×

Summit Financial Group Reports Third Quarter and First Nine Months 2015 Results

MOOREFIELD, W. Va., Oct. 26, 2015 (GLOBE NEWSWIRE) -- Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ:SMMF) today reported third quarter 2015 net income applicable to common shares of $3.66 million, or $0.34 per diluted share, compared to $3.14 million, or $0.35 per diluted share, for the third quarter of 2014, representing an increase in net income of 16.5 percent, but a 2.9 percent decrease in diluted earnings per share. Q3 2015 earnings compared to Q3 2014 were positively impacted by a $534,000 decline in write-downs of foreclosed properties and a $228,000 increase in net interest income. Increased common shares outstanding resulting from common stock issuances during the past year accounted for the $0.01 decline in quarterly year-over-year diluted earnings per share, despite the increase in earnings.

Excluding from third quarter 2015 (on a pre-tax basis) realized securities gains of $372,000, losses on sales of foreclosed properties of $35,000, and write-downs of foreclosed properties of $1.0 million, Q3 2015 core earnings approximated $4.11 million, or $0.38 per diluted share. Excluding from third quarter 2014 (on a pre-tax basis) realized securities gains of $128,000, losses on sales of foreclosed properties of $70,000, and write-downs of foreclosed properties of $1.58 million, Q3 2014 core earnings approximated $4.10 million, or $0.45 per diluted share.

For the nine months ended September 30, 2015, Summit recorded net income applicable to common shares of $11.96 million, or $1.12 per diluted share, compared with $7.58 million, or $0.85 per diluted share, for the comparable 2014 nine-month period, representing an increase of 57.8%, or 31.8% per diluted share.

Excluding from the nine month period ended September 30, 2015 nonrecurring items (on a pre-tax basis) comprised of realized securities gains of $1.02 million, a $176,000 Federal Home Loan Bank of Pittsburgh (“FHLB”) special dividend, losses on sales of assets of $288,000, and write-downs of foreclosed properties of $1.78 million, and from the 2014 first nine-month period realized securities gains of $64,000, losses on sales of assets of $199,000, OTTI charges of $1,000 and write-downs of foreclosed properties of $3.47 million, core earnings for first nine months of 2015 were approximately $12.50 million, or $1.18 per diluted share, compared to $9.85 million, or $1.08 per diluted share, for the 2014 nine month period.

Highlights for Q3 2015 include:

  • Net interest margin contracted 8 and 6 basis points, respectively, as compared to that for Q2 2015 and Q3 2014.
  • Despite loans declining $2.2 million, or 0.8 percent (on an annualized basis) during the quarter, loans grew $42.6 million during the first nine months of 2015, or 5.5 percent (on an annualized basis).
  • Core revenues decreased 1.6 percent compared to the linked quarter, but remained relatively flat compared to the year ago quarter.
  • Recorded charges of $1.05 million to write-down foreclosed properties compared to such charges of $160,000 in Q2 2015 and $1.58 million in Q3 2014.
  • Nonperforming assets as a percentage of total assets increased slightly during the quarter to 3.07 percent compared to 3.05 percent for the linked quarter, but remains well below year end 2014 levels of 3.48 percent. Foreclosed properties are at the lowest level since Q2 2009.

H. Charles Maddy III, President and Chief Executive Officer of Summit, commented, “Our results for the quarter just ended were mixed, as the robust loan growth we had experienced in the first half of 2015, stalled in the third quarter. This coupled with lower securities yields halted the quarter-over-quarter growth in core revenues and net interest margin improvement that we had enjoyed earlier this year. Despite this, we are very pleased by Summit’s considerable growth in both quarterly and year-to-date net income compared to the same periods of the prior year, giving us optimism as we look forward to the remainder of 2015 and beyond.”

Results from Operations

Total revenue for third quarter 2015, consisting of net interest income and noninterest income, grew 2.2 percent to $14.3 million compared to $14.0 million for the third quarter 2014. For the year-to-date period ended September 30, 2015, total revenue was $43.3 million compared to $39.8 million for the same period of 2014, representing an 8.6 percent increase.

Total core revenue (excluding nonrecurring items, enumerated above) was $13.9 million for both third quarter 2015 and the same prior-year quarter. For the first nine months of 2015, total core revenue (excluding nonrecurring items) was $42.1 million compared to $39.8 million for the comparable period of 2014, a 5.8 percent improvement.

For the third quarter of 2015, net interest income was $11.3 million, an increase of 2.1 percent from the $11.1 million reported in the prior-year third quarter and decreased $153,000 compared to the linked quarter. The net interest margin for third quarter 2015 was 3.41 percent compared to 3.47 percent for the year-ago quarter, and 3.49 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 third quarter 2015 was $2.99 million compared to $2.91 million for the comparable period of 2014. Excluding realized securities gains/losses and OTTI of securities, noninterest income was $2.62 million for third quarter 2015, compared to $2.79 million reported for third quarter 2014.

The third quarter 2015 and 2014 provision for loan losses totaled $250,000, compared to $500,000 for the linked quarter.

Core noninterest expense continues to be well-controlled. Total noninterest expense decreased 3.4% to $8.87 million compared to $9.19 million for the prior-year third quarter. Excluding from noninterest expense (on a pre-tax basis) losses on sales of foreclosed properties of $35,000 in Q3 2015 and $70,000 in Q3 2014 and write-downs of foreclosed properties of $1.05 million in Q3 2015 and $1.58 million in Q3 2014, noninterest expense would have approximated $7.79 million for Q3 2015 compared to $7.54 million for the comparable period of 2014. Noninterest expense for the first nine months of 2015 decreased 4.1% compared to the first nine months of 2014.

Balance Sheet

At September 30, 2015, total assets were $1.47 billion, an increase of $25.7 million, or 1.8 percent since December 31, 2014. Total loans, net of unearned fees and allowance for loan losses, were $1.06 billion at September 30, 2015, up $42.5 million, or 4.2 percent, from the $1.02 billion reported at year-end 2014.

At September 30, 2015, deposits were $1.07 billion, an increase of $10.8 million, or 1.0 percent, since year end 2014. During first nine months of 2015, checking and savings increased by $16.7 million and $5.6 million, respectively, or 5.2 percent and 2.2 percent, respectively, while time deposits decreased $11.5 million or 2.4 percent. Long-term borrowings and subordinated debentures declined by 16.0 percent since year end 2014, as the Company prepaid $16.8 million in subordinated debentures, which was funded by short-term borrowings.

Asset Quality

As of September 30, 2015, nonperforming assets (“NPAs”), consisting of nonperforming loans, foreclosed properties, and repossessed assets, were $45.2 million, or 3.07 percent of assets. This compares to $45.1 million, or 3.05 percent of assets at the linked quarter, and $58.5 million, or 4.10 percent of assets, at third quarter 2014.

Third quarter 2015 net loan charge-offs were $293,000, or 0.11 percent of average loans annualized; while adding $250,000 to the allowance for loan losses. The allowance for loan losses stood at $11.2 million, or 1.05 percent of total loans at September 30, 2015, compared to 1.08 percent at year-end 2014.

Capital Adequacy

Shareholders’ equity was $140.3 million as of September 30, 2015 compared to $140.1 million June 30, 2015 and $121.4 million at September 30, 2014. Tangible book value per common share increased to $12.45 at September 30, 2015 compared to $12.22 at June 30, 2015 and $11.81 at September 30, 2014.

At September 30, 2015, Summit’s and its depository institution’s, Summit Community Bank, Inc.’s (the “Bank’s”), regulatory risk-based capital ratios computed in accordance with the new Basel III regulatory capital guidelines effective January 1, 2015, were each well in excess of the regulatory minimum required ratio relative to each plus the respective applicable capital conservation buffer on a fully phased-in basis. Respectively, the Company’s and Bank’s Tier 1 leverage capital ratios were 10.5 percent and 10.7 percent at September 30, 2015 compared to 9.9 percent and 10.6 percent reported at December 31, 2014.

About the Company

Summit Financial Group, Inc. is a $1.47 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 -- Q3 2015 vs Q3 2014
For the Quarter Ended Percent
Dollars in thousands 9/30/20159/30/2014 Change
Condensed Statements of Income
Interest income
Loans, including fees$12,983 $13,033 -0.4%
Securities 1,543 1,724 -10.5%
Other 5 3 66.7%
Total interest income 14,531 14,760 -1.6%
Interest expense
Deposits 2,106 2,288 -8.0%
Borrowings 1,120 1,395 -19.7%
Total interest expense 3,226 3,683 -12.4%
Net interest income 11,305 11,077 2.1%
Provision for loan losses 250 250 0.0%
Net interest income after provision
for loan losses 11,055 10,827 2.1%
Noninterest income
Insurance commissions 983 1,105 -11.0%
Service fees related to deposit accounts 1,111 1,177 -5.6%
Realized securities gains (losses) 372 128 n/m
Other income 527 503 4.8%
Total noninterest income 2,993 2,913 2.7%
Noninterest expense
Salaries and employee benefits 4,479 4,026 11.3%
Net occupancy expense 496 482 2.9%
Equipment expense 582 520 11.9%
Professional fees 402 380 5.8%
FDIC premiums 300 480 -37.5%
Foreclosed properties expense 168 298 -43.6%
Loss on sales of foreclosed properties 35 70 -50.0%
Write-downs of foreclosed properties 1,046 1,580 -33.8%
Other expenses 1,364 1,350 1.0%
Total noninterest expense 8,872 9,186 -3.4%
Income before income taxes 5,176 4,554 13.7%
Income taxes 1,515 1,218 24.4%
Net income 3,661 3,336 9.7%
Preferred stock dividends - 193 n/m
Net income applicable to common shares$ 3,661 $ 3,143 16.5%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Quarterly Performance Summary -- Q3 2015 vs Q3 2014
For the Quarter Ended Percent
9/30/20159/30/2014 Change
Per Share Data
Earnings per common share
Basic$0.34 $0.42 -19.0%
Diluted$0.34 $0.35 -2.9%
Cash dividends$0.08 $- n/a
Average common shares outstanding
Basic 10,703,526 7,457,222 43.5%
Diluted 10,712,203 9,630,293 11.2%
Common shares outstanding at period end 10,658,199 7,457,222 42.9%
Performance Ratios
Return on average equity 10.42% 11.13% -6.4%
Return on average tangible equity 11.01% 11.90% -7.5%
Return on average assets 1.00% 0.93% 7.5%
Net interest margin 3.41% 3.47% -1.7%
Efficiency ratio (A) 52.93% 51.19% 3.4%
NOTE (A) – Computed on a tax equivalent basis excluding nonrecurring income and expense items and amortization of intangibles.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Nine Month Performance Summary -- 2015 vs 2014
For the Nine Months Ended Percent
Dollars in thousands 9/30/20159/30/2014 Change
Condensed Statements of Income
Interest income
Loans, including fees$38,804 $37,764 2.8%
Securities 5,122 5,403 -5.2%
Other 7 7 0.0%
Total interest income 43,933 43,174 1.8%
Interest expense
Deposits 6,251 6,864 -8.9%
Borrowings 3,399 4,875 -30.3%
Total interest expense 9,650 11,739 -17.8%
Net interest income 34,283 31,435 9.1%
Provision for loan losses 1,000 2,250 -55.6%
Net interest income after provision
for loan losses 33,283 29,185 14.0%
Noninterest income
Insurance commissions 3,191 3,377 -5.5%
Service fees related to deposit accounts 3,159 3,291 -4.0%
Realized securities gains (losses) 1,023 64 n/m
Other-than-temporary impairment of securities - (1) -100.0%
Other income 1,619 1,670 -3.1%
Total noninterest income 8,992 8,401 7.0%
Noninterest expense
Salaries and employee benefits 13,107 12,052 8.8%
Net occupancy expense 1,483 1,528 -2.9%
Equipment expense 1,677 1,599 4.9%
Professional fees 1,109 978 13.4%
FDIC premiums 950 1,477 -35.7%
Foreclosed properties expense 534 780 -31.5%
Loss on sales of foreclosed properties 288 198 45.5%
Write-downs of foreclosed properties 1,779 3,471 -48.7%
Other expenses 4,211 4,130 2.0%
Total noninterest expense 25,138 26,213 -4.1%
Income before income taxes 17,137 11,373 50.7%
Income taxes 5,181 3,215 61.2%
Net income 11,956 8,158 46.6%
Preferred stock dividends - 580 n/m
Net income applicable to common shares$ 11,956 $ 7,578 57.8%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Nine Month Performance Summary -- 2015 vs 2014
For the Nine Months Ended Percent
9/30/20159/30/2014 Change
Per Share Data
Earnings per common share
Basic$1.19 $1.02 16.7%
Diluted$1.12 $0.85 31.8%
Cash dividends$0.24 $- n/a
Average common shares outstanding
Basic 10,069,374 7,455,952 35.1%
Diluted 10,628,139 9,626,942 10.4%
Common shares outstanding at period end 10,658,199 7,457,222 42.9%
Performance Ratios
Return on average equity 11.61% 9.35% 24.2%
Return on average tangible equity 12.29% 10.02% 22.7%
Return on average assets 1.09% 0.77% 41.6%
Net interest margin 3.50% 3.37% 3.9%
Efficiency ratio (A) 51.40% 52.69% -2.4%
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 9/30/20156/30/20153/31/201512/31/20149/30/2014
Condensed Statements of Income
Interest income
Loans, including fees$12,983 $12,972 $12,848 $12,666 $13,033
Securities 1,543 1,685 1,894 1,784 1,724
Other 5 1 1 2 3
Total interest income 14,531 14,658 14,743 14,452 14,760
Interest expense
Deposits 2,106 2,074 2,071 2,130 2,288
Borrowings 1,120 1,126 1,152 1,371 1,395
Total interest expense 3,226 3,200 3,223 3,501 3,683
Net interest income 11,305 11,458 11,520 10,951 11,077
Provision for loan losses 250 500 250 - 250
Net interest income after provision
for loan losses 11,055 10,958 11,270 10,951 10,827
Noninterest income
Insurance commissions 983 1,080 1,128 1,023 1,105
Service fees related to deposit accounts 1,111 1,072 976 1,113 1,177
Realized securities gains (losses) 372 170 480 149 128
Other-than-temporary impairment of securities - - - - -
Other income 527 538 555 537 503
Total noninterest income 2,993 2,860 3,139 2,822 2,913
Noninterest expense
Salaries and employee benefits 4,479 4,442 4,187 4,133 4,026
Net occupancy expense 496 489 498 495 482
Equipment expense 582 560 535 487 520
Professional fees 402 372 335 452 380
FDIC premiums 300 320 330 315 480
Foreclosed properties expense 168 158 208 239 298
Loss on sales of foreclosed properties 35 103 150 628 70
Write-downs of foreclosed properties 1,046 160 572 300 1,580
Other expenses 1,364 1,457 1,389 2,061 1,350
Total noninterest expense 8,872 8,061 8,204 9,110 9,186
Income before income taxes 5,176 5,757 6,205 4,663 4,554
Income taxes 1,515 1,747 1,920 1,464 1,218
Net income 3,661 4,010 4,285 3,199 3,336
Preferred stock dividends - - - 191 193
Net income applicable to common shares$ 3,661 $ 4,010 $ 4,285 $ 3,008 $ 3,143

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Five Quarter Performance Summary
For the Quarter Ended
9/30/20156/30/20153/31/201512/31/20149/30/2014
Per Share Data
Earnings per common share
Basic$0.34 $0.38 $0.49 $0.39 $0.42
Diluted$0.34 $0.38 $0.41 $0.32 $0.35
Cash dividends$0.08 $0.08 $0.08 $- $-
Average common shares outstanding
Basic 10,703,526 10,667,892 8,815,961 7,796,508 7,457,222
Diluted 10,712,203 10,676,474 10,493,323 9,963,214 9,630,293
Common shares outstanding at period end 10,658,199 10,843,676 10,586,242 8,301,746 7,457,222
Performance Ratios
Return on average equity 10.42% 11.67% 12.79% 10.10% 11.13%
Return on average tangible equity 11.01% 12.36% 13.56% 10.76% 11.90%
Return on average assets 1.00% 1.09% 1.18% 0.89% 0.93%
Net interest margin 3.41% 3.49% 3.59% 3.42% 3.47%
Efficiency ratio (A) 52.93% 52.05% 49.27% 53.07% 51.19%
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
For the Quarter Ended
Dollars in thousands, except per share amounts 9/30/20156/30/20153/31/201512/31/20149/30/2014
Assets
Cash and due from banks$4,232 $3,988 $3,850 $3,728 $3,933
Interest bearing deposits other banks 8,057 9,274 8,437 8,783 9,300
Securities 272,127 276,661 282,135 282,834 282,401
Loans, net 1,062,348 1,064,472 1,039,669 1,019,842 993,347
Property held for sale 29,713 31,500 34,368 37,529 47,252
Premises and equipment, net 20,457 20,490 20,208 20,060 20,132
Intangible assets 7,548 7,598 7,648 7,698 7,748
Cash surrender value of life insurance policies 37,482 37,222 36,961 36,700 36,417
Other assets 27,340 28,764 27,216 26,394 28,139
Total assets$ 1,469,304 $ 1,479,969 $ 1,460,492 $ 1,443,568 $ 1,428,669
Liabilities and Shareholders' Equity
Deposits$1,072,091 $1,053,310 $1,058,308 $1,061,314 $1,054,454
Short-term borrowings 145,291 174,599 148,985 123,633 127,432
Long-term borrowings and
subordinated debentures 95,648 98,625 101,602 113,879 114,855
Other liabilities 15,985 13,363 15,708 13,098 10,566
Shareholders' equity 140,289 140,072 135,889 131,644 121,362
Total liabilities and shareholders' equity$ 1,469,304 $ 1,479,969 $ 1,460,492 $ 1,443,568 $ 1,428,669
Book value per common share (A)$13.16 $12.92 $12.84 $12.60 $12.62
Tangible book value per common share (A)$12.45 $12.22 $12.11 $11.86 $11.81
Tangible equity to tangible assets 9.1% 9.0% 8.8% 8.6% 8.0%
Tangible common equity to tangible assets 9.1% 9.0% 8.8% 8.0% 7.3%
NOTE (A) – Assumes conversion of convertible preferred stock

SUMMIT FINANCIAL GROUP INC. (NASDAQ:SMMF)
Regulatory Capital Ratios (A)
9/30/20156/30/20153/31/201512/31/20149/30/2014
Summit Financial Group, Inc.
CET1 Risk-based Capital 11.7% 11.6% 11.3%n/an/a
Tier 1 Risk-based Capital 13.4% 13.2% 13.0% 13.3% 12.5%
Total Risk-based Capital 14.4% 14.2% 14.0% 14.9% 14.3%
Tier 1 Leverage Ratio 10.5% 10.4% 10.1% 9.9% 9.2%
Summit Community Bank, Inc.
CET1 Risk-based Capital 13.6% 13.4% 13.5%n/an/a
Tier 1 Risk-based Capital 13.6% 13.4% 13.5% 14.2% 14.4%
Total Risk-based Capital 14.6% 14.4% 14.5% 15.3% 15.5%
Tier 1 Leverage Ratio 10.7% 10.6% 10.5% 10.6% 10.5%
NOTE (A) – Computed in accordance with Basel III regulatory capital guidelines beginning January 1, 2015

SUMMIT FINANCIAL GROUP INC. (NASDAQ:SMMF)
Loan Composition
Dollars in thousands9/30/20156/30/20153/31/201512/31/20149/30/2014
Commercial$89,250 $97,284 $89,928 $88,590 $83,762
Commercial real estate
Owner occupied 199,068 191,743 180,269 157,783 156,765
Non-owner occupied 336,550 331,056 325,764 317,136 314,577
Construction and development
Land and development 66,164 64,435 66,558 67,881 61,088
Construction 8,419 18,214 19,094 28,591 27,239
Residential real estate
Non-jumbo 222,739 220,199 219,938 220,071 218,125
Jumbo 46,092 49,203 50,492 52,879 51,917
Home equity 73,652 72,504 68,894 67,115 64,256
Consumer 19,124 18,683 18,485 19,456 19,906
Other 12,518 12,423 11,074 11,507 6,753
Total loans, net of unearned fees 1,073,576 1,075,744 1,050,496 1,031,009 1,004,388
Less allowance for loan losses 11,228 11,272 10,827 11,167 11,041
Loans, net$ 1,062,348 $ 1,064,472 $ 1,039,669 $ 1,019,842 $ 993,347

SUMMIT FINANCIAL GROUP INC. (NASDAQ:SMMF)
Deposit Composition
Dollars in thousands9/30/20156/30/20153/31/201512/31/20149/30/2014
Non interest bearing checking$118,887 $113,256 $117,049 $115,427 $104,442
Interest bearing checking 217,242 202,957 196,606 204,030 195,183
Savings 259,185 246,949 257,687 253,578 255,880
Time deposits 476,777 490,148 486,966 488,279 498,949
Total deposits$ 1,072,091 $ 1,053,310 $ 1,058,308 $ 1,061,314 $ 1,054,454

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Asset Quality Information
For the Quarter Ended
Dollars in thousands 9/30/20156/30/20153/31/201512/31/20149/30/2014
Gross loan charge-offs$774 $463 $782 $362 $297
Gross loan recoveries (481) (407) (192) (488) (82)
Net loan charge-offs$ 293 $ 56 $ 590 $ (126)$ 215
Net loan charge-offs to average loans (annualized) 0.11% 0.02% 0.23% -0.05% 0.09%
Allowance for loan losses$11,228 $11,272 $10,827 $11,167 $11,041
Allowance for loan losses as a percentage
of period end loans 1.05% 1.05% 1.03% 1.08% 1.10%
Nonperforming assets:
Nonperforming loans
Commercial$884 $1,065 $788 $392 $309
Commercial real estate 5,294 2,421 1,340 1,844 936
Commercial construction and development - - - - -
Residential construction and development 5,345 5,627 5,333 4,619 4,592
Residential real estate 3,881 4,433 4,491 5,556 5,257
Consumer 53 45 65 83 146
Total nonperforming loans 15,457 13,591 12,017 12,494 11,240
Foreclosed properties
Commercial - - 110 110 110
Commercial real estate 3,209 3,279 3,657 5,204 5,815
Commercial construction and development 9,328 10,178 10,191 10,179 10,178
Residential construction and development 14,965 15,839 17,590 19,267 20,431
Residential real estate 2,211 2,204 2,819 2,769 10,718
Total foreclosed properties 29,713 31,500 34,367 37,529 47,252
Other repossessed assets - 55 55 221 34
Total nonperforming assets$ 45,170 $ 45,146 $ 46,439 $ 50,244 $ 58,526
Nonperforming loans to period end loans 1.44% 1.26% 1.14% 1.21% 1.12%
Nonperforming assets to period end assets 3.07% 3.05% 3.18% 3.48% 4.10%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q3 2015 vs Q3 2014
Q3 2015 Q3 2014
AverageEarnings /Yield / AverageEarnings /Yield /
Dollars in thousandsBalancesExpenseRate BalancesExpenseRate
ASSETS
Interest earning assets
Loans, net of unearned interest
Taxable$1,050,058 $12,855 4.86% $995,270 $12,944 5.22%
Tax-exempt 13,360 194 5.76% 8,331 135 6.43%
Securities
Taxable 208,473 933 1.78% 208,891 1,084 2.06%
Tax-exempt 75,571 924 4.85% 83,956 970 4.58%
Interest bearing deposits other banks
and Federal funds sold 13,116 5 0.15% 11,842 3 0.10%
Total interest earning assets 1,360,578 14,911 4.35% 1,308,290 15,136 4.59%
Noninterest earning assets
Cash & due from banks 3,871 3,690
Premises & equipment 20,502 20,229
Other assets 93,563 112,103
Allowance for loan losses (11,521) (11,272)
Total assets$ 1,466,993 $ 1,433,040
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits$210,691 $61 0.11% $191,565 $55 0.11%
Savings deposits 251,932 450 0.71% 251,401 430 0.68%
Time deposits 485,453 1,595 1.30% 508,817 1,803 1.41%
Short-term borrowings 148,012 130 0.35% 123,495 98 0.31%
Long-term borrowings and
subordinated debentures 97,500 990 4.03% 121,101 1,297 4.25%
Total interest bearing liabilities 1,193,588 3,226 1.07% 1,196,379 3,683 1.22%
Noninterest bearing liabilities
Demand deposits 118,603 105,887
Other liabilities 14,242 10,857
Total liabilities 1,326,433 1,313,123
Shareholders' equity - preferred - 9,283
Shareholders' equity - common 140,560 110,634
Total liabilities and
shareholders' equity$ 1,466,993 $ 1,433,040
NET INTEREST EARNINGS $ 11,685 $ 11,453
NET INTEREST MARGIN 3.41% 3.47%


SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
YTD 2015 vs YTD 2014
YTD 2015 YTD 2014
AverageEarnings /Yield / AverageEarnings /Yield /
Dollars in thousandsBalancesExpenseRate BalancesExpenseRate
ASSETS
Interest earning assets
Loans, net of unearned interest
Taxable$1,044,010 $38,443 4.92% $977,336 $37,516 5.13%
Tax-exempt 12,801 547 5.71% 7,262 376 6.92%
Securities
Taxable 211,642 3,302 2.09% 213,089 3,565 2.24%
Tax-exempt 75,685 2,759 4.87% 80,814 2,785 4.61%
Interest bearing deposits other banks
and Federal funds sold 9,395 6 0.09% 9,737 6 0.08%
Total interest earning assets 1,353,533 45,057 4.45% 1,288,238 44,248 4.59%
Noninterest earning assets
Cash & due from banks 3,842 3,790
Premises & equipment 20,373 20,414
Other assets 96,142 114,203
Allowance for loan losses (11,285) (11,887)
Total assets$ 1,462,605 $ 1,414,758
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits$205,749 $179 0.12% $189,581 $162 0.11%
Savings deposits 252,701 1,307 0.69% 232,730 1,137 0.65%
Time deposits 485,939 4,765 1.31% 520,937 5,566 1.43%
Short-term borrowings 149,177 368 0.33% 92,963 209 0.30%
Long-term borrowings and
subordinated debentures 101,245 3,030 4.00% 151,541 4,665 4.12%
1,194,811 9,649 1.08% 1,187,752 11,739 1.32%
Noninterest bearing liabilities
Demand deposits 116,057 101,006
Other liabilities 14,371 9,609
Total liabilities 1,325,239 1,298,367
Shareholders' equity - preferred 2,388 9,286
Shareholders' equity - common 134,978 107,105
Total liabilities and
shareholders' equity$ 1,462,605 $ 1,414,758
NET INTEREST EARNINGS $ 35,408 $ 32,509
NET INTEREST MARGIN 3.50% 3.37%


SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures
For the Quarter Ended For the Nine Months Ended
Dollars in thousands 9/30/20156/30/20159/30/2014 9/30/20159/30/2014
Core earnings applicable to common shares$4,108 $4,069 $4,101 $12,503 $9,851
FHLB special dividend - - - 176 -
Applicable income tax effect - - - (65) -
Realized securities gains (losses) 372 170 128 1,023 64
Applicable income tax effect (138) (63) (47) (379) (24)
Gain (loss) on sale of foreclosed properties (35) (103) (70) (288) (199)
Applicable income tax effect 13 38 26 107 74
Other-than-temporary impairment of securities - - - - (1)
Applicable income tax effect - - - - -
Write-downs foreclosed properties (1,046) (160) (1,580) (1,779) (3,471)
Applicable income tax effect 387 59 585 658 1,284
(447) (59) (958) (547) (2,273)
GAAP net income applicable to common shares$ 3,661 $ 4,010 $ 3,143 $ 11,956 $ 7,578
Core diluted earnings per common share$0.38 $0.39 $0.45 $1.18 $1.08
FHLB special dividend - - - 0.02 -
Applicable income tax effect - - - (0.01) -
Realized securities gains (losses) 0.03 0.02 0.01 0.10 0.01
Applicable income tax effect (0.01) (0.01) - (0.04) -
Gain (loss) on sale of foreclosed properties - (0.01) (0.01) (0.03) (0.02)
Applicable income tax effect - - - 0.01 0.01
Other-than-temporary impairment of securities - - - - -
Applicable income tax effect - - - - -
Write-downs of foreclosed properties (0.10) (0.01) (0.16) (0.17) (0.36)
Applicable income tax effect 0.04 - 0.06 0.06 0.13
(0.04) (0.01) (0.10) (0.06) (0.23)
GAAP diluted earnings per common share$ 0.34 $ 0.38 $ 0.35 $ 1.12 $ 0.85

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures
For the Quarter Ended For the Nine Months Ended
Dollars in thousands 9/30/20156/30/20159/30/2014 9/30/20159/30/2014
Total core revenue$13,926 $14,148 $13,862 $42,076 $39,773
FHLB special dividend - - - 176 -
Realized securities gains/(losses) 372 170 128 1,023 64
Other-than-temporary impairment of securities - - - - (1)
372 170 128 1,199 63
GAAP total revenue$ 14,298 $ 14,318 $ 13,990 $ 43,275 $ 39,836
Total core noninterest income$2,621 $2,690 $2,785 $7,969 $8,338
Realized securities gains/(losses) 372 170 128 1,023 64
Other-than-temporary impairment of securities - - - - (1)
372 170 128 1,023 63
GAAP total noninterest income$ 2,993 $ 2,860 $ 2,913 $ 8,992 $ 8,401
Total core noninterest expense$7,791 $7,798 $7,536 $21,469 $22,543
(Gains)/losses on sales of foreclosed properties 35 103 70 198 199
Write-downs of foreclosed properties 1,046 160 1,580 3,471 3,471
1,081 263 1,650 3,669 3,670
GAAP total noninterest expense$ 8,872 $ 8,061 $ 9,186 $ 25,138 $ 26,213

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

Source:Summit Financial Group, Inc.