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Summit Financial Group Reports Second Quarter 2014 Results

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MOOREFIELD, W.Va., July 30, 2014 (GLOBE NEWSWIRE) -- Summit Financial Group, Inc. ("Company" or "Summit") (Nasdaq:SMMF) today reported second quarter 2014 net income applicable to common shares of $2.24 million, or $0.25 per diluted share, compared to $1.02 million, or $0.13 per diluted share, for the second quarter of 2013, representing an increase of 118.9 percent, or 92.3 percent per diluted share. Q2 2014 earnings compared to Q2 2013 were positively impacted by a $532,000 decline in write-downs of foreclosed properties and an $816,000 increase in net interest income.

Excluding from second quarter 2014 (on a pre-tax basis) realized securities losses of $43,000, losses on sales of foreclosed properties of $54,000, $1,000 in other-than-temporary impairment of securities ("OTTI") and write-downs of foreclosed properties of $962,000, Q2 2014 core earnings approximated $2.91 million, or $0.32 per diluted share. Excluding from Q2 2013 (on a pre-tax basis) realized securities losses of $57,000, losses on sales of foreclosed properties of $523,000, OTTI charges of $27,000 and write-downs of foreclosed properties of $1.49 million, Q2 2013 core earnings approximated $2.35 million, or $0.27 per diluted share.

For the six months ended June 30, 2014, Summit recorded net income applicable to common shares of $4.44 million, or $0.50 per diluted share, compared with $2.62 million, or $0.31 per diluted share, for the comparable 2013 six-month period, representing an increase of 69.5%, or 61.3 % per diluted share.

Excluding from the six month period ended June 30, 2014 nonrecurring items (on a pre-tax basis) comprised of realized securities losses of $64,000, losses on sales of assets of $129,000, OTTI charges of $1,000 and write-downs of foreclosed properties of $1.89 million, and from the 2013 first six-month period realized securities losses of $16,000, losses on sale of foreclosed properties of $563,000, OTTI charges of $80,000 and write-downs of foreclosed properties of $2.42 million, core earnings for first six months of 2014 were approximately $5.75 million, or $0.65 per diluted share, compared to $4.56 million, or $0.52 per diluted share, for the 2013 six month period.

Highlights for Q2 2014 include:

  • Nonperforming assets declined for the tenth consecutive quarter, reaching its lowest level since Q4 2008; foreclosed properties are at the lowest level since Q4 2009.
  • Net interest margin has increased 20 basis points since Q2 2013, although it declined 1 basis point compared to Q1 2014.
  • Achieved loan growth of $30.0 million, or 3.1 percent (non-annualized) during the quarter, and $54.1 million, or 5.7 percent (non-annualized) year-to-date.
  • Core revenues increased for the fourth consecutive quarter.
  • Recorded charges of $962,000 to write-down foreclosed properties compared to $928,000 in Q1 2014 and $1.49 million in Q2 2013.
  • Noninterest expenses remained well-controlled decreasing almost 10.6 percent compared to Q2 2013.
  • Summit's regulatory capital ratios are at the highest levels in fourteen years.

H. Charles Maddy III, President and Chief Executive Officer of Summit, commented, "I am very pleased to report another quarter of solid performance improvements. We continued to enhance earnings, grow the loan portfolio, increase revenues, enhance net interest earnings, strengthen capital and reduce the portfolio of problem assets. Reducing our portfolio of problem assets remains an important priority, and we are very pleased to have reduced nonperforming assets for ten consecutive quarters. While we anticipate earnings may continue to fluctuate from quarter-to-quarter in the short term as our foreclosed properties are re-appraised and written-down to estimated fair values on an ongoing basis, continuing revenue growth driven by an improving net interest margin and the recent uptick in lending is expected to positively impact earnings in the near term."

Results from Operations

Total revenue for second quarter 2014, consisting of net interest income and noninterest income, grew 6.7 percent to $13.0 million compared to $12.2 million for the second quarter 2013. For the year-to-date period ended June 30, 2014, total revenue was $25.8 million compared to $24.7 million for the same period of 2013, representing a 4.4 percent increase.

Total core revenue (excluding nonrecurring items, enumerated above) was $13.1 million for second quarter 2014 compared to $12.3 million for the same prior-year quarter, an increase of 6.3 percent. For the first half of 2014, total core revenue (excluding nonrecurring items) was $25.9 million compared to $24.8 million for the first half of 2013, a 4.4 percent improvement.

For the second quarter of 2014, net interest income was $10.3 million, an increase of 8.6 percent from the $9.5 million reported in the prior-year second quarter and increased $282,000 compared to the linked quarter. The net interest margin for second quarter 2014 was 3.32 percent compared to 3.12 percent for the year-ago quarter, and 3.33 percent for the linked quarter.

Noninterest income, consisting primarily of insurance commissions from Summit's insurance agency subsidiary and service fee income from community banking activities, for second quarter 2014 was $2.71 million compared to $2.70 million for the comparable period of 2014. Excluding realized securities gains/losses and OTTI of securities, noninterest income was $2.75 million for second quarter 2014, compared to $2.79 million reported for second quarter 2013.

The second quarter 2014 provision for loan losses of $1.0 million remained unchanged compared to the linked quarter and the year-ago quarter.

Noninterest expense continues to be well-controlled. Total noninterest expense decreased 10.6% to $8.53 million compared to $9.54 million for the prior-year second quarter. Excluding from noninterest expense (on a pre-tax basis) losses on sales of foreclosed properties of $54,000 in Q2 2014 and $523,000 in Q2 2013 and write-downs of foreclosed properties of $962,000 in Q2 2014 and $1.49 million in Q2 2013, noninterest expense would have approximated $7.51 million for Q2 2014 compared to $7.52 million for the comparable period of 2013. Noninterest expense for the first half of 2014 decreased 5.9% compared to the first half of 2013.

Balance Sheet

At June 30, 2014, total assets were $1.44 billion, an increase of $49.7 million, or 3.6 percent since December 31, 2013. Total loans, net of unearned fees and allowance for loan losses, were $992.8 million at June 30, 2014, up $55.7 million, or 5.9 percent, from the $937.1 million reported at year-end 2013.

At June 30, 2014, deposits were $1.06 billion, an increase of $54.0 million, or 5.4 percent, since year end 2013. During first half 2014, checking and savings grew by $14.6 million and $49.9 million, respectively, or 5.2 percent and 25.8 percent, respectively. Long-term borrowings and subordinated debentures declined by 20.8 percent since year end 2013, as the Company paid down $41.6 million in maturing borrowings, which was funded by growth in checking and savings deposits.

Asset Quality

As of June 30, 2014, nonperforming assets ("NPAs"), consisting of nonperforming loans, foreclosed properties, and repossessed assets, were $63.0 million, or 4.39 percent of assets. This compares to $69.2 million, or 4.92 percent of assets at the linked quarter, and $78.2 million, or 5.70 percent of assets, at second quarter 2013.

Second quarter 2014 net loan charge-offs were $1.06 million, or 0.43 percent of average loans annualized; while adding $1.00 million to the allowance for loan losses. The allowance for loan losses stood at $11.0 million, or 1.10 percent of total loans at June 30, 2014, compared to 1.33 percent at year-end 2013.

Capital Adequacy

Shareholders' equity was $117.5 million as of June 30, 2014 compared to $111.1 million December 31, 2013 and $107.2 million at June 30, 2013. Tangible book value per common share increased to $11.40 at June 30, 2014 compared to $10.72 at December 31, 2013 and $10.31 at June 30, 2013.

Summit's depository institution, Summit Community Bank, Inc. (the "Bank"), remains well in excess of regulatory requirements for a "well capitalized" institution at June 30, 2014. The Bank's total risk-based capital ratio was 15.6 percent at June 30, 2014 compared to 15.7 percent at December 31, 2013, while its Tier 1 leverage capital ratio improved to 10.6 percent from the 10.4 percent reported at December 31, 2013.

About the Company

Summit Financial Group, Inc. is a $1.44 billion financial holding company headquartered in Moorefield, West Virginia. Summit provides community banking services primarily in the Eastern Panhandle and South Central regions of West Virginia and the Northern and Shenandoah Valley regions of Virginia, through its bank subsidiary, Summit Community Bank, Inc., which operates fifteen banking locations. Summit also operates Summit Insurance Services, LLC in Moorefield, West Virginia and Leesburg, Virginia.

FORWARD-LOOKING STATEMENTS

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

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

NON-GAAP FINANCIAL MEASURES

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

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary -- Q2 2014 vs Q2 2013
For the Quarter Ended Percent
Dollars in thousands 6/30/2014 6/30/13 Change
Condensed Statements of Income
Interest income
Loans, including fees $ 12,515 $ 12,799 -2.2%
Securities 1,827 1,507 21.2%
Other 2 2 0.0%
Total interest income 14,344 14,308 0.3%
Interest expense
Deposits 2,335 2,820 -17.2%
Borrowings 1,689 1,984 -14.9%
Total interest expense 4,024 4,804 -16.2%
Net interest income 10,320 9,504 8.6%
Provision for loan losses 1,000 1,000 0.0%
Net interest income after provision for loan losses 9,320 8,504 9.6%
Noninterest income
Insurance commissions 1,091 1,132 -3.6%
Service fees related to deposit accounts 1,101 1,085 1.5%
Realized securities gains (losses) (43) (57) -24.6%
Other-than-temporary impairment of securities (1) (27) -96.3%
Other income 557 570 -2.3%
Total noninterest income 2,705 2,703 0.1%
Noninterest expense
Salaries and employee benefits 4,045 3,987 1.5%
Net occupancy expense 505 476 6.1%
Equipment expense 513 559 -8.2%
Professional fees 282 360 -21.7%
FDIC premiums 495 515 -3.9%
Foreclosed properties expense 229 295 -22.4%
Loss (gain) on sales of foreclosed properties 54 523 -89.7%
Write-downs of foreclosed properties 962 1,494 -35.6%
Other expenses 1,445 1,329 8.7%
Total noninterest expense 8,530 9,538 -10.6%
Income before income taxes 3,495 1,669 109.4%
Income taxes 1,063 452 135.2%
Net income 2,432 1,217 99.8%
Preferred stock dividends 193 194 -0.5%
Net income applicable to common shares $ 2,239 $ 1,023 118.9%
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary -- Q2 2014 vs Q2 2013
For the Quarter Ended Percent
6/30/2014 6/30/2013 Change
Per Share Data
Earnings per common share
Basic $ 0.30 $ 0.14 114.3%
Diluted $ 0.25 $ 0.13 92.3%
Average shares outstanding
Basic 7,457,222 7,438,401 0.3%
Diluted 9,630,699 9,619,585 0.1%
Performance Ratios
Return on average equity (A) 8.37% 4.40% 90.2%
Return on average assets 0.69% 0.35% 97.1%
Net interest margin 3.32% 3.12% 6.4%
Efficiency ratio (B) 52.86% 56.52% -6.5%
NOTE (A) – Net income divided by total 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)
Six Month Performance Summary -- 2014 vs 2013
For the Six Months Ended Percent
Dollars in thousands 6/30/2014 6/30/2013 Change
Condensed Statements of Income
Interest income
Loans, including fees $ 24,731 $ 25,703 -3.8%
Securities 3,679 3,171 16.0%
Other 4 3 33.3%
Total interest income 28,414 28,877 -1.6%
Interest expense
Deposits 4,576 5,588 -18.1%
Borrowings 3,480 4,027 -13.6%
Total interest expense 8,056 9,615 -16.2%
Net interest income 20,358 19,262 5.7%
Provision for loan losses 2,000 2,500 -20.0%
Net interest income after provision for loan losses 18,358 16,762 9.5%
Noninterest income
Insurance commissions 2,273 2,316 -1.9%
Service fees related to deposit accounts 2,144 2,096 2.3%
Realized securities gains (64) (16) 300.0%
Other-than-temporary impairment of securities (1) (80) -98.8%
Other income 1,137 1,134 0.3%
Total noninterest income 5,489 5,450 0.7%
Noninterest expense
Salaries and employee benefits 8,026 8,105 -1.0%
Net occupancy expense 1,046 932 12.2%
Equipment expense 1,079 1,157 -6.7%
Professional fees 598 611 -2.1%
FDIC premiums 997 1,055 -5.5%
Foreclosed properties expense 482 575 -16.2%
Loss (gain) on sales of foreclosed properties 129 563 -77.1%
Write-downs of foreclosed properties 1,891 2,423 -22.0%
Other expenses 2,780 2,679 3.8%
Total noninterest expense 17,028 18,100 -5.9%
Income before income taxes 6,819 4,112 65.8%
Income taxes 1,997 1,102 81.2%
Net income 4,822 3,010 60.2%
Preferred stock dividends 387 388 -0.3%
Net income applicable to common shares $ 4,435 $ 2,622 69.1%
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Six Month Performance Summary -- 2014 vs 2013
For the Six Months Ended Percent
6/30/2014 6/30/2013 Change
Per Share Data
Earnings per common share
Basic $ 0.59 $ 0.35 68.6%
Diluted $ 0.50 $ 0.31 61.3%
Average shares outstanding
Basic 7,455,307 7,435,344 0.3%
Diluted 9,629,830 9,616,918 0.1%
Performance Ratios
Return on average equity (A) 8.42% 5.47% 53.9%
Return on average assets 0.69% 0.43% 60.5%
Net interest margin 3.32% 3.18% 4.4%
Efficiency ratio (B) 53.49% 56.24% -4.9%
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 6/30/2014 3/31/2014 12/31/2013 9/30/2013 6/30/2013
Condensed Statements of Income
Interest income
Loans, including fees $ 12,515 $ 12,216 $ 12,507 $ 12,532 $ 12,799
Securities 1,827 1,852 1,850 1,512 1,507
Other 2 2 2 1 2
Total interest income 14,344 14,070 14,359 14,045 14,308
Interest expense
Deposits 2,335 2,241 2,317 2,487 2,820
Borrowings 1,689 1,791 2,039 2,020 1,984
Total interest expense 4,024 4,032 4,356 4,507 4,804
Net interest income 10,320 10,038 10,003 9,538 9,504
Provision for loan losses 1,000 1,000 1,000 1,000 1,000
Net interest income after provision for loan losses 9,320 9,038 9,003 8,538 8,504
Noninterest income
Insurance commissions 1,091 1,181 1,056 1,057 1,132
Service fees related to deposit accounts 1,101 1,043 1,124 1,106 1,085
Realized securities gains (losses) (43) (22) 124 132 (57)
Other-than-temporary impairment of securities (1) -- -- (38) (27)
Other income 557 581 592 606 570
Total noninterest income 2,705 2,783 2,896 2,863 2,703
Noninterest expense
Salaries and employee benefits 4,045 3,980 4,024 4,050 3,987
Net occupancy expense 505 541 466 454 476
Equipment expense 513 566 580 578 559
Professional fees 282 316 295 263 360
FDIC premiums 495 502 502 503 515
Foreclosed properties expense 229 254 209 262 295
Loss (gain) on sale of foreclosed properties 54 75 (28) (17) 523
Write-downs of foreclosed properties 962 928 644 654 1,494
Other expenses 1,445 1,336 1,732 1,484 1,329
Total noninterest expense 8,530 8,498 8,424 8,231 9,538
Income before income taxes 3,495 3,323 3,475 3,170 1,669
Income taxes 1,063 934 687 898 452
Net income 2,432 2,389 2,788 2,272 1,217
Preferred stock dividends 193 193 194 194 194
Net income applicable to common shares $ 2,239 $ 2,196 $ 2,594 $ 2,078 $ 1,023
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Five Quarter Performance Summary
For the Quarter Ended
6/30/2014 3/31/2014 12/31/2013 9/30/2013 6/30/2013
Per Share Data
Earnings per common share
Basic $ 0.30 $ 0.29 $ 0.35 $ 0.28 $ 0.14
Diluted $ 0.25 $ 0.25 $ 0.29 $ 0.24 $ 0.13
Average shares outstanding
Basic 7,457,222 7,453,370 7,450,379 7,443,865 7,438,401
Diluted 9,630,699 9,628,927 9,624,312 9,621,957 9,619,585
Performance Ratios
Return on average equity (A) 8.37% 8.46% 10.15% 8.49% 4.40%
Return on average assets 0.69% 0.69% 0.80% 0.67% 0.35%
Net interest margin 3.32% 3.33% 3.24% 3.15% 3.12%
Efficiency ratio - (B) 52.86% 54.13% 57.31% 56.22% 56.52%
NOTE (A) – Net income divided by average total 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 6/30/2014 3/31/2014 12/31/2013 9/30/2013 6/30/2013
Assets
Cash and due from banks $ 3,749 $ 3,827 $ 3,442 $ 4,571 $ 4,336
Interest bearing deposits other banks 9,970 13,424 8,340 11,532 7,971
Securities 287,883 281,865 288,780 291,258 291,180
Loans, net 992,816 962,714 937,070 939,169 925,979
Property held for sale 48,783 52,241 53,392 45,303 47,258
Premises and equipment, net 20,301 20,457 20,623 20,780 20,936
Intangible assets 7,798 7,861 7,949 8,036 8,124
Cash surrender value of life insurance policies 36,151 35,881 35,611 35,257 30,027
Other assets 28,507 27,847 31,020 31,881 34,159
Total assets $ 1,435,958 $ 1,406,117 $ 1,386,227 $ 1,387,787 $ 1,369,970
Liabilities and Shareholders' Equity
Deposits $ 1,057,795 $ 1,052,630 $ 1,003,812 $ 1,016,735 $ 1,038,163
Short-term borrowings 91,729 68,974 62,769 54,163 16,762
Long-term borrowings and subordinated debentures 158,331 159,881 199,905 199,929 199,954
Other liabilities 10,638 10,105 8,669 8,155 7,880
Shareholders' equity 117,465 114,527 111,072 108,805 107,211
Total liabilities and shareholders' equity $ 1,435,958 $ 1,406,117 $ 1,386,227 $ 1,387,787 $ 1,369,970
Book value per common share (A) $ 12.21 $ 11.91 $ 11.55 $ 11.32 $ 11.15
Tangible book value per common share (A) $ 11.40 $ 11.09 $ 10.72 $ 10.48 $ 10.31
Tangible equity / Tangible assets 7.7% 7.6% 7.5% 7.3% 7.3%
NOTE (A) – Assumes conversion of convertible preferred stock
SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Regulatory Capital Ratios
6/30/2014 3/31/2014 12/31/2013 9/30/2013 6/30/2013
Summit Financial Group, Inc.
Total Risk Based Capital 14.2% 14.2% 14.5% 14.5% 14.4%
Tier 1 Risk-based Capital 12.4% 12.4% 12.4% 12.1% 12.1%
Tier 1 Leverage Ratio 9.0% 9.0% 8.9% 8.9% 8.6%
Summit Community Bank, Inc.
Total Risk Based Capital 15.6% 15.6% 15.7% 15.5% 15.6%
Tier 1 Risk-based Capital 14.5% 14.5% 14.5% 14.3% 14.3%
Tier 1 Leverage Ratio 10.6% 10.6% 10.4% 10.4% 10.2%
SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Loan Composition
Dollars in thousands 6/30/2014 3/31/2014 12/31/2013 9/30/2013 6/30/2013
Commercial $ 90,096 $ 93,517 $ 88,352 $ 83,844 $ 78,964
Commercial real estate
Owner occupied 154,260 150,025 149,618 151,261 149,660
Non-owner occupied 314,439 297,197 280,790 279,412 277,773
Construction and development
Land and development 64,246 67,342 71,453 73,089 73,426
Construction 20,902 18,327 15,155 12,323 7,634
Residential real estate
Non-jumbo 219,569 215,665 212,946 215,058 216,759
Jumbo 52,487 51,406 53,406 59,701 58,567
Home equity 61,248 56,161 54,844 53,674 53,774
Consumer 19,777 19,106 19,889 20,472 20,147
Other 6,798 5,037 3,276 3,374 3,397
Total loans, net of unearned fees 1,003,822 973,783 949,729 952,208 940,101
Less allowance for loan losses 11,006 11,069 12,659 13,039 14,122
Loans, net $ 992,816 $ 962,714 $ 937,070 $ 939,169 $ 925,979
SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Deposit Composition
Dollars in thousands 6/30/2014 3/31/2014 12/31/2013 9/30/2013 6/30/2013
Non interest bearing checking $ 106,134 $ 99,445 $ 92,837 $ 99,109 $ 92,147
Interest bearing checking 187,855 195,898 186,578 186,702 187,244
Savings 243,323 228,854 193,446 193,285 196,069
Time deposits 520,483 528,433 530,951 537,639 562,703
Total deposits $ 1,057,795 $ 1,052,630 $ 1,003,812 $ 1,016,735 $ 1,038,163
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Asset Quality Information
For the Quarter Ended
Dollars in thousands 6/30/2014 3/31/2014 12/31/2013 9/30/2013 6/30/2013
Gross loan charge-offs $ 1,312 $ 2,862 $ 1,669 $ 2,825 $ 3,968
Gross loan recoveries (249) (272) (289) (742) (70)
Net loan charge-offs $ 1,063 $ 2,590 $ 1,380 $ 2,083 $ 3,898
Net loan charge-offs to average loans (annualized) 0.43% 1.08% 0.58% 0.89% 1.63%
Allowance for loan losses $ 11,006 $ 11,069 $ 12,659 $ 13,039 $ 14,122
Allowance for loan losses as a percentage of period end loans 1.10% 1.14% 1.33% 1.37% 1.50%
Nonperforming assets:
Nonperforming loans
Commercial $ 415 $ 866 $ 1,224 $ 2,557 $ 3,996
Commercial real estate 1,537 2,834 2,318 3,795 1,695
Commercial construction and development 3,601 3,653 3,782 3,761 --
Residential construction and development 5,248 6,599 9,048 9,128 11,505
Residential real estate 3,289 2,890 2,446 12,385 13,605
Consumer 129 73 128 145 91
Total nonperforming loans 14,219 16,915 18,946 31,771 30,892
Foreclosed properties
Commercial 110 -- -- -- --
Commercial real estate 5,762 8,523 9,903 9,961 10,310
Commercial construction and development 10,363 11,097 11,125 11,161 11,492
Residential construction and development 20,557 20,640 20,485 20,585 21,591
Residential real estate 11,991 11,981 11,879 3,596 3,865
Total foreclosed properties 48,783 52,241 53,392 45,303 47,258
Other repossessed assets -- 28 8 -- 2
Total nonperforming assets $ 63,002 $ 69,184 $ 72,346 $ 77,074 $ 78,152
Nonperforming loans to period end loans 1.42% 1.74% 1.99% 3.34% 3.29%
Nonperforming assets to period end assets 4.39% 4.92% 5.22% 5.55% 5.70%
Loans Past Due 30-89 Days
For the Quarter Ended
In thousands 6/30/2014 3/31/2014 12/31/2013 9/30/2013 6/30/2013
Commercial $ 376 $ 52 $ 74 $ 30 $ 199
Commercial real estate 1,032 1,310 1,809 1,757 626
Construction and development 156 754 1,628 154 698
Residential real estate 5,775 3,847 4,332 4,697 4,479
Consumer 585 219 292 229 286
Other -- -- -- 50 53
Total $ 7,924 $ 6,182 $ 8,135 $ 6,917 $ 6,341
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q2 2014 vs Q2 2013
Q2 2014 Q2 2013
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 $ 978,842 $ 12,428 5.09% $ 950,397 $ 12,735 5.37%
Tax-exempt 7,597 133 7.02% 5,466 98 7.19%
Securities
Taxable 213,560 1,198 2.25% 227,629 926 1.63%
Tax-exempt 82,958 952 4.60% 71,489 874 4.90%
Interest bearing deposits other banks and Federal funds sold 8,413 2 0.10% 8,533 2 0.09%
Total interest earning assets 1,291,370 14,713 4.57% 1,263,514 14,635 4.65%
Noninterest earning assets
Cash & due from banks 3,785 4,525
Premises & equipment 20,433 21,018
Other assets 114,917 111,981
Allowance for loan losses (11,440) (15,702)
Total assets $ 1,419,065 $ 1,385,336
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing demand deposits $ 190,146 $ 54 0.11% $ 178,875 $ 62 0.14%
Savings deposits 237,789 388 0.65% 197,362 287 0.58%
Time deposits 524,111 1,894 1.45% 580,760 2,471 1.71%
Short-term borrowings 79,687 59 0.30% 13,985 9 0.26%
Long-term borrowings and subordinated debentures 159,550 1,629 4.10% 199,963 1,975 3.96%
Total interest bearing liabilities 1,191,283 4,024 1.35% 1,170,945 4,804 1.65%
Noninterest bearing liabilities
Demand deposits 101,874 96,059
Other liabilities 9,694 7,616
Total liabilities 1,302,851 1,274,620
Shareholders' equity - preferred 9,283 9,322
Shareholders' equity - common 106,931 101,394
Total liabilities and shareholders' equity $ 1,419,065 $ 1,385,336
NET INTEREST EARNINGS $ 10,689 $ 9,831
NET INTEREST MARGIN 3.32% 3.12%
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
YTD 2014 vs YTD 2013
YTD 2014 YTD 2013
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 $ 968,221 $ 24,572 5.12% $ 955,425 $ 25,569 5.40%
Tax-exempt 6,719 241 7.23% 5,714 203 7.16%
Securities
Taxable 215,220 2,481 2.32% 221,998 1,955 1.78%
Tax-exempt 79,218 1,815 4.62% 75,297 1,842 4.93%
Interest bearing deposits other banks and Federal funds sold 8,666 3 0.07% 8,023 3 0.08%
Total interest earning assets 1,278,044 29,112 4.59% 1,266,457 29,572 4.71%
Noninterest earning assets
Cash & due from banks 3,841 4,384
Premises & equipment 20,506 21,059
Other assets 115,454 113,334
Allowance for loan losses (12,200) (16,632)
Total assets $ 1,405,645 $ 1,388,602
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing demand deposits $ 188,573 $ 106 0.11% $ 176,811 $ 132 0.15%
Savings deposits 223,240 707 0.64% 196,464 597 0.61%
Time deposits 527,097 3,763 1.44% 577,669 4,859 1.70%
Short-term borrowings 77,444 111 0.29% 20,872 26 0.25%
Long-term borrowings and subordinated debentures 167,013 3,368 4.07% 204,584 4,001 3.94%
1,183,367 8,055 1.37% 1,176,400 9,615 1.65%
Noninterest bearing liabilities
Demand deposits 98,525 94,501
Other liabilities 9,155 7,632
Total liabilities 1,291,047 1,278,533
Shareholders' equity - preferred 9,287 9,324
Shareholders' equity - common 105,311 100,745
Total liabilities and shareholders' equity $ 1,405,645 $ 1,388,602
NET INTEREST EARNINGS $ 21,057 $ 19,957
NET INTEREST MARGIN 3.32% 3.18%
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures
For the Quarter Ended For the Six Months Ended
Dollars in thousands 6/30/2014 3/31/2014 6/30/2013 6/30/2014 6/30/2013
Core earnings applicable to common shares $ 2,907 $ 2,842 $ 2,347 $ 5,749 $ 4,564
Realized securities gains (losses) (43) (22) (57) (64) (16)
Applicable income tax effect 16 8 21 24 6
Gain (loss) on sale of foreclosed properties (54) (75) (523) (129) (563)
Applicable income tax effect 20 28 194 48 208
Other-than-temporary impairment of securities (1) -- (27) (1) (80)
Applicable income tax effect 0 -- 10 0 30
Write-downs foreclosed properties (962) (928) (1,494) (1,891) (2,423)
Applicable income tax effect 356 343 553 700 897
(668) (646) (1,324) (1,314) (1,942)
GAAP net income applicable to common shares $ 2,239 $ 2,196 $ 1,023 $ 4,435 $ 2,622
Core diluted earnings per common share $ 0.32 $ 0.32 $ 0.27 $ 0.65 $ 0.52
Realized securities gains (losses) -- -- (0.01) (0.01) --
Applicable income tax effect -- -- -- -- --
Gain (loss) on sale of foreclosed properties (0.01) (0.01) (0.05) (0.01) (0.06)
Applicable income tax effect -- -- 0.02 -- 0.02
Other-than-temporary impairment of securities -- -- -- -- (0.01)
Applicable income tax effect -- -- -- -- --
Write-downs of foreclosed properties (0.10) (0.10) (0.16) (0.20) (0.25)
Applicable income tax effect 0.04 0.04 0.06 0.07 0.09
(0.07) (0.07) (0.14) (0.15) (0.21)
GAAP diluted earnings per common share $ 0.25 $ 0.25 $ 0.13 $ 0.50 $ 0.31
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures
For the Quarter Ended For the Six Months Ended
Dollars in thousands 6/30/2014 3/31/2014 6/30/2013 6/30/2014 6/30/2013
Total core revenue $ 13,069 $ 12,843 $ 12,291 $ 25,911 $ 24,809
Realized securities gains/(losses) (43) (22) (57) (64) (16)
Other-than-temporary impairment of securities (1) -- (27) (1) (80)
(44) (22) (84) (65) (96)
GAAP total revenue $ 13,025 $ 12,821 $ 12,207 $ 25,846 $ 24,713
Total core noninterest income $ 2,749 $ 2,805 $ 2,787 $ 5,553 $ 5,547
Realized securities gains/(losses) (43) (22) (57) (64) (16)
Other-than-temporary impairment of securities (1) -- (27) (1) (80)
(44) (22) (84) (65) (96)
GAAP total noninterest income $ 2,705 $ 2,783 $ 2,703 $ 5,488 $ 5,451
Total core noninterest expense $ 7,514 $ 7,495 $ 7,521 $ 15,008 $ 15,114
(Gains)/losses on sales of foreclosed properties 54 75 523 129 563
Write-downs of foreclosed properties 962 928 1,494 1,891 2,423
1,016 1,003 2,017 2,020 2,986
GAAP total noninterest expense $ 8,530 $ 8,498 $ 9,538 $ 17,028 $ 18,100

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

Source:Summit Financial Group, Inc.