206		567,670		574,677		585,809		573,932
Construction and development
Land and development			84,112		69,589		67,769		64,192		68,833
Construction			37,523		56,255		46,975		36,040		24,731
Residential real estate
Non-jumbo			354,963		359,399		360,752		359,107		336,977
Jumbo			70,947		69,815		70,171		69,313		73,599
Home equity			76,568		78,493		81,373		80,370		80,910
Consumer			36,470		36,982		36,715		36,046		32,460
Other			14,117		13,371		11,924		12,045		12,899
Total loans, net of unearned fees			1,913,499		1,851,832		1,819,002		1,738,196		1,695,052
Less allowance for loan losses			13,074		12,941		13,152		13,132		13,047
Loans, net		$	1,900,425	$	1,838,891	$	1,805,850	$	1,725,064	$	1,682,005

 

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Deposit Composition (unaudited)
Dollars in thousands		12/31/2019		9/30/2019		6/30/2019		3/31/2019		12/31/2018
Core deposits
Non-interest bearing checking		$	260,553	$	241,999	$	234,397	$	258,679	$	222,120
Interest bearing checking			630,352		602,059		588,948		560,800		523,257
Savings			418,096		305,891		301,403		310,646		284,173
Time deposits			373,125		371,178		365,275		359,141		316,914
Total core deposits			1,682,126		1,521,127		1,490,023		1,489,266		1,346,464
Brokered time deposits			150,554		227,369		222,901		218,913		220,497
Other non-core time deposits			80,557		83,789		84,569		80,853		67,865
Total deposits		$	1,913,237	$	1,832,285	$	1,797,493	$	1,789,032	$	1,634,826

 

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Asset Quality Information (unaudited)
		For the Quarter Ended
Dollars in thousands		12/31/19			9/30/19			6/30/19			3/31/19			12/31/18
	Gross loan charge-offs	$	455		$	843		$	391		$	414		$	705
	Gross loan recoveries		(88	)		(132	)		(111	)		(249	)		(307	)
	Net loan charge-offs	$	367		$	711		$	280		$	165		$	398
	Net loan charge-offs to average loans (annualized)		0.08	%		0.16	%		0.06	%		0.04	%		0.10	%
	Allowance for loan losses	$	13,074		$	12,941		$	13,152		$	13,132		$	13,047
	Allowance for loan losses as a percentage
	of period end loans		0.68	%		0.70	%		0.72	%		0.76	%		0.77	%
	Nonperforming assets:
	Nonperforming loans
	Commercial	$	764		$	835		$	948		$	729		$	935
	Commercial real estate		5,800			7,037			6,544			2,981			3,239
	Residential construction and development		326			191			66			24			3,198
	Residential real estate		4,404			4,461			5,657			5,928			7,506
	Consumer		116			115			160			182			147
	Other		100			100			100			130			-
	Total nonperforming loans		11,510			12,739			13,475			9,974			15,025
	Foreclosed properties
	Commercial real estate		1,930			1,514			1,544			1,841			1,762
	Commercial construction and development		4,601			4,909			4,910			6,326			6,479
	Residential construction and development		11,169			12,847			13,132			14,347			11,543
	Residential real estate		1,576			1,709			1,804			1,879			1,648
	Total foreclosed properties		19,276			20,979			21,390			24,393			21,432
	Other repossessed assets		17			16			12			34			5
	Total nonperforming assets	$	30,803		$	33,734		$	34,877		$	34,401		$	36,462
	Nonperforming loans to period end loans		0.60	%		0.69	%		0.74	%		0.57	%		0.89	%
	Nonperforming assets to period end assets		1.28	%		1.45	%		1.52	%		1.53	%		1.66	%
	Troubled debt restructurings
	Performing	$	23,339		$	23,420		$	23,266		$	27,845		$	26,609
	Nonperforming		2,337			2,443			2,915			-			388
	Total troubled debt restructurings	$	25,676		$	25,863		$	26,181		$	27,845		$	26,997

 

Loans Past Due 30-89 Days (unaudited)
		For the Quarter Ended
Dollars in thousands		12/31/19		9/30/19		6/30/19		3/31/19		12/31/18
	Commercial	$	111	$	390	$	375	$	264	$	219
	Commercial real estate		1,196		312		1,719		4,128		161
	Construction and development		236		65		235		179		194
	Residential real estate		4,775		5,573		5,670		2,944		6,249
	Consumer		269		365		234		432		593
	Other		25		63		9		52		38
	Total	$	6,612	$	6,768	$	8,242	$	7,999	$	7,454

 

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q4 2019 vs Q3 2019 vs Q4 2018 (unaudited)
	Q4 2019								Q3 2019								Q4 2018
	Average			Earnings /		Yield /			Average			Earnings /		Yield /			Average			Earnings /		Yield /
Dollars in thousands	Balances			Expense		Rate			Balances			Expense		Rate			Balances			Expense		Rate
ASSETS
Interest earning assets
Loans, net of unearned interest (1)
Taxable	$	1,853,197		$	24,622	5.27	%		$	1,813,555		$	24,786	5.42	%		$	1,660,250		$	22,519	5.38	%
Tax-exempt (2)		15,738			189	4.76	%			15,903			195	4.86	%			15,322			177	4.58	%
Securities
Taxable		218,375			1,654	3.00	%			203,288			1,566	3.06	%			176,059			1,502	3.38	%
Tax-exempt (2)		69,276			686	3.93	%			79,387			782	3.91	%			132,088			1,296	3.89	%
Interest bearing deposits other banks
and Federal funds sold		32,779			105	1.27	%			35,214			125	1.41	%			35,402			127	1.42	%
Total interest earning assets		2,189,365			27,256	4.94	%			2,147,347			27,454	5.07	%			2,019,121			25,621	5.03	%
Noninterest earning assets
Cash & due from banks		12,932								12,815								9,686
Premises & equipment		44,136								43,160								37,224
Other assets		103,481								104,789								109,228
Allowance for loan losses		(13,055	)							(13,276	)							(13,172	)
Total assets	$	2,336,859							$	2,294,835							$	2,162,087
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	619,939		$	1,378	0.88	%		$	594,772		$	1,621	1.08	%		$	519,465		$	1,504	1.15	%
Savings deposits		351,653			1,201	1.35	%			302,331			949	1.25	%			289,809			861	1.18	%
Time deposits		641,160			3,373	2.09	%			674,869			3,644	2.14	%			607,037			2,738	1.79	%
Short-term borrowings		188,007			1,062	2.24	%			202,425			1,372	2.69	%			270,092			1,909	2.80	%
Long-term borrowings and
subordinated debentures		20,308			230	4.49	%			20,312			243	4.75	%			20,326			249	4.86	%
Total interest bearing liabilities		1,821,067			7,244	1.58	%			1,794,709			7,829	1.73	%			1,706,729			7,261	1.69	%
Noninterest bearing liabilities
Demand deposits		248,159								240,193								223,999
Other liabilities		22,856								21,320								16,138
Total liabilities		2,092,082								2,056,222								1,946,866
Shareholders' equity		244,777								238,613								215,221
Total liabilities and
shareholders' equity	$	2,336,859							$	2,294,835							$	2,162,087
NET INTEREST EARNINGS				$	20,012							$	19,625							$	18,360
NET INTEREST MARGIN						3.63	%							3.63	%							3.61	%
(1) - For purposes of this table, nonaccrual loans are included in average loan balances.
(2) - Interest income on tax-exempt securities and loans has been adjusted assuming a Federal tax rate of 21% for all periods presented.
The tax equivalent adjustment resulted in an increase in interest income of $184,000, $205,000, and $308,000 for Q4 2019,
Q3 2019 and Q4 2018, respectively.

 

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
YTD 2019 vs YTD 2018 (unaudited)
	YTD 2019								YTD 2018
	Average			Earnings /		Yield /			Average			Earnings /		Yield /
Dollars in thousands	Balances			Expense		Rate			Balances			Expense		Rate
ASSETS
Interest earning assets
Loans, net of unearned interest (1)
Taxable	$	1,782,477		$	96,499	5.41	%		$	1,626,725		$	84,716	5.21	%
Tax-exempt (2)		15,315			780	5.09	%			15,776			718	4.55	%
Securities
Taxable		205,340			6,511	3.17	%			170,912			5,341	3.13	%
Tax-exempt (2)		90,823			3,608	3.97	%			136,913			5,375	3.93	%
Interest bearing deposits other banks
and Federal funds sold		39,408			595	1.51	%			38,148			539	1.41	%
Total interest earning assets		2,133,363			107,993	5.06	%			1,988,474			96,689	4.86	%
Noninterest earning assets
Cash & due from banks		12,939								9,517
Premises & equipment		41,778								36,025
Other assets		107,456								107,856
Allowance for loan losses		(13,225	)							(12,830	)
Total assets	$	2,282,311							$	2,129,042
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	586,938		$	6,394	1.09	%		$	471,725		$	4,205	0.89	%
Savings deposits		317,569			3,969	1.25	%			320,184			3,233	1.01	%
Time deposits		660,910			13,334	2.02	%			621,659			10,237	1.65	%
Short-term borrowings		194,450			5,303	2.73	%			228,142			5,993	2.63	%
Long-term borrowings and
subordinated debentures		20,315			987	4.86	%			44,132			1,944	4.40	%
		1,780,182			29,987	1.68	%			1,685,842			25,612	1.52	%
Noninterest bearing liabilities
Demand deposits		244,559								218,541
Other liabilities		20,341								15,574
Total liabilities		2,045,082								1,919,957
Shareholders' equity		237,229								209,085
Total liabilities and
shareholders' equity	$	2,282,311							$	2,129,042
NET INTEREST EARNINGS				$	78,006							$	71,077
NET INTEREST MARGIN						3.66	%							3.57	%
(1) - For purposes of this table, nonaccrual loans are included in average loan balances.
(2) - Interest income on tax-exempt securities and loans has been adjusted assuming a Federal tax rate of 21%.
The tax equivalent adjustment resulted in an increase in interest income of $922,000 and $1,279,000 for
YTD 2019 and YTD 2018, respectively.

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