MOOREFIELD, W.Va., July 27, 2017 (GLOBE NEWSWIRE) -- Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ:SMMF) today reported second quarter 2017 net income of $5.28 million, or $0.43 per diluted share, compared to $4.24 million, or $0.40 per diluted share, for the second quarter of 2016, representing an increase of 24.4 percent, or 7.5 percent per diluted share.

For the six months ended June 30, 2017, Summit recorded net income of $3.66 million, or $0.32 per diluted share, compared with $8.31 million, or $0.78 per diluted share, for the comparable 2016 six-month period, representing a decrease of 55.9 percent or 59.0 percent per diluted share.  The decrease in first half 2017 earnings is principally attributable to a legal settlement during first quarter which reduced earnings by $0.54 per diluted share.

Highlights for Q2 2017 include:

  • Summit completed its acquisition of First Century Bankshares, Inc. (“FCB”) and its subsidiary, First Century Bank, headquartered in Bluefield, West Virginia on April 1, 2017, and converted substantially all its data processing systems to that of Summit’s effective April 21, 2017; accordingly, merger-related expenses of $1.46 million were incurred during Q2 2017 compared to $153,000 during Q2 2016;

  • Total revenues increased 34.3 percent compared to the linked-quarter and 47.3 percent compared to the year ago quarter, principally as result of the acquisition of FCB;

  • Net interest margin increased 41 basis points compared to Q2 2016, and 27 basis points compared to the linked quarter, reflecting FCB’s higher yielding loan portfolio, the impact of increasing short-term interest rates as result of recent FOMC activity and relatively stable funding costs;

  • Loans, excluding mortgage warehouse lines of credit and FCB’s purchased loan portfolio, grew $11.9 million during the quarter, or 3.7 percent (on an annualized basis), and have grown $52.8 million, or 8.6 percent (annualized), year-to-date;

  • Nonperforming assets declined for the nineteenth consecutive quarter. Compared to the linked quarter, nonperforming assets as a percentage of total assets declined from 2.16 percent to 1.78 percent, reaching its lowest level since Q2 2008;

  • Recorded charges of $29,000 to write-down foreclosed properties compared to $259,000 in Q2 2016 and $418,000 in Q1 2017.

H. Charles Maddy, III, President and Chief Executive Officer of Summit, commented, “I am very pleased to report Summit achieved another quarter of solid core operating results highlighted by improvement in our net interest margin and core loan growth. Further, despite the quarter’s challenges of integrating FCB’s banking operations with that of Summit’s, we nonetheless maintained an efficiency ratio well below that of most of our peers. We are demonstrating our ability to successfully execute on a disciplined M&A growth strategy, which we believe will continue to present us with significant opportunities going forward as we seek to be a consistent, high-performing community banking institution.”

FCB Acquisition

On April 1, 2017, Summit completed its acquisition of FCB.  Accordingly, FCB’s results of operations are included in Summit’s consolidated results of operation from the date of acquisition, and therefore Summit’s second quarter and first half 2017 results reflect increased levels of average balances, income and expense compared to its second quarter and first half 2016 results. 

At consummation, FCB had total assets of $404.8 million, loans of $229.0 million, and deposits of $350.0 million. In addition, our merger-related expenses totaled $1.56 million during first half 2017, with $1.46 million of those expenses incurred during second quarter 2017. Summit recognized net accretion income totaling $285,000 in Q2 2017 related to FCB’s loan fair value acquisition accounting adjustments.

HCB Acquisition

On October 1, 2016, Summit completed its acquisition of Highland County Bankshares, Inc. (“HCB”) and its subsidiary, First & Citizens Bank, headquartered in Monterey, Virginia. Accordingly, HCB’s results of operations are included in Summit’s consolidated results of operation from the date of acquisition, and therefore Summit’s three and six months ended June 30, 2017 results reflect increased levels of average balances, income and expense as compared to the same periods of 2016 results.

At consummation, HCB had total assets of $122.8 million, loans of $60.8 million, and deposits of $106.9 million. Summit recognized net accretion income totaling $59,000 in Q2 2017 and $203,000 in the first half of 2017 related to HCB’s loan fair value acquisition accounting adjustments.

Results from Operations

Total revenue for second quarter 2017 consisting of net interest income and noninterest income, grew 47.3 percent to $21.8 million, principally as result of the FCB and HCB acquisitions, compared to $14.8 million for the second quarter 2016. For the year-to-date period ended June 30, 2017, total revenue was $38.0 million compared to $29.4 million for the same period of 2016, representing a 29.3 percent increase.

For the second quarter of 2017, net interest income was $17.8 million, an increase of 52.1 percent from the $11.7 million reported in the prior-year second quarter and increased $4.2 million compared to the linked quarter. The net interest margin for second quarter 2017 was 3.81 percent compared to 3.40 percent for the year-ago quarter, and 3.54 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 3.72 percent for Q2 2017 and 3.62 percent for first half of 2017.  

Noninterest income, consisting primarily of insurance commissions from Summit's insurance agency subsidiary, trust and wealth management fees and service fee income from community banking activities, for second quarter 2017 was $3.92 million compared to $3.05 million for the comparable period of 2016. Excluding realized securities gains, noninterest income was $3.83 million for second quarter 2017, compared to $2.67 million reported for second quarter 2016 and $2.64 million for the linked quarter.

We recorded a $250,000 provision for loan losses during second quarters 2017 and 2016.

Q2 2017 total noninterest expense increased 65.2% to $13.94 million compared to $8.44 million for the prior-year second quarter principally due to the acquisitions of FCB and HCB. Noninterest expense for the first half of 2017 increased 93.9% compared to the first half of 2016. Summit recorded a $9.9 million charge to resolve fully all litigation with Residential Funding Company, LLC and ResCap Liquidating Trust (collectively “ResCap”) during Q1 2017. Excluding the impact of the ResCap litigation settlement charge, noninterest expense for first half of 2017 increased 35.7 percent to $23.1 million compared to $17.0 million for the first half of 2016, principally as result of the acquisitions of HCB and FCB.

Balance Sheet

At June 30, 2017, total assets were $2.10 billion, an increase of $336.7 million, or 19.1 percent since December 31, 2016. Total loans, net of unearned fees and allowance for loan losses, were $1.54 billion at June 30, 2017, up $230.2 million, or 17.6 percent, from the $1.31 billion reported at year-end 2016.  Loans, excluding mortgage warehouse lines of credit and FCB’s purchased loan portfolio, grew $11.9 million during the quarter, or 3.7 percent (on an annualized basis), and have grown $52.8 million, or 8.6 percent (annualized) since year-end 2016.

At June 30, 2017, deposits were $1.61 billion, an increase of $318.4 million, or 24.6 percent, since year end 2016. During first half 2017, checking deposits increased $194.2 million or 47.1 percent, time deposits grew by $88.1 million or 16.1 percent and savings deposits increased $36.1 million or 10.7 percent.

Shareholders’ equity was $193.1 million as of June 30, 2017 compared to $155.4 million at December 31, 2016 and $150.7 million at June 30, 2016. In conjunction with the acquisition of FCB on April 1, 2017, Summit issued 1,537,912 shares of common stock valued at $33.1 million to the former FCB shareholders.

Tangible book value per common share increased to $13.41 at June 30, 2017 compared to $13.20 at December 31, 2016 and $13.40 at June 30, 2016. Summit had 12,299,726 outstanding common shares at Q2 2017 quarter end compared to 10,736,970 at year end 2016.

Asset Quality

As of June 30, 2016, nonperforming assets (“NPAs”), consisting of nonperforming loans, foreclosed properties, and repossessed assets, were $37.4 million, or 1.78 percent of assets. This compares to $38.4 million, or 2.16 percent of assets at the linked quarter-end, and $38.7 million, or 2.47 percent of assets, at second quarter-end 2016.

Second quarter 2017 net loan recoveries were $364,000, or 0.09 percent of average loans annualized; while adding $250,000 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 June 30, 2017, compared to 0.88 percent at year-end 2016.  If the acquired FCB and HCB loans are excluded, the allowance for loan losses to total loans ratio at June 30, 2017 and December 31, 2016 would have been 0.95 percent and 0.92, respectively.

About the Company

Summit Financial Group, Inc. is a $2.10 billion financial holding company headquartered in Moorefield, West Virginia. Summit provides community banking services primarily in the Eastern Panhandle and Southern regions of West Virginia and the Northern, Shenandoah Valley and Southwestern regions of Virginia, through its bank subsidiary, Summit Community Bank, Inc., which operates thirty banking locations. Summit also operates Summit Insurance Services, LLC in Moorefield, West Virginia and Leesburg, Virginia.

FORWARD-LOOKING STATEMENTS

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

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


SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)  
Quarterly Performance Summary -- Q2 2017 vs Q2 2016  
     
    
   For the Quarter Ended  Percent 
 Dollars in thousands 6/30/20176/30/2016 Change 
 Condensed Statements of Income    
  Interest income    
   Loans, including fees $  19,717 $  13,622  44.7%
   Securities    2,349    1,656  41.8%
   Other    165    5 n/a
  Total interest income    22,231    15,283  45.5%
  Interest expense    
   Deposits    2,634    2,154  22.3%
   Borrowings    1,749    1,395  25.4%
  Total interest expense    4,383    3,549  23.5%
  Net interest income    17,848    11,734  52.1%
  Provision for loan losses    250    250  0.0%
  Net interest income after provision    
   for loan losses    17,598    11,484  53.2%
     
  Noninterest income    
   Insurance commissions    988    1,090  -9.4%
   Trust and wealth management fees    595    116  412.9%
   Service fees related to deposit accounts    1,706    1,059  61.1%
   Realized securities gains    90    383  -76.5%
   Other income    537    397  35.3%
 Total noninterest income   3,916    3,045  28.6%
  Noninterest expense    
   Salaries and employee benefits   6,758    4,764  41.9%
   Net occupancy expense   826    512  61.3%
   Equipment expense   1,031    686  50.3%
   Professional fees   354    429  -17.5%
   Amortization of intangibles   429    50  758.0%
   FDIC premiums   295    300  -1.7%
   Merger-related expense   1,455    153 n/a
   Foreclosed properties expense   122    93  31.2%
   Loss (gain) on sales of foreclosed properties   73    (276)n/a
   Write-downs of foreclosed properties   29    259  -88.8%
   Other expenses   2,564    1,467  74.8%
 Total noninterest expense   13,936    8,437  65.2%
  Income before income taxes    7,578    6,092  24.4%
  Income taxes    2,300    1,849  24.4%
  Net income $  5,278 $  4,243  24.4%
     


SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)
Quarterly Performance Summary -- Q2 2017 vs Q2 2016
    
   For the Quarter Ended  Percent 
  6/30/20176/30/2016 Change 
Per Share Data    
 Earnings per common share    
   Basic $  0.43 $  0.40 7.5%
   Diluted $  0.43 $  0.40 7.5%
     
 Cash dividends $  0.11 $  0.10 10.0%
     
 Average common shares outstanding    
   Basic    12,288,514    10,681,995 15.0%
   Diluted    12,299,187    10,701,017 14.9%
     
  Common shares outstanding at period end    12,299,726    10,692,320 15.0%
     
Performance Ratios    
 Return on average equity  11.10% 11.49%-3.4%
 Return on average tangible equity  12.95% 12.10%7.0%
 Return on average assets  1.01% 1.10%-8.2%
 Net interest margin  3.81% 3.40%12.1%
 Efficiency ratio (A)  53.00% 55.35%-4.2%
     

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


SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)  
Six Month Performance Summary -- 2017 vs 2016   
     
     
   For the Six Months Ended  Percent 
 Dollars in thousands 6/30/20176/30/2016 Change 
 Condensed Statements of Income    
  Interest income    
   Loans, including fees $  35,388  $  27,059 30.8%
   Securities    4,200     3,382 24.2%
   Other    317     7 n/a
  Total interest income    39,905     30,448 31.1%
  Interest expense    
   Deposits    5,024     4,324 16.2%
   Borrowings    3,404     2,611 30.4%
  Total interest expense    8,428     6,935 21.5%
  Net interest income    31,477     23,513 33.9%
  Provision for loan losses    500     500 0.0%
  Net interest income after provision       
   for loan losses    30,977     23,013 34.6%
     
  Noninterest income    
   Insurance commissions    1,957     2,013 -2.8%
   Trust and wealth management fees    695     232 199.6%
   Service fees related to deposit accounts    2,874     2,038 41.0%
   Realized securities gains    32     775 -95.9%
   Other income    938     794 18.1%
 Total noninterest income   6,496     5,852 11.0%
  Noninterest expense       
   Salaries and employee benefits   11,945     9,446 26.5%
   Net occupancy expense   1,393     1,051 32.5%
   Equipment expense   1,766     1,343 31.5%
   Professional fees   639     901 -29.1%
   Amortization of intangibles   526     100 426.0%
   FDIC premiums   505     600 -15.8%
   Merger-related expense   1,564     264 n/a
   Foreclosed properties expense   226     217 4.1%
   Gain on sales of foreclosed properties   (83)    (282)-70.6%
   Write-downs of foreclosed properties   447     369 21.1%
   Litigation settlement   9,900     - n/a
   Other expenses   4,125     2,982 38.3%
 Total noninterest expense   32,953     16,991 93.9%
  Income before income taxes    4,520     11,874 -61.9%
  Income taxes    858     3,569 -76.0%
  Net income $  3,662  $  8,305 -55.9%
        


SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)  
Six Month Performance Summary -- 2017 vs 2016   
    
   For the Six Months Ended  Percent 
  6/30/20176/30/2016 Change 
 Per Share Data    
  Earnings per common share    
   Basic $  0.32 $  0.78 -59.0%
   Diluted $  0.32 $  0.78 -59.0%
     
  Cash dividends $  0.22 $  0.20 10.0%
     
  Average common shares outstanding    
   Basic    11,517,721    10,676,925 7.9%
   Diluted    11,559,990    10,685,290 8.2%
     
  Common shares outstanding at period end    12,299,726    10,692,320 15.0%
     
 Performance Ratios    
  Return on average equity  4.22% 11.29%-62.6%
  Return on average tangible equity  4.78% 11.90%-59.8%
  Return on average assets  0.38% 1.09%-65.1%
  Net interest margin  3.69% 3.45%7.0%
  Efficiency ratio (A)  52.21% 55.63%-6.1%
     

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 6/30/20173/31/201712/31/20169/30/20166/30/2016
 Condensed Statements of Income (unaudited)      
  Interest income      
   Loans, including fees $  19,717 $  15,671  $  15,780  $  14,142  $  13,622 
   Securities    2,349    1,851     1,796     1,759     1,656 
   Other    165    152     161     5     5 
  Total interest income    22,231    17,674     17,737     15,906     15,283 
  Interest expense      
   Deposits    2,634    2,390     2,430     2,209     2,154 
   Borrowings    1,749    1,654     1,850     1,659     1,395 
  Total interest expense    4,383    4,044     4,280     3,868     3,549 
  Net interest income    17,848    13,630     13,457     12,038     11,734 
  Provision for loan losses    250    250     -     -     250 
  Net interest income after provision      
   for loan losses    17,598    13,380     13,457     12,038     11,484 
  Noninterest income      
   Insurance commissions    988    968     992     1,016     1,090 
   Trust and wealth management fees    595    100     111     252     116 
   Service fees related to deposit accounts    1,706    1,168     1,194     1,138     1,059 
   Realized securities gains (losses)    90    (58)    291     61     383 
   Other income    537    401     410     282     397 
 Total noninterest income   3,916    2,579     2,998     2,749     3,045 
  Noninterest expense      
   Salaries and employee benefits   6,758    5,187     5,308     4,819     4,764 
   Net occupancy expense   826    567     522     525     512 
   Equipment expense   1,031    735     700     716     686 
   Professional fees   354    285     344     270     429 
   Amortization of intangibles   429    97     97     50     50 
   FDIC premiums   295    210     75     200     300 
   Merger-related expense   1,455    109     588     80     153 
   Foreclosed properties expense   122    104     97     100     93 
   Loss (gain) on sales of foreclosed properties    73    (156)    (465)    (168)    (276)
   Write-downs of foreclosed properties    29    418     165     134     259 
   Litigation settlement    -    9,900     -     -     - 
   Other expenses   2,564    1,560     1,961     1,693     1,467 
 Total noninterest expense   13,936    19,016     9,392     8,419     8,437 
  Income (loss) before income taxes    7,578    (3,057)    7,063     6,368     6,092 
  Income tax expense (benefit)    2,300    (1,441)    2,353     2,087     1,849 
  Net income (loss) $  5,278 $  (1,616) $  4,710  $  4,281  $  4,243 
       

 

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)     
Five Quarter Performance Summary     
      
   For the Quarter Ended 
  6/30/20173/31/201712/31/20169/30/20166/30/2016
 Per Share Data      
  Earnings per common share      
   Basic $  0.43 $  (0.15)$  0.44 $  0.40 $  0.40 
   Diluted $  0.43 $  (0.15)$  0.44 $  0.40 $  0.40 
       
  Cash dividends $  0.11 $  0.11 $  0.10 $  0.10 $  0.10 
       
  Average common shares outstanding      
   Basic    12,288,514    10,738,365    10,710,164    10,692,423    10,681,995 
   Diluted    12,299,187    10,738,365    10,762,445    10,727,140    10,701,017 
       
  Common shares outstanding at period end    12,299,726    10,750,477    10,736,970    10,701,841    10,692,320 
       
 Performance Ratios      
  Return on average equity  11.10% -4.11% 12.22% 11.29% 11.49%
  Return on average tangible equity  12.95% -4.51% 13.42% 11.86% 12.10%
  Return on average assets  1.01% -0.37% 1.07% 1.08% 1.10%
  Net interest margin  3.81% 3.54% 3.34% 3.32% 3.40%
  Efficiency ratio (A)  53.00% 51.16% 56.67% 53.30% 55.35%
       

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 (unaudited)     
       
 Dollars in thousands, except per share amounts 6/30/20173/31/201712/31/20169/30/20166/30/2016
       
 Assets      
 Cash and due from banks$  9,294  $  19,326  $  4,262  $  25,067  $  4,161 
 Interest bearing deposits other banks   44,242     38,895     42,354     9,432     8,897 
 Securities   336,811     282,028     266,542     262,102     261,633 
 Loans, net   1,538,083     1,292,915     1,307,862     1,234,605     1,166,723 
 Property held for sale   23,592     23,491     24,504     24,767     23,425 
 Premises and equipment, net   33,234     26,377     23,737     21,802     21,405 
 Goodwill and other intangible assets   28,214     13,587     13,652     7,348     7,398 
 Cash surrender value of life insurance policies   41,189     39,412     39,143     38,504     38,246 
 Other assets   40,641     40,411     36,591     34,009     33,293 
   Total assets$  2,095,300  $  1,776,442  $  1,758,647  $  1,657,636  $  1,565,181 
             
 Liabilities and Shareholders' Equity      
 Deposits$  1,613,919  $  1,301,241  $  1,295,519  $  1,156,785  $  1,096,545 
 Short-term borrowings   205,728     228,868     224,461     234,657     205,552 
 Long-term borrowings and     
   subordinated debentures   65,348     65,804     66,259     93,735     94,214 
 Other liabilities   17,173     26,910     17,048     18,640     18,201 
 Shareholders' equity   193,132     153,619     155,360     153,819     150,669 
   Total liabilities and shareholders' equity$  2,095,300  $  1,776,442  $  1,758,647  $  1,657,636  $  1,565,181 
                   
 Book value per common share$  15.70  $  14.29  $  14.47  $  14.37  $  14.09 
                     
 Tangible book value per common share$  13.41  $  13.03  $  13.20  $  13.69  $  13.40 
                     
 Tangible common equity to tangible assets 8.0%  7.9%  8.1%  8.9%  9.2%
       

 

SUMMIT FINANCIAL GROUP INC. (NASDAQ:  SMMF)     
Regulatory Capital Ratios      
        
  6/30/20173/31/201712/31/20169/30/20166/30/2016 
Summit Financial Group, Inc.      
 CET1 Risk-based Capital10.5%10.3%10.5%11.1%11.5% 
 Tier 1 Risk-based Capital11.7%11.5%11.8%12.4%12.9% 
 Total Risk-based Capital12.4%12.3%12.6%13.3%13.8% 
 Tier 1 Leverage Ratio9.2%9.4%9.4%10.4%10.5% 
        
Summit Community Bank, Inc.      
 CET1 Risk-based Capital11.6%11.6%11.9%12.5%13.0% 
 Tier 1 Risk-based Capital11.6%11.6%11.9%12.5%13.0% 
 Total Risk-based Capital12.4%12.4%12.7%13.4%13.9% 
 Tier 1 Leverage Ratio9.2%9.4%9.5%10.5%10.6% 
        

 

SUMMIT FINANCIAL GROUP INC. (NASDAQ:  SMMF)    
Loan Composition      
        
Dollars in thousands6/30/20173/31/201712/31/20169/30/20166/30/2016 
        
Commercial $  176,362 $  134,808 $  119,088 $  110,466 $  101,521 
Mortgage warehouse lines   35,068    30,217    85,966    108,983    80,282 
Commercial real estate      
  Owner occupied   239,108    217,733    203,047    192,254    190,534 
  Non-owner occupied   455,439    401,795    381,921    367,196    348,099 
Construction and development      
  Land and development   74,155    68,079    72,042    65,430    65,702 
  Construction    22,967    16,511    16,584    11,276    8,506 
Residential real estate      
  Non-jumbo    355,546    266,140    265,641    228,777    225,919 
  Jumbo    63,899    60,780    65,628    57,276    52,105 
  Home equity    81,192    75,299    74,596    75,161    75,904 
Consumer    37,630    24,440    25,534    19,756    19,520 
Other    9,049    8,831    9,489    9,649    10,008 
Total loans, net of unearned fees   1,550,415    1,304,633    1,319,536    1,246,224    1,178,100 
Less allowance for loan losses   12,332    11,718    11,674    11,619    11,377 
Loans, net$  1,538,083 $  1,292,915 $  1,307,862 $  1,234,605 $  1,166,723 
        

 

SUMMIT FINANCIAL GROUP INC. (NASDAQ:  SMMF)    
Deposit Composition      
        
Dollars in thousands 6/30/20173/31/201712/31/20169/30/20166/30/2016 
Non-interest bearing checking$  234,173 $  152,086 $  149,737 $  122,652 $  120,845 
Interest bearing checking   372,327    275,678    262,591    212,172    205,095 
Savings    373,439    342,548    337,348    321,563    306,785 
Time deposits    633,980    530,929    545,843    500,398    463,820 
Total deposits$  1,613,919 $  1,301,241 $  1,295,519 $  1,156,785 $  1,096,545 
        

 

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)    
Asset Quality Information     
       
   For the Quarter Ended 
 Dollars in thousands 6/30/20173/31/201712/31/20169/30/20166/30/2016
       
 Gross loan charge-offs$  114  $  315  $  400  $  331  $  263 
 Gross loan recoveries   (478)    (108)    (456)    (573)    (75)
   Net loan charge-offs (recoveries)$  (364) $  207  $  (56) $  (242) $  188 
       
 Net loan charge-offs to average loans (annualized) -0.09%  0.06%  -0.02%  -0.09%  0.07%
 Allowance for loan losses$  12,332  $  11,718  $  11,674  $  11,619  $  11,377 
 Allowance for loan losses as a percentage     
   of period end loans 0.79%  0.90%  0.88%  0.93%  0.97%
 Nonperforming assets:     
   Nonperforming loans     
   Commercial$  786  $  226  $  298  $  846  $  399 
   Commercial real estate   2,051     4,734     4,844     4,867     5,773 
   Residential construction and development   3,613     3,936     4,465     4,360     5,400 
   Residential real estate   6,860     5,886     4,815     4,174     3,531 
   Consumer   391     162     152     169     91 
 Total nonperforming loans   13,701     14,944     14,574     14,416     15,194 
   Foreclosed properties     
   Commercial real estate   2,126     1,749     1,749     1,749     976 
   Commercial construction and development   7,527     8,276     8,610     8,664     8,708 
   Residential construction and development   12,402     12,635     13,265     13,741     12,989 
   Residential real estate   1,537     831     880     613     752 
 Total foreclosed properties   23,592     23,491     24,504     24,767     23,425 
   Other repossessed assets   57     12     12     12     38 
 Total nonperforming assets$  37,350  $  38,447  $  39,090  $  39,195  $  38,657 
       
 Nonperforming loans to period end loans 0.88%  1.15%  1.10%  1.16%  1.29%
 Nonperforming assets to period end assets 1.78%  2.16%  2.22%  2.36%  2.47%
       
 Troubled debt restructurings     
   Performing$  26,472  $  28,183  $  28,066  $  28,287  $  27,750 
   Nonperforming   464     719     564     863     2,133 
 Total troubled debt restructurings$  26,936  $  28,902  $  28,630  $  29,150  $  29,883 
       

 

Loans Past Due 30-89 Days     
   For the Quarter Ended 
 In thousands 6/30/20173/31/201712/31/20169/30/20166/30/2016
       
 Commercial$  470 $  162 $  175 $  405 $  422
 Commercial real estate   976    2,758    434    626    214
 Construction and development   308    291    552    235    520
 Residential real estate   6,943    2,924    5,517    2,941    4,763
 Consumer   548    155    375    144    177
 Other   49    17    14    13    12
   Total$  9,294 $  6,307 $  7,067 $  4,364 $  6,108
       

 

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)      
Average Balance Sheet, Interest Earnings & Expenses and Average Rates     
Q2 2017 vs Q2 2016        
 Q2 2017 Q2 2016 
 AverageEarnings /Yield / AverageEarnings /Yield / 
Dollars in thousandsBalancesExpenseRate BalancesExpenseRate 
         
ASSETS        
Interest earning assets        
  Loans, net of unearned  interest        
  Taxable$  1,537,317  $  19,550  5.10% $  1,126,519  $  13,488 4.82% 
  Tax-exempt   13,030     257  7.91%    14,554     203 5.61% 
  Securities        
  Taxable   214,601     1,330  2.49%    211,624     1,062 2.02% 
  Tax-exempt   133,130     1,568  4.72%    71,649     900 5.05% 
  Interest bearing deposits other banks        
  and Federal funds sold   47,937     165  1.38%    9,152     4 0.18% 
Total interest earning assets   1,946,015     22,870  4.71%    1,433,498     15,657 4.39% 
         
Noninterest earning assets        
  Cash & due from banks   10,101       3,752    
  Premises & equipment   34,441       21,517    
  Other assets   115,728       89,773    
  Allowance for loan losses   (11,966)      (11,420)   
  Total assets$  2,094,319    $  1,537,120    
         
 LIABILITIES AND SHAREHOLDERS' EQUITY       
         
Liabilities        
Interest bearing liabilities        
  Interest bearing         
  demand deposits$  378,350  $  252  0.27% $  205,242  $  79 0.15% 
  Savings deposits   389,847     616  0.63%    295,402     550 0.75% 
  Time deposits   628,358     1,766  1.13%    471,343     1,526 1.30% 
  Short-term borrowings   200,209     1,079  2.16%    183,673     419 0.92% 
  Long-term borrowings and        
  subordinated debentures   65,692     670  4.09%    94,568     975 4.15% 
Total interest bearing liabilities   1,662,456     4,383  1.06%    1,250,228     3,549 1.14% 
         
Noninterest bearing liabilities        
  Demand deposits   221,245       120,118    
  Other liabilities   20,490       19,044    
  Total liabilities   1,904,191       1,389,390    
         
Shareholders' equity - preferred   -       -    
Shareholders' equity - common   190,128       147,730    
  Total liabilities and        
  shareholders' equity$  2,094,319    $  1,537,120    
         
NET INTEREST EARNINGS  $  18,487    $  12,108  
         
NET INTEREST MARGIN    3.81%    3.40% 
              

  

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)      
Average Balance Sheet, Interest Earnings & Expenses and Average Rates     
YTD 2017 vs YTD 2016        
   
 YTD 2017 YTD 2016 
 AverageEarnings /Yield / AverageEarnings /Yield / 
Dollars in thousandsBalancesExpenseRate BalancesExpenseRate 
         
ASSETS        
Interest earning assets        
  Loans, net of unearned  interest        
  Taxable$  1,408,566  $  35,100 5.03% $  1,107,801  $  26,778 4.86% 
  Tax-exempt   13,161     443 6.79%    15,189     424 5.61% 
  Securities        
  Taxable   200,544     2,459 2.47%    210,494     2,146 2.05% 
  Tax-exempt   114,320     2,678 4.72%    75,482     1,873 4.99% 
  Interest bearing deposits other banks        
  and Federal funds sold   44,338     317 1.44%    8,621     7 0.16% 
Total interest earning assets   1,780,929     40,997 4.64%    1,417,587     31,228 4.43% 
         
Noninterest earning assets        
  Cash & due from banks   7,298       3,757    
  Premises & equipment   29,500       21,556    
  Other assets   106,440       89,708    
  Allowance for loan losses   (11,864)      (11,491)   
  Total assets$  1,912,303    $  1,521,117    
         
 LIABILITIES AND SHAREHOLDERS' EQUITY       
         
Liabilities        
Interest bearing liabilities        
  Interest bearing         
  demand deposits$  320,918  $  399 0.25% $  207,487  $  162 0.16% 
  Savings deposits   365,026     1,242 0.69%    286,399     1,055 0.74% 
  Time deposits   584,767     3,383 1.17%    471,470     3,106 1.32% 
  Short-term borrowings   198,587     2,073 2.11%    176,111     659 0.75% 
  Long-term borrowings and        
  subordinated debentures   65,918     1,331 4.07%    94,811     1,952 4.14% 
    1,535,216     8,428 1.11%    1,236,278     6,934 1.13% 
Noninterest bearing liabilities        
  Demand deposits   184,968       120,291    
  Other liabilities   18,454       17,485    
  Total liabilities   1,738,638       1,374,054    
         
Shareholders' equity - preferred   -       -    
Shareholders' equity - common   173,665       147,063    
  Total liabilities and        
  shareholders' equity$  1,912,303    $  1,521,117    
         
NET INTEREST EARNINGS  $  32,569    $  24,294  
         
NET INTEREST MARGIN   3.69%    3.45% 
         
Contact: Robert S. Tissue, Sr. Vice President & CFO
Telephone: (304) 530-0552	
Email: rtissue@summitfgi.com