Summit Financial Group Reports Fourth Quarter & Full Year 2013 Results

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MOOREFIELD, W.Va., Jan. 29, 2014 (GLOBE NEWSWIRE) -- Summit Financial Group, Inc. ("Company" or "Summit") (Nasdaq:SMMF) today reported fourth quarter 2013 net income applicable to common shares of $2.59 million, or $0.29 per diluted share, compared with $1.91 million, or $0.22 per diluted share, for the fourth quarter of 2012. Fourth quarter 2013 results, as compared to the same period in 2012, were positively impacted primarily by a lower provision for loan losses.

Excluding from fourth quarter 2013 (on a pre-tax basis) realized securities gains of $124,000, gains on sales of foreclosed properties of $28,000, and write-downs of foreclosed properties of $644,000, and from fourth quarter 2012 realized securities gains of $103,000, losses on sales of foreclosed properties of $94,000, charges for other-than-temporary impairment ("OTTI") of securities of $76,000 and write-downs of foreclosed properties of $748,000, fourth quarter 2013 earnings would have approximated $2.90 million, or $0.32 per diluted share, compared to $2.42 million, or $0.28 per diluted share, for the year-ago period.

For the full-year 2013, Summit recorded net income applicable to common shares of $7.29 million, or $0.84 per diluted share, compared with $4.94 million, or $0.60 per diluted share, for 2012.

Excluding from the full-year 2013 (on a pre-tax basis) realized securities gains of $240,000, losses on sales of foreclosed properties of $518,000, OTTI charges of $118,000 and write-downs of foreclosed properties of $3.72 million, and from the full-year 2012 realized securities gains of $2.35 million, losses on sale of foreclosed properties of $677,000, OTTI charges of $451,000 and write-downs of foreclosed properties of $6.86 million, earnings for the full-year 2013 would have approximated $9.89 million, or $1.12 per diluted share, compared to $8.49 million, or $0.97 per diluted share, for 2012.

Highlights for Q4 2013 include:

  • Best quarter's earnings per diluted share since Q4 2008.
  • Eleventh consecutive quarter of positive quarterly earnings.
  • Nonperforming assets declined for the eighth consecutive quarter, reaching its lowest level since Q4 2008.
  • Net interest margin increased 9 basis points compared to Q3 2013 and 5 basis points compared to the year-ago period.
  • The provision for loan losses remained unchanged compared to the $1.00 million recorded in Q3 2013, and was less than half the amount recorded in Q4 2012.
  • Recorded charges to write-down foreclosed properties of $644,000, compared to $654,000 in Q3 2013 and $748,000 in Q4 2012.
  • Summit's regulatory capital ratios are at the highest levels in thirteen years.

H. Charles Maddy, III, President and Chief Executive Officer of Summit, commented, "We are very pleased to report the past quarter's and year's improved earnings performance, increased net interest margin, reductions in the portfolio of problem assets and strengthened capital levels. Our problem assets remain our top priority, and we are encouraged by the 23 percent reduction in our nonperforming assets over the past 12 months. However, dispositions of foreclosed properties remain challenging -- particularly with respect to commercial and residential development properties. Further, our near term quarterly earnings could fluctuate as foreclosed properties are re-appraised and adjusted to estimated fair values on an ongoing basis, but we anticipate such charges in 2014 will approximate or be less than the amounts recorded in 2013."

Results from Operations

Total revenue for the fourth quarter 2013, consisting of net interest income and noninterest income, was $12.9 million compared to $12.7 million for the fourth quarter 2012. For the full-year 2013, total revenue was $50.0 million compared to $52.7 million for 2012.

Total revenue excluding realized securities gains of $124,000 was $12.8 million for fourth quarter 2013 compared to total revenue excluding realized securities gains of $103,000 and OTTI of securities of $76,000 of $12.7 million for the same prior-year quarter. For the full-year 2013, total revenue excluding these same items was $49.9 million compared to $50.8 million for the full-year 2012.

For the fourth quarter of 2013, net interest income increased to $10.0 million, compared to $9.9 million reported in the prior-year fourth quarter and $9.5 million reported in the linked quarter. The net interest margin for fourth quarter 2013 was 3.24 percent compared to 3.15 percent for the linked quarter, and 3.19 percent for the year-ago quarter.

Noninterest income, consisting primarily of insurance commissions from Summit's insurance agency subsidiary and service fee income from community banking activities, for fourth quarter 2013 was $2.9 million compared to $2.8 million for the comparable period of 2012. Excluding realized securities gains and OTTI of securities, noninterest income was $2.77 million for fourth quarter 2013, compared to the $2.82 million reported for fourth quarter 2012.

The provision for loan losses was $1.0 million for the fourth quarter and linked quarter of 2013 compared to $2.5 million for the year-ago quarter.

Noninterest expenses continue to be well-controlled. Total noninterest expense increased 1.9% for the quarter to $8.4 million from the $8.3 million reported in fourth quarter 2012. Excluding from fourth quarter 2013 noninterest expense (on a pre-tax basis) gains on sales of foreclosed properties of $28,000 and write-downs of foreclosed properties of $644,000 and from fourth quarter 2012 losses on sales of foreclosed properties of $94,000 and write-downs of foreclosed properties of $748,000, noninterest expense would have approximated $7.8 million for fourth quarter 2013 compared to $7.4 million for fourth quarter 2012.

Noninterest expense for the full-year 2013 decreased 6.7% compared to the full-year 2012. Excluding from full-year 2013 noninterest expense (on a pre-tax basis) losses on sales of foreclosed properties of $518,000 and write-downs of foreclosed properties of $3.7 million and from full-year 2012 losses on sales of foreclosed properties of $677,000 and write-downs of foreclosed properties of $6.9 million, noninterest expense would have approximated $30.5 million for full-year 2013, compared to $29.7 million for the comparable period of 2012.

Balance Sheet

At December 31, 2013, total assets were $1.39 billion, a decrease of $877,000, or 0.1 percent since December 31, 2012. Total loans, net of unearned fees and allowance for loan losses, were $937.1 million at December 31, 2013, almost unchanged from the $937.2 million reported at year end 2012.

At December 31, 2013, deposits were $1.00 billion, a decrease of $23.3 million, or 2.3 percent, since year end 2012. During 2013, interest bearing checking deposits grew $10.9 million, or 6.2 percent, to $186.6 million, while time deposits decreased by $26.8 million, or 4.8 percent. Long-term borrowings and subordinated debentures declined by 16.6 percent since year end 2012, as the Company paid down $39.8 million in maturing borrowings during 2013.

Asset Quality

As of December 31, 2013, nonperforming assets ("NPAs"), consisting of nonperforming loans, foreclosed properties, and repossessed assets, were $72.3 million, or 5.22 percent of assets. This compares to $77.0 million, or 5.55 percent of assets at the linked quarter, and $94.0 million, or 6.77 percent of assets at December 31, 2012.

Fourth quarter 2013 net loan charge-offs were $1.4 million, or 0.58 percent of average loans annualized, while adding $1.0 million to the allowance for loan losses. The allowance for loan losses stood at $12.7 million, or 1.33 percent of total loans at December 31, 2013, compared to 1.88 percent at December 31, 2012.

Capital Adequacy

Shareholders' equity was $111.1 million as of December 31, 2013 compared to $108.6 million at December 31, 2012.

Summit's regulatory total risk-based capital ratio of 14.5 percent at December 31, 2013, was unchanged compared to September 30, 2013, and increased compared to 14.0 percent at December 31, 2012. The Company's December 31, 2013 Tier 1 leverage capital ratio of 8.9 percent is unchanged from September 30, 2013 and up nicely from 8.3 percent at December 30, 2012.

Summit's depository institution, Summit Community Bank, Inc. (the "Bank"), is well in excess of regulatory requirements for a "well capitalized" institution at September 30, 2013. The Bank's total risk-based capital ratio was 15.7 percent at December 31, 2013 compared to 15.5 percent at September 30, 2013 and 15.0 percent at December 31, 2012, while its Tier 1 leverage capital ratio was unchanged at 10.4 percent compared to September 30, 2013 and up from the 9.8% reported at December 31, 2012.

The Bank received regulatory approval for and paid an upstream dividend of $1.0 million during Q4 2013, representing the second such dividend of the year. In 2013, upstream dividends totaling $2.0 million were paid to Summit, representing the first such dividends paid since 2008.

Total common shares outstanding as of December 31, 2013 were 7,451,022 compared to 7,425,472 shares as of December 31, 2012.

About the Company

Summit Financial Group, Inc. is a $1.39 billion financial holding company headquartered in Moorefield, West Virginia. Summit provides community banking services primarily in the Eastern Panhandle and South Central regions of West Virginia and the Northern and Shenandoah Valley regions of Virginia, through its bank subsidiary, Summit Community Bank, Inc., which operates fifteen banking locations. Summit also operates Summit Insurance Services, LLC in Moorefield, West Virginia and Leesburg, Virginia.

FORWARD-LOOKING STATEMENTS

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

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

NON-GAAP FINANCIAL MEASURES

This press release contains financial information determined by methods other than in accordance with generally accepted accounting principles in the United States of America ("GAAP"). Specifically, Summit adjusted GAAP performance measures to exclude the effects of realized and unrealized securities gains and losses, gains/losses on sales of foreclosed properties, and write-downs of foreclosed properties to estimated fair values included in its Consolidated Statements of Income. Management believes presentations of financial measures excluding the impact of these items provide useful supplemental information that is important for a proper understanding of Summit's results of operations for the following reasons: (1) the trading of securities is not deemed a core business activity of Summit; and (2) prior to the financial crisis in 2008, the recognition of material unrealized securities losses, gains/losses on sales of foreclosed properties, and write-downs of foreclosed properties were infrequent, and results excluding their impact will be beneficial to readers, if our levels of nonperforming assets return to historical levels. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary -- Q4 2013 vs Q4 2012
For the Quarter Ended Percent
Dollars in thousands 12/31/2013 12/31/2012 Change
Condensed Statements of Income
Interest income
Loans, including fees $ 12,507 $ 13,512 -7.4%
Securities 1,850 1,703 8.6%
Other 2 5 -60.0%
Total interest income 14,359 15,220 -5.7%
Interest expense
Deposits 2,317 3,017 -23.2%
Borrowings 2,039 2,307 -11.6%
Total interest expense 4,356 5,324 -18.2%
Net interest income 10,003 9,896 1.1%
Provision for loan losses 1,000 2,498 -60.0%
Net interest income after provision for loan losses 9,003 7,398 21.7%
Noninterest income
Insurance commissions 1,056 1,081 -2.3%
Service fees related to deposit accounts 1,124 1,092 2.9%
Realized securities gains 124 103 20.4%
Other-than-temporary impairment of securities -- (76) -100.0%
Other income 592 644 -8.1%
Total noninterest income 2,896 2,844 1.8%
Noninterest expense
Salaries and employee benefits 4,024 3,799 5.9%
Net occupancy expense 466 494 -5.7%
Equipment expense 580 554 4.7%
Professional fees 295 337 -12.5%
FDIC premiums 502 535 -6.2%
Foreclosed properties expense 209 269 -22.3%
(Gain) on sale of foreclosed properties (28) 94 -129.8%
Write-downs of foreclosed properties 644 748 -13.9%
Other expenses 1,732 1,433 20.9%
Total noninterest expense 8,424 8,263 1.9%
Income before income taxes 3,475 1,979 75.6%
Income taxes 687 (126) -645.2%
Net income 2,788 2,105 32.4%
Preferred stock dividends 194 194 0.0%
Net income applicable to common shares $ 2,594 $ 1,911 35.7%
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary -- Q4 2013 vs Q4 2012
For the Quarter Ended Percent
12/31/2013 12/31/2012 Change
Per Share Data
Earnings per common share
Basic $ 0.35 $ 0.26 34.6%
Diluted $ 0.29 $ 0.22 31.8%
Average shares outstanding
Basic 7,450,379 7,425,472 0.3%
Diluted 9,624,312 9,601,435 0.2%
Performance Ratios
Return on average equity (A) 10.15% 7.76% 30.8%
Return on average assets 0.80% 0.60% 33.3%
Net interest margin 3.24% 3.19% 1.6%
Efficiency ratio (B) 57.31% 53.88% 6.4%

NOTE (A) – Net income divided by total average shareholders' equity.

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

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Annual Performance Summary -- 2013 vs 2012
For the Years Ended Percent
Dollars in thousands 12/31/2013 12/31/2012 Change
Condensed Statements of Income
Interest income
Loans, including fees $ 50,741 $ 55,567 -8.7%
Securities 6,534 8,282 -21.1%
Other 5 35 -85.7%
Total interest income 57,280 63,884 -10.3%
Interest expense
Deposits 10,392 13,158 -21.0%
Borrowings 8,085 10,906 -25.9%
Total interest expense 18,477 24,064 -23.2%
Net interest income 38,803 39,820 -2.6%
Provision for loan losses 4,500 8,500 -47.1%
Net interest income after provision for loan losses 34,303 31,320 9.5%
Noninterest income
Insurance commissions 4,429 4,433 -0.1%
Service fees related to deposit accounts 4,325 4,255 1.6%
Realized securities gains 240 2,348 -89.8%
Other-than-temporary impairment of securities (118) (451) -73.8%
Other income 2,333 2,294 1.7%
Total noninterest income 11,209 12,879 -13.0%
Noninterest expense
Salaries and employee benefits 16,178 15,532 4.2%
Net occupancy expense 1,853 1,939 -4.4%
Equipment expense 2,303 2,332 -1.2%
Professional fees 1,181 1,193 -1.0%
FDIC premiums 2,060 2,067 -0.3%
Foreclosed properties expense 1,045 1,221 -14.4%
Loss on sale of foreclosed properties 518 677 -23.5%
Write-downs of foreclosed properties 3,722 6,862 -45.8%
Other expenses 5,896 5,444 8.3%
Total noninterest expense 34,756 37,267 -6.7%
Income before income taxes 10,756 6,932 55.2%
Income taxes 2,688 1,219 120.5%
Net income 8,068 5,713 41.2%
Preferred stock dividends 775 777 -0.3%
Net income applicable to common shares $ 7,293 $ 4,936 47.8%
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Annual Performance Summary -- 2013 vs 2012
For the Years Ended Percent
12/31/2013 12/31/2012 Change
Per Share Data
Earnings per common share
Basic $ 0.98 $ 0.66 48.5%
Diluted $ 0.84 $ 0.60 40.0%
Average shares outstanding
Basic 7,442,689 7,425,472 0.2%
Diluted 9,621,504 9,601,169 0.2%
Performance Ratios
Return on average equity (A) 7.38% 5.36% 37.7%
Return on average assets 0.58% 0.40% 45.0%
Net interest margin 3.22% 3.19% 0.9%
Efficiency ratio (B) 56.48% 53.78% 5.0%

NOTE (A) – Net income divided by total average shareholders' equity.

NOTE (B) – 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 12/31/2013 9/30/2013 6/30/2013 3/31/2013 12/31/2012
Condensed Statements of Income
Interest income
Loans, including fees $ 12,507 $ 12,532 $ 12,799 $ 12,904 $ 13,512
Securities 1,850 1,512 1,507 1,664 1,703
Other 2 1 2 1 5
Total interest income 14,359 14,045 14,308 14,569 15,220
Interest expense
Deposits 2,317 2,487 2,820 2,768 3,017
Borrowings 2,039 2,020 1,984 2,043 2,307
Total interest expense 4,356 4,507 4,804 4,811 5,324
Net interest income 10,003 9,538 9,504 9,758 9,896
Provision for loan losses 1,000 1,000 1,000 1,500 2,498
Net interest income after provision for loan losses 9,003 8,538 8,504 8,258 7,398
Noninterest income
Insurance commissions 1,056 1,057 1,132 1,184 1,081
Service fees related to deposit accounts 1,124 1,106 1,085 1,012 1,092
Realized securities gains 124 132 (57) 42 103
Other-than-temporary impairment of securities -- (38) (27) (54) (76)
Other income 592 606 570 564 644
Total noninterest income 2,896 2,863 2,703 2,748 2,844
Noninterest expense
Salaries and employee benefits 4,024 4,050 3,987 4,117 3,799
Net occupancy expense 466 454 476 457 494
Equipment expense 580 578 559 598 554
Professional fees 295 263 360 251 337
FDIC premiums 502 503 515 540 535
Foreclosed properties expense 209 262 295 279 269
(Gain) loss on sale of foreclosed properties (28) (17) 523 40 94
Write-downs of foreclosed properties 644 654 1,494 929 748
Other expenses 1,732 1,484 1,329 1,351 1,433
Total noninterest expense 8,424 8,231 9,538 8,562 8,263
Income before income taxes 3,475 3,170 1,669 2,444 1,979
Income taxes 687 898 452 651 (126)
Net income 2,788 2,272 1,217 1,793 2,105
Preferred stock dividends 194 194 194 194 194
Net income applicable to common shares $ 2,594 $ 2,078 $ 1,023 $ 1,599 $ 1,911
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Five Quarter Performance Summary
For the Quarter Ended
12/31/2013 9/30/2013 6/30/2013 3/31/2013 12/31/2012
Per Share Data
Earnings per common share
Basic $ 0.35 $ 0.28 $ 0.14 $ 0.22 $ 0.26
Diluted $ 0.29 $ 0.24 $ 0.13 $ 0.19 $ 0.22
Average shares outstanding
Basic 7,450,379 7,443,865 7,438,401 7,432,254 7,425,472
Diluted 9,624,312 9,621,957 9,619,585 9,613,886 9,601,435
Performance Ratios
Return on average equity (A) 10.15% 8.49% 4.40% 6.55% 7.76%
Return on average assets 0.80% 0.67% 0.35% 0.52% 0.60%
Net interest margin 3.24% 3.15% 3.12% 3.23% 3.19%
Efficiency ratio - (B) 57.31% 56.22% 56.52% 56.00% 53.88%

NOTE (A) – Net income divided by total average shareholders' equity.

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

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Selected Balance Sheet Data
For the Quarter Ended
Dollars in thousands, except per share amounts 12/31/2013 9/30/2013 6/30/2013 3/31/2013 12/31/2012
Assets
Cash and due from banks $ 3,442 $ 4,571 $ 4,336 $ 3,906 $ 3,833
Interest bearing deposits other banks 8,340 11,532 7,971 7,915 10,969
Securities 288,780 291,258 291,180 283,054 281,539
Loans, net 937,070 939,169 925,979 945,741 937,168
Property held for sale 53,392 45,303 47,258 54,625 56,172
Premises and equipment, net 20,623 20,780 20,936 21,023 21,129
Intangible assets 7,949 8,036 8,124 8,212 8,300
Cash surrender value of life insurance policies 35,611 35,257 30,027 29,791 29,553
Other assets 31,020 31,881 34,159 35,931 38,441
Total assets $ 1,386,227 $ 1,387,787 $ 1,369,970 $ 1,390,198 $ 1,387,104
Liabilities and Shareholders' Equity
Deposits $ 1,003,812 $ 1,016,735 $ 1,038,163 $ 1,066,318 $ 1,027,125
Short-term borrowings 62,769 54,163 16,762 5,960 3,958
Long-term borrowings and subordinated debentures 199,905 199,929 199,954 199,977 239,657
Other liabilities 8,669 8,155 7,880 7,928 7,809
Shareholders' equity 111,072 108,805 107,211 110,015 108,555
Total liabilities and shareholders' equity $ 1,386,227 $ 1,387,787 $ 1,369,970 $ 1,390,198 $ 1,387,104
Book value per common share (A) $ 11.55 $ 11.32 $ 11.15 $ 11.45 $ 11.31
Tangible book value per common share (A) $ 10.72 $ 10.48 $ 10.31 $ 10.60 $ 10.44
Tangible equity / Tangible assets 7.5% 7.3% 7.3% 7.4% 7.3%

NOTE (A) – Assumes the conversion to common stock of all outstanding shares of convertible preferred stock.

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Regulatory Capital Ratios
12/31/2013 9/30/2013 6/30/2013 3/31/2013 12/31/2012
Summit Financial Group, Inc.
Total Risk Based Capital 14.5% 14.5% 14.4% 14.1% 14.0%
Tier 1 Risk-based Capital 12.4% 12.1% 12.1% 11.8% 11.6%
Tier 1 Leverage Ratio 8.9% 8.9% 8.6% 8.4% 8.3%
Summit Community Bank, Inc.
Total Risk Based Capital 15.7% 15.5% 15.6% 15.2% 15.0%
Tier 1 Risk-based Capital 14.5% 14.3% 14.3% 13.9% 13.7%
Tier 1 Leverage Ratio 10.4% 10.4% 10.2% 10.0% 9.8%
SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Loan Composition
Dollars in thousands 12/31/2013 9/30/2013 6/30/2013 3/31/2013 12/31/2012
Commercial $ 88,352 $ 83,844 $ 78,964 $ 86,877 $ 85,829
Commercial real estate
Owner occupied 149,618 151,261 149,660 151,942 154,252
Non-owner occupied 280,790 279,412 277,773 288,475 276,082
Construction and development
Land and development 71,453 73,089 73,426 76,277 79,335
Construction 15,155 12,323 7,634 5,782 3,772
Residential real estate
Non-jumbo 212,946 215,058 216,759 213,965 216,714
Jumbo 53,406 59,701 58,567 62,849 61,567
Home equity 54,844 53,674 53,774 53,765 53,263
Consumer 19,889 20,472 20,147 19,638 20,586
Other 3,276 3,374 3,397 3,191 3,701
Total loans, net of unearned fees 949,729 952,208 940,101 962,761 955,101
Less allowance for loan losses 12,659 13,039 14,122 17,020 17,933
Loans, net $ 937,070 $ 939,169 $ 925,979 $ 945,741 $ 937,168
SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Deposit Composition
Dollars in thousands 12/31/2013 9/30/2013 6/30/2013 3/31/2013 12/31/2012
Non interest bearing checking $ 92,837 $ 99,109 $ 92,147 $ 93,125 $ 100,592
Interest bearing checking 186,578 186,702 187,244 181,327 175,706
Savings 193,446 193,285 196,069 197,587 193,039
Time deposits 530,951 537,639 562,703 594,279 557,788
Total deposits $ 1,003,812 $ 1,016,735 $ 1,038,163 $ 1,066,318 $ 1,027,125
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Asset Quality Information
For the Quarter Ended
Dollars in thousands 12/31/2013 9/30/2013 6/30/2013 3/31/2013 12/31/2012
Gross loan charge-offs $ 1,669 $ 2,825 $ 3,968 $ 2,497 $ 2,545
Gross loan recoveries (289) (742) (70) (84) (160)
Net loan charge-offs $ 1,380 $ 2,083 $ 3,898 $ 2,413 $ 2,385
Net loan charge-offs to average loans (annualized) 0.58% 0.89% 1.63% 1.00% 0.99%
Allowance for loan losses $ 12,659 $ 13,039 $ 14,122 $ 17,020 $ 17,933
Allowance for loan losses as a percentage of period end loans 1.33% 1.37% 1.50% 1.77% 1.88%
Nonperforming assets:
Nonperforming loans
Commercial $ 1,224 $ 2,557 $ 3,996 $ 4,763 $ 5,002
Commercial real estate 2,318 3,795 1,695 1,525 2,556
Commercial construction and development 3,782 3,761 -- -- --
Residential construction and development 9,048 9,128 11,505 13,076 13,641
Residential real estate 2,446 12,385 13,605 16,869 16,522
Consumer 128 145 91 72 55
Total nonperforming loans 18,946 31,771 30,892 36,305 37,776
Foreclosed properties
Commercial -- -- -- -- --
Commercial real estate 9,903 9,961 10,310 11,779 11,835
Commercial construction and development 11,125 11,161 11,492 16,670 17,597
Residential construction and development 20,485 20,585 21,591 21,929 23,074
Residential real estate 11,879 3,596 3,865 4,247 3,666
Total foreclosed properties 53,392 45,303 47,258 54,625 56,172
Other repossessed assets 8 -- 2 19 6
Total nonperforming assets $ 72,346 $ 77,074 $ 78,152 $ 90,949 $ 93,954
Nonperforming loans to period end loans 1.99% 3.34% 3.29% 3.77% 3.96%
Nonperforming assets to period end assets 5.22% 5.55% 5.70% 6.54% 6.77%
Loans Past Due 30-89 Days
For the Quarter Ended
In thousands 12/31/2013 9/30/2013 6/30/2013 3/31/2013 12/31/2012
Commercial $ 74 $ 30 $ 199 $ 27 $ 180
Commercial real estate 1,809 1,757 626 2,161 437
Construction and development 1,628 154 698 64 --
Residential real estate 4,332 4,697 4,479 4,522 6,170
Consumer 292 229 286 277 326
Other -- 50 53 -- --
Total $ 8,135 $ 6,917 $ 6,341 $ 7,051 $ 7,113
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q3 2013 vs Q3 2012
Q4 2013 Q4 2012
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 $ 950,162 $ 12,450 5.20% $ 956,864 $ 13,436 5.59%
Tax-exempt 5,084 89 6.95% 6,184 117 7.53%
Securities
Taxable 226,710 1,273 2.23% 226,629 1,097 1.93%
Tax-exempt 74,777 871 4.62% 75,466 912 4.81%
Interest bearing deposits other banks and Federal funds sold 8,156 1 0.05% 10,779 4 0.15%
Total interest earning assets 1,264,889 14,684 4.61% 1,275,922 15,566 4.85%
Noninterest earning assets
Cash & due from banks 4,279 4,166
Premises & equipment 20,689 21,266
Other assets 109,534 113,952
Allowance for loan losses (13,449) (18,053)
Total assets $ 1,385,942 $ 1,397,253
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing demand deposits $ 188,839 $ 63 0.13% $ 179,198 $ 78 0.17%
Savings deposits 193,889 277 0.57% 194,839 307 0.63%
Time deposits 528,370 1,977 1.48% 556,748 2,632 1.88%
Short-term borrowings 59,378 45 0.30% 10,263 7 0.27%
Long-term borrowings and subordinated debentures 199,917 1,993 3.96% 239,722 2,300 3.82%
Total interest bearing liabilities 1,170,393 4,355 1.48% 1,180,770 5,324 1.79%
Noninterest bearing liabilities
Demand deposits 97,371 99,845
Other liabilities 8,286 8,198
Total liabilities 1,276,050 1,288,813
Shareholders' equity - preferred 9,295 9,326
Shareholders' equity - common 100,597 99,114
Total liabilities and shareholders' equity $ 1,385,942 $ 1,397,253
NET INTEREST EARNINGS $ 10,329 $ 10,242
NET INTEREST MARGIN 3.24% 3.19%
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
YTD 2013 vs YTD 2012
YTD 2013 YTD 2012
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 $ 949,616 $ 50,505 5.32% $ 963,209 $ 55,248 5.74%
Tax-exempt 5,440 388 7.13% 6,628 483 7.29%
Securities
Taxable 208,588 4,131 1.98% 233,560 5,689 2.44%
Tax-exempt 75,707 3,647 4.82% 71,937 3,929 5.46%
Interest bearing deposits other banks and Federal funds sold 7,821 5 0.06% 19,731 35 0.18%
Total interest earning assets 1,247,172 58,676 4.70% 1,295,065 65,384 5.05%
Noninterest earning assets
Cash & due from banks 4,381 4,188
Premises & equipment 20,926 21,578
Other assets 125,629 118,427
Allowance for loan losses (15,152) (18,157)
Total assets $ 1,382,956 $ 1,421,101
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing demand deposits $ 181,413 $ 255 0.14% $ 170,698 $ 325 0.19%
Savings deposits 195,398 1,152 0.59% 203,908 1,361 0.67%
Time deposits 556,644 8,985 1.61% 548,044 11,472 2.09%
Short-term borrowings 34,098 95 0.28% 13,248 31 0.23%
Long-term borrowings and subordinated debentures 202,237 7,991 3.95% 276,092 10,875 3.94%
1,169,790 18,478 1.58% 1,211,990 24,064 1.99%
Noninterest bearing liabilities
Demand deposits 94,943 94,243
Other liabilities 8,951 8,256
Total liabilities 1,273,684 1,314,489
Shareholders' equity - preferred 9,313 9,326
Shareholders' equity - common 99,959 97,286
Total liabilities and shareholders' equity $ 1,382,956 $ 1,421,101
NET INTEREST EARNINGS $ 40,198 $ 41,320
NET INTEREST MARGIN 3.22% 3.19%
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures
For the Quarter Ended For the Years Ended
Dollars in thousands 12/31/2013 9/30/2013 12/31/2012 12/31/2013 12/31/2012
Net income applicable to common shares - excluding realized securities gains, gains/(losses) on sales of foreclosed properties, other-than-temporary impairment of securities and write-downs of foreclosed properties $ 2,904 $ 2,420 $ 2,424 $ 9,887 $ 8,491
Realized securities gains/(losses) 124 132 103 240 2,348
Applicable income tax effect (46) (49) (38) (89) (869)
Gains/(losses) on sales of foreclosed properties 28 17 (94) (518) (677)
Applicable income tax effect (10) (6) 35 192 250
Other-than-temporary impairment of securities -- (38) (76) (118) (451)
Applicable income tax effect -- 14 28 44 167
Write-downs foreclosed properties (644) (654) (748) (3,722) (6,862)
Applicable income tax effect 238 242 277 1,377 2,539
(310) (342) (513) (2,594) (3,555)
GAAP net income applicable to common shares $ 2,594 $ 2,078 $ 1,911 $ 7,293 $ 4,936
Diluted earnings per common share - excluding realized securities gains, gains/(losses) on sales of foreclosed properties, other-than-temporary impairment of securities and write-downs of foreclosed properties $ 0.32 $ 0.27 $ 0.28 $ 1.12 $ 0.97
Realized securities gains/(losses) 0.01 0.01 0.01 0.02 0.24
Applicable income tax effect -- -- -- (0.01) (0.09)
Gains/(losses) on sales of foreclosed properties -- -- (0.01) (0.05) (0.07)
Applicable income tax effect -- -- -- 0.02 0.03
Other-than-temporary impairment of securities -- -- (0.01) (0.01) (0.05)
Applicable income tax effect -- -- -- -- 0.02
Write-downs of foreclosed properties (0.07) (0.07) (0.08) (0.39) (0.71)
Applicable income tax effect 0.03 0.03 0.03 0.14 0.26
(0.03) (0.03) (0.06) (0.28) (0.37)
GAAP diluted earnings per common share $ 0.29 $ 0.24 $ 0.22 $ 0.84 $ 0.60
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures
For the Quarter Ended For the Years Ended
Dollars in thousands 12/31/2013 9/30/2013 12/31/2012 12/31/2013 12/31/2012
Total revenue - excluding realized securities gains and other-than-temporary impairment of securities $ 12,775 $ 12,307 $ 12,713 $ 49,890 $ 50,802
Realized securities gains/(losses) 124 132 103 240 2,348
Other-than-temporary impairment of securities -- (38) (76) (118) (451)
124 94 27 122 1,897
GAAP total revenue $ 12,899 $ 12,401 $ 12,740 $ 50,012 $ 52,699
Total noninterest income - excluding realized securities gains and other-than-temporary impairment of securities $ 2,772 $ 2,769 $ 2,817 $ 11,087 $ 10,982
Realized securities gains/(losses) 124 132 103 240 2,348
Other-than-temporary impairment of securities -- (38) (76) (118) (451)
124 94 27 122 1,897
GAAP total noninterest income $ 2,896 $ 2,863 $ 2,844 $ 11,209 $ 12,879
Total noninterest expense - excluding gains/losses on sales of foreclosed properties and write-downs of foreclosed properties $ 7,808 $ 7,594 $ 7,421 $ 30,516 $ 29,727
(Gains)/losses on sales of foreclosed properties (28) (17) 94 518 677
Write-downs of foreclosed properties 644 654 748 3,722 6,862
616 637 842 4,240 7,539
GAAP total noninterest expense $ 8,424 $ 8,231 $ 8,263 $ 34,756 $ 37,266

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

Source:Summit Financial Group, Inc.