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Summit Financial Group Reports Fourth Quarter and Full Year 2015 Results

MOOREFIELD, W. Va., Jan. 25, 2016 (GLOBE NEWSWIRE) -- Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ:SMMF) today reported fourth quarter 2015 net income applicable to common shares of $4.15 million, or $0.39 per diluted share, compared to $3.01 million, or $0.32 per diluted share, for the fourth quarter of 2014, representing an increase of 37.8 percent, or 21.9 percent per diluted share. Q4 2015 earnings compared to Q4 2014 were positively impacted by a $782,000 increase in net interest income and a $314,000 gain on sale of foreclosed properties, but were negatively impacted by a $336,000 increase in write-downs of foreclosed properties and a $250,000 provision for loan losses compared to zero for Q4 2014.

Excluding from fourth quarter 2015 (on a pre-tax basis) realized securities gains of $421,000, gains on sales of foreclosed properties of $314,000, write-downs of foreclosed properties of $636,000, Q4 2015 core earnings approximated $4.08 million, or $0.38 per diluted share. Excluding from Q4 2014 (on a pre-tax basis) realized securities gains of $149,000, losses on sales of foreclosed properties of $628,000, a $461,000 fraud loss, and write-downs of foreclosed properties of $300,000, Q4 2014 core earnings approximated $3.79 million, or $0.40 per diluted share. Increased common shares outstanding resulting from common stock issuances during the past year accounted for the $0.02 decline in quarterly year-over-year core diluted earnings per share, despite the increase in earnings.

For the year ended December 31, 2015, Summit recorded net income applicable to common shares of $16.10 million, or $1.50 per diluted share, compared with $10.59 million, or $1.17 per diluted share, for 2014, representing an increase of 52.1%, or 28.2% per diluted share.

Excluding from the full-year 2015 nonrecurring items (on a pre-tax basis) comprised of realized securities gains of $1.44 million, gains on sales of foreclosed properties of $26,000, and write-downs of foreclosed properties of $2.42 million, and from the 2014 full year realized securities gains of $213,000, losses on sale of foreclosed properties of $827,000, a $461,000 fraud loss, and write-downs of foreclosed properties of $3.77 million, core earnings for full-year 2015 were approximately $16.70 million, or $1.56 per diluted share, compared to $13.64 million, or $1.50 per diluted share, for full-year 2014.

Highlights for Q4 2015 include:

  • 2015 was the most profitable year in Summit’s history, with net income of $16.10 million, or $1.50 per diluted share.
  • Net interest margin increased 10 basis points compared to the linked quarter, and is 9 basis points higher than Q4 2014.
  • Core revenues increased $255,000, or 1.8 percent (non-annualized) during Q4 2015, and $3.04 million, or 5.7 percent during 2015.
  • Loan portfolio grew $17.2 million, or 1.6 percent (non-annualized) during Q4 2015, and $59.8 million, or 5.8 percent during 2015.
  • Nonperforming assets as a percentage of total assets declined to 2.77 percent compared to 3.07 percent for the linked quarter, and 3.48 percent at year end 2014; foreclosed properties are at the lowest level since Q2 2009.
  • Recorded charges of $636,000 to write-down foreclosed properties compared to $1.05 million in Q3 2015 and $300,000 in Q4 2014.

H. Charles Maddy III, President and Chief Executive Officer of Summit, commented, “The year just concluded marked a significant milestone towards Summit’s goal of being a consistent, high-performing community banking institution. Our improved earnings performance, increased return on assets and equity, growing loan portfolio, increasing revenues, improved net interest margin, strengthened capital, and continuing reductions in the portfolio of problem assets, all serve as evidence towards achievement of this goal. Further, we are very pleased to end 2015 with another exceptional quarter of solid performance, which gives us optimism as we look forward to 2016 and beyond.”

Results from Operations

Total revenue for fourth quarter 2015, consisting of net interest income and noninterest income, grew 6.0 percent to $14.6 million compared to $13.8 million for the fourth quarter 2014. For the year-to-date period ended December 31, 2015, total revenue was $57.9 million compared to $53.6 million for 2014, representing a 8.0 percent increase.

Total core revenue (excluding nonrecurring items, enumerated above) was $14.2 million for fourth quarter 2015 compared to $13.6 million for the same prior-year quarter, an increase of 4.1 percent. For full-year 2015, total core revenue (excluding nonrecurring items) was $56.4 million compared to $53.4 million for full-year 2014, a 5.7 percent improvement.

For the fourth quarter of 2015, net interest income was $11.7 million, an increase of 7.1 percent from the $11.0 million reported in the prior-year fourth quarter and 3.8 percent or $428,000 more than the linked quarter. The net interest margin for fourth quarter 2015 was 3.51 percent compared to 3.42 percent for the year-ago quarter, and 3.41 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 fourth quarter 2015 was $2.87 million compared to $2.82 million for the comparable period of 2014. Excluding realized securities gains/losses, noninterest income was $2.45 million for fourth quarter 2015, compared to $2.67 million reported for fourth quarter 2014.

Summit recognized $250,000 provision for loan losses in both the fourth quarter 2015, and the linked quarter, compared to none for the year-ago quarter.

Core noninterest expense continues to be well-controlled. Total noninterest expense decreased 6.8% to $8.49 million compared to $9.11 million for the prior-year fourth quarter. Excluding from noninterest expense (on a pre-tax basis) gains on sales of foreclosed properties of $314,000 in Q4 2015 and losses of $628,000 in Q4 2014, write-downs of foreclosed properties of $636,000 in Q4 2015 and $300,000 in Q4 2014, and a fraud loss in Q4 2014 of $461,000, noninterest expense would have approximated $8.17 million for Q4 2015 compared to $7.72 million for the comparable period of 2014. Noninterest expense for the full-year 2015 decreased 4.8% compared to 2014.

Balance Sheet

At December 31, 2015, total assets were $1.49 billion, an increase of $48.9 million, or 3.4 percent since December 31, 2014. Total loans, net of unearned fees and allowance for loan losses, were $1.08 billion at December 31, 2015, up $59.5 million, or 5.8 percent, from the $1.02 billion reported at year-end 2014.

At December 31, 2015, deposits were $1.07 billion, an increase of $5.4 million, or 0.5 percent, since year end 2014. During 2015, checking and savings grew by $15.3 million and $13.2 million, respectively, or 4.8 percent and 5.2 percent, respectively. Long-term borrowings and subordinated debentures declined by 16.4 percent since year end 2014, as the Company prepaid $16.8 million in subordinated debentures, which was funded primarily by short-term borrowings.

Asset Quality

As of December 31, 2015, nonperforming assets (“NPAs”), consisting of nonperforming loans, foreclosed properties, and repossessed assets, were $41.3 million, or 2.77 percent of assets. This compares to $45.2 million, or 3.07 percent of assets at the linked quarter, and $50.2 million, or 3.48 percent of assets, at fourth quarter 2014.

Fourth quarter 2014 net loan charge-offs were $6,000, or 0.00 percent of average loans annualized. The allowance for loan losses stood at $11.5 million, or 1.05 percent of total loans at December 31, 2015, compared to 1.08 percent at year-end 2014.

Capital Adequacy

Shareholders’ equity was $143.7 million as of December 31, 2015 compared to $131.6 million December 31, 2014. Tangible book value per common share increased to $12.78 at December 31, 2015 compared to $11.86 at December 31, 2014.

Summit's depository institution, Summit Community Bank, Inc. (the “Bank”), is well in excess of regulatory requirements for a "well capitalized" institution at December 31, 2015. The Bank’s total risk-based capital ratio was 14.5 percent at December 31, 2015 compared to 15.3 percent at December 31, 2014, while its Tier 1 leverage capital ratio improved to 10.8 percent from the 10.6 percent reported at December 31, 2014.

About the Company

Summit Financial Group, Inc. is a $1.49 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 -- Q4 2015 vs Q4 2014
For the Quarter Ended Percent
Dollars in thousands 12/31/201512/31/2014 Change
Condensed Statements of Income
Interest income
Loans, including fees $ 13,265 $ 12,666 4.7%
Securities 1,685 1,784 -5.5%
Other 1 2 -50.0%
Total interest income 14,951 14,452 3.5%
Interest expense
Deposits 2,085 2,130 -2.1%
Borrowings 1,133 1,371 -17.4%
Total interest expense 3,218 3,501 -8.1%
Net interest income 11,733 10,951 7.1%
Provision for loan losses 250 - n/a
Net interest income after provision
for loan losses 11,483 10,951 4.9%
Noninterest income
Insurance commissions 851 1,023 -16.8%
Service fees related to deposit accounts 1,126 1,113 1.2%
Realized securities gains (losses) 421 149 182.6%
Other income 471 537 -12.3%
Total noninterest income 2,869 2,822 1.7%
Noninterest expense
Salaries and employee benefits 4,530 4,133 9.6%
Net occupancy expense 481 495 -2.8%
Equipment expense 617 487 26.7%
Professional fees 507 452 12.2%
FDIC premiums 270 315 -14.3%
Foreclosed properties expense 150 239 -37.2%
Loss (gain) on sales of foreclosed properties (314) 628 -150.0%
Write-downs of foreclosed properties 636 300 112.0%
Other expenses 1,617 2,061 -21.5%
Total noninterest expense 8,494 9,110 -6.8%
Income before income taxes 5,858 4,663 25.6%
Income taxes 1,712 1,464 16.9%
Net income 4,146 3,199 29.6%
Preferred stock dividends - 191 -100.0%
Net income applicable to common shares$ 4,146 $ 3,008 37.8%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Quarterly Performance Summary -- Q4 2015 vs Q4 2014
For the Quarter Ended Percent
12/31/201512/31/2014 Change
Per Share Data
Earnings per common share
Basic $ 0.39 $ 0.39 0.0%
Diluted $ 0.39 $ 0.32 21.9%
Cash dividends $ 0.08 $ - n/a
Average common shares outstanding
Basic 10,661,700 7,796,508 36.7%
Diluted 10,669,192 9,963,214 7.1%
Common shares outstanding at period end 10,671,744 8,301,746 28.5%
Performance Ratios
Return on average equity 11.66% 10.10% 15.4%
Return on average tangible equity 12.31% 10.76% 14.4%
Return on average assets 1.12% 0.89% 25.8%
Net interest margin 3.51% 3.42% 2.6%
Efficiency ratio (A) 54.46% 53.07% 2.6%

NOTE (A) – 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 -- 2015 vs 2014
For the Years Ended Percent
Dollars in thousands 12/31/201512/31/2014 Change
Condensed Statements of Income
Interest income
Loans, including fees $ 52,068 $ 50,430 3.2%
Securities 6,808 7,188 -5.3%
Other 7 8 -12.5%
Total interest income 58,883 57,626 2.2%
Interest expense
Deposits 8,336 8,995 -7.3%
Borrowings 4,531 6,246 -27.5%
Total interest expense 12,867 15,241 -15.6%
Net interest income 46,016 42,385 8.6%
Provision for loan losses 1,250 2,250 -44.4%
Net interest income after provision
for loan losses 44,766 40,135 11.5%
Noninterest income
Insurance commissions 4,042 4,400 -8.1%
Service fees related to deposit accounts 4,285 4,405 -2.7%
Realized securities gains 1,444 213 577.9%
Other-than-temporary impairment of securities - (1) -100.0%
Other income 2,090 2,206 -5.3%
Total noninterest income 11,861 11,223 5.7%
Noninterest expense
Salaries and employee benefits 17,638 16,185 9.0%
Net occupancy expense 1,964 2,023 -2.9%
Equipment expense 2,294 2,086 10.0%
Professional fees 1,616 1,429 13.1%
FDIC premiums 1,220 1,792 -31.9%
Foreclosed properties expense 684 1,020 -32.9%
Loss (gain) on sales of foreclosed properties (26) 827 -103.1%
Write-downs of foreclosed properties 2,415 3,771 -36.0%
Other expenses 5,827 6,191 -5.9%
Total noninterest expense 33,632 35,324 -4.8%
Income before income taxes 22,995 16,034 43.4%
Income taxes 6,893 4,678 47.3%
Net income 16,102 11,356 41.8%
Preferred stock dividends - 771 -100.0%
Net income applicable to common shares$ 16,102 $ 10,585 52.1%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Annual Performance Summary -- 2015 vs 2014
For the Years Ended Percent
12/31/201512/31/2014 Change
Per Share Data
Earnings per common share
Basic $ 1.56 $ 1.40 11.4%
Diluted $ 1.50 $ 1.17 28.2%
Cash dividends $ 0.32 $ - n/a
Average common shares outstanding
Basic 10,295,434 7,539,444 36.6%
Diluted 10,715,275 9,711,561 10.3%
Common shares outstanding at period end 10,671,744 8,301,746 28.5%
Performance Ratios
Return on average equity 11.62% 9.54% 21.8%
Return on average tangible equity 12.29% 10.22% 20.3%
Return on average assets 1.10% 0.80% 37.5%
Net interest margin 3.50% 3.39% 3.2%
Efficiency ratio (A) 52.17% 52.78% -1.2%

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

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Five Quarter Performance Summary
For the Quarter Ended
Dollars in thousands 12/31/20159/30/20156/30/20153/31/201512/31/2014
Condensed Statements of Income
Interest income
Loans, including fees $ 13,265 $ 12,983 $ 12,972 $ 12,848 $ 12,666
Securities 1,685 1,543 1,685 1,894 1,784
Other 1 5 1 1 2
Total interest income 14,951 14,531 14,658 14,743 14,452
Interest expense
Deposits 2,085 2,106 2,074 2,071 2,130
Borrowings 1,133 1,120 1,126 1,152 1,371
Total interest expense 3,218 3,226 3,200 3,223 3,501
Net interest income 11,733 11,305 11,458 11,520 10,951
Provision for loan losses 250 250 500 250 -
Net interest income after provision
for loan losses 11,483 11,055 10,958 11,270 10,951
Noninterest income
Insurance commissions 851 983 1,080 1,128 1,023
Service fees related to deposit accounts 1,126 1,111 1,072 976 1,113
Realized securities gains (losses) 421 372 170 480 149
Other income 471 527 538 555 537
Total noninterest income 2,869 2,993 2,860 3,139 2,822
Noninterest expense
Salaries and employee benefits 4,530 4,479 4,442 4,187 4,133
Net occupancy expense 481 496 489 498 495
Equipment expense 617 582 560 535 487
Professional fees 507 402 372 335 452
FDIC premiums 270 300 320 330 315
Foreclosed properties expense 150 168 158 208 239
Loss (gain) on sales of foreclosed properties (314) 35 103 150 628
Write-downs of foreclosed properties 636 1,046 160 572 300
Other expenses 1,617 1,364 1,457 1,389 2,061
Total noninterest expense 8,494 8,872 8,061 8,204 9,110
Income before income taxes 5,858 5,176 5,757 6,205 4,663
Income taxes 1,712 1,515 1,747 1,920 1,464
Net income 4,146 3,661 4,010 4,285 3,199
Preferred stock dividends - - - - 191
Net income applicable to common shares$ 4,146 $ 3,661 $ 4,010 $ 4,285 $ 3,008

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Five Quarter Performance Summary
For the Quarter Ended
12/31/20159/30/20156/30/20153/31/201512/31/2014
Per Share Data
Earnings per common share
Basic $ 0.39 $ 0.34 $ 0.38 $ 0.49 $ 0.39
Diluted $ 0.39 $ 0.34 $ 0.38 $ 0.41 $ 0.32
Cash dividends $ 0.08 $ 0.08 $ 0.08 $ 0.08 $ -
Average common shares outstanding
Basic 10,661,700 10,703,526 10,667,892 8,815,961 7,796,508
Diluted 10,669,192 10,712,203 10,676,474 10,493,323 9,963,214
Common shares outstanding at period end 10,671,744 10,658,199 10,843,676 10,586,242 8,301,746
Performance Ratios
Return on average equity 11.66% 10.42% 11.67% 12.79% 10.10%
Return on average tangible equity 12.31% 11.01% 12.36% 13.56% 10.76%
Return on average assets 1.12% 1.00% 1.09% 1.18% 0.89%
Net interest margin 3.51% 3.41% 3.49% 3.59% 3.42%
Efficiency ratio (A) 54.46% 52.93% 52.05% 49.27% 53.07%

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 12/31/20159/30/20156/30/20153/31/201512/31/2014
Assets
Cash and due from banks$ 3,625 $ 4,232 $ 3,988 $ 3,850 $ 3,728
Interest bearing deposits other banks 5,862 8,057 9,274 8,437 8,783
Securities 280,792 272,127 276,661 282,135 282,834
Loans, net 1,079,331 1,062,348 1,064,472 1,039,669 1,019,842
Property held for sale 25,567 29,713 31,500 34,368 37,529
Premises and equipment, net 21,572 20,457 20,490 20,208 20,060
Intangible assets 7,498 7,548 7,598 7,648 7,698
Cash surrender value of life insurance policies 37,732 37,482 37,222 36,961 36,700
Other assets 30,450 27,340 28,764 27,216 26,394
Total assets$ 1,492,429 $ 1,469,304 $ 1,479,969 $ 1,460,492 $ 1,443,568
Liabilities and Shareholders' Equity
Deposits$ 1,066,709 $ 1,072,091 $ 1,053,310 $ 1,058,308 $ 1,061,314
Short-term borrowings 171,394 145,291 174,599 148,985 123,633
Long-term borrowings and
subordinated debentures 95,170 95,648 98,625 101,602 113,879
Other liabilities 15,412 15,985 13,363 15,708 13,098
Shareholders' equity 143,744 140,289 140,072 135,889 131,644
Total liabilities and shareholders' equity$ 1,492,429 $ 1,469,304 $ 1,479,969 $ 1,460,492 $ 1,443,568
Book value per common share (A)$ 13.48 $ 13.16 $ 12.92 $ 12.84 $ 12.60
Tangible book value per common share (A)$ 12.78 $ 12.45 $ 12.22 $ 12.11 $ 11.86
Tangible equity to tangible assets 9.2% 9.1% 9.0% 8.8% 8.6%
Tangible common equity to tangible assets 9.2% 9.1% 9.0% 8.8% 8.0%

NOTE (A) – Assumes conversion of convertible preferred stock

SUMMIT FINANCIAL GROUP INC. (NASDAQ:SMMF)
Regulatory Capital Ratios (A)
12/31/20159/30/20156/30/20153/31/201512/31/2014
Summit Financial Group, Inc.
CET1 Risk-based Capital 11.8% 11.7% 11.6% 11.3%n/a
Tier 1 Risk-based Capital 13.4% 13.4% 13.2% 13.0% 13.3%
Total Risk-based Capital 14.4% 14.4% 14.2% 14.0% 14.9%
Tier 1 Leverage Ratio 10.7% 10.5% 10.4% 10.1% 9.9%
Summit Community Bank, Inc.
CET1 Risk-based Capital 13.6% 13.6% 13.4% 13.5%n/a
Tier 1 Risk-based Capital 13.6% 13.6% 13.4% 13.5% 14.2%
Total Risk-based Capital 14.5% 14.6% 14.4% 14.5% 15.3%
Tier 1 Leverage Ratio 10.8% 10.7% 10.6% 10.5% 10.6%


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 thousands12/31/20159/30/20156/30/20153/31/201512/31/2014
Commercial $ 97,201 $ 89,250 $ 97,284 $ 89,928 $ 88,590
Commercial real estate
Owner occupied 203,555 199,068 191,743 180,269 157,783
Non-owner occupied 337,295 336,550 331,056 325,764 317,136
Construction and development
Land and development 65,500 66,164 64,435 66,558 67,881
Construction 9,970 8,419 18,214 19,094 28,591
Residential real estate
Non-jumbo 221,749 222,739 220,199 219,938 220,071
Jumbo 50,313 46,092 49,203 50,492 52,879
Home equity 74,300 73,652 72,504 68,894 67,115
Consumer 19,251 19,124 18,683 18,485 19,456
Other 11,669 12,518 12,423 11,074 11,507
Total loans, net of unearned fees 1,090,803 1,073,576 1,075,744 1,050,496 1,031,009
Less allowance for loan losses 11,472 11,228 11,272 10,827 11,167
Loans, net$ 1,079,331 $ 1,062,348 $ 1,064,472 $ 1,039,669 $ 1,019,842


SUMMIT FINANCIAL GROUP INC. (NASDAQ:SMMF)
Deposit Composition
Dollars in thousands 12/31/20159/30/20156/30/20153/31/201512/31/2014
Non interest bearing checking$ 119,010 $ 118,887 $ 113,256 $ 117,049 $ 115,427
Interest bearing checking 215,721 217,242 202,957 196,606 204,030
Savings 266,825 259,185 246,949 257,687 253,578
Time deposits 465,153 476,777 490,148 486,966 488,279
Total deposits$ 1,066,709 $ 1,072,091 $ 1,053,310 $ 1,058,308 $ 1,061,314


SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Asset Quality Information
For the Quarter Ended
Dollars in thousands 12/31/20159/30/20156/30/20153/31/201512/31/2014
Gross loan charge-offs$ 132 $ 774 $ 463 $ 782 $ 362
Gross loan recoveries (126) (481) (407) (192) (488)
Net loan charge-offs$ 6 $ 293 $ 56 $ 590 $ (126)
Net loan charge-offs to average loans (annualized) 0.00% 0.11% 0.02% 0.23% -0.05%
Allowance for loan losses$ 11,472 $ 11,228 $ 11,272 $ 10,827 $ 11,167
Allowance for loan losses as a percentage
of period end loans 1.05% 1.05% 1.05% 1.03% 1.08%
Nonperforming assets:
Nonperforming loans
Commercial$ 853 $ 884 $ 1,065 $ 788 $ 392
Commercial real estate 5,955 5,294 2,421 1,340 1,844
Commercial construction and development - - - - -
Residential construction and development 5,623 5,345 5,627 5,333 4,619
Residential real estate 3,245 3,881 4,433 4,491 5,556
Consumer 92 53 45 65 83
Total nonperforming loans 15,768 15,457 13,591 12,017 12,494
Foreclosed properties
Commercial - - - 110 110
Commercial real estate 1,300 3,209 3,279 3,657 5,204
Commercial construction and development 8,717 9,328 10,178 10,191 10,179
Residential construction and development 14,068 14,965 15,839 17,590 19,267
Residential real estate 1,482 2,211 2,204 2,819 2,769
Total foreclosed properties 25,567 29,713 31,500 34,367 37,529
Other repossessed assets 5 - 55 55 221
Total nonperforming assets$ 41,340 $ 45,170 $ 45,146 $ 46,439 $ 50,244
Nonperforming loans to period end loans 1.45% 1.44% 1.26% 1.14% 1.21%
Nonperforming assets to period end assets 2.77% 3.07% 3.05% 3.18% 3.48%

Loans Past Due 30-89 Days
For the Quarter Ended
In thousands 12/31/20159/30/20156/30/20153/31/201512/31/2014
Commercial$ 339 $ 42 $ 344 $ 387 $ 382
Commercial real estate 543 1,926 4,945 783 266
Construction and development 1,182 39 21 2,735 2,278
Residential real estate 4,442 3,888 3,932 3,614 7,413
Consumer 186 216 211 148 269
Other 9 9 7 18 14
Total$ 6,701 $ 6,120 $ 9,460 $ 7,685 $ 10,622

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q4 2015 vs Q4 2014
Q4 2015 Q4 2014
AverageEarnings /Yield / AverageEarnings /Yield /
Dollars in thousandsBalancesExpenseRate BalancesExpenseRate
ASSETS
Interest earning assets
Loans, net of unearned interest
Taxable$ 1,064,491 $ 13,111 4.89% $ 1,006,641 $ 12,562 4.95%
Tax-exempt 16,393 232 5.61% 9,488 158 6.61%
Securities
Taxable 202,417 1,027 2.01% 207,577 1,127 2.15%
Tax-exempt 82,013 997 4.82% 83,729 995 4.71%
Interest bearing deposits other banks
and Federal funds sold 7,345 1 0.05% 8,102 2 0.10%
Total interest earning assets 1,372,659 15,368 4.44% 1,315,537 14,844 4.48%
Noninterest earning assets
Cash & due from banks 3,828 3,654
Premises & equipment 21,701 20,149
Other assets 91,596 107,467
Allowance for loan losses (11,370) (11,239)
Total assets$ 1,478,414 $ 1,435,568
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits$ 215,315 $ 72 0.13% $ 199,932 $ 60 0.12%
Savings deposits 262,557 474 0.72% 254,986 443 0.69%
Time deposits 469,249 1,539 1.30% 489,884 1,627 1.32%
Short-term borrowings 156,812 156 0.39% 124,001 97 0.31%
Long-term borrowings and
subordinated debentures 95,531 977 4.06% 114,533 1,274 4.41%
Total interest bearing liabilities 1,199,464 3,218 1.06% 1,183,336 3,501 1.17%
Noninterest bearing liabilities
Demand deposits 119,785 113,926
Other liabilities 16,970 11,633
Total liabilities 1,336,219 1,308,895
Shareholders' equity - preferred - 9,249
Shareholders' equity - common 142,195 117,424
Total liabilities and
shareholders' equity$ 1,478,414 $ 1,435,568
NET INTEREST EARNINGS $ 12,150 $ 11,343
NET INTEREST MARGIN 3.51% 3.42%

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$ 1,049,172 $ 51,554 4.91% $ 984,723 $ 50,078 5.09%
Tax-exempt 13,706 779 5.68% 7,823 533 6.81%
Securities
Taxable 209,316 4,328 2.07% 211,700 4,692 2.22%
Tax-exempt 77,280 3,756 4.86% 81,549 3,780 4.64%
Interest bearing deposits other banks
and Federal funds sold 8,878 8 0.09% 9,325 8 0.09%
Total interest earning assets 1,358,352 60,425 4.45% 1,295,120 59,091 4.56%
Noninterest earning assets
Cash & due from banks 3,839 3,756
Premises & equipment 20,707 20,346
Other assets 94,996 112,504
Allowance for loan losses (11,307) (11,724)
Total assets$ 1,466,587 $ 1,420,002
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits$ 208,160 $ 251 0.12% $ 192,190 $ 222 0.12%
Savings deposits 255,186 1,781 0.70% 238,340 1,580 0.66%
Time deposits 481,732 6,304 1.31% 513,110 7,193 1.40%
Short-term borrowings 151,102 525 0.35% 100,786 306 0.30%
Long-term borrowings and
subordinated debentures 99,805 4,007 4.01% 142,213 5,939 4.18%
1,195,985 12,868 1.08% 1,186,639 15,240 1.28%
Noninterest bearing liabilities
Demand deposits 116,995 104,262
Other liabilities 15,024 10,119
Total liabilities 1,328,004 1,301,020
Shareholders' equity - preferred 1,786 9,276
Shareholders' equity - common 136,797 109,706
Total liabilities and
shareholders' equity$ 1,466,587 $ 1,420,002
NET INTEREST EARNINGS $ 47,557 $ 43,851
NET INTEREST MARGIN 3.50% 3.39%


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 12/31/20159/30/201512/31/2014 12/31/201512/31/2014
Core earnings applicable to common shares $ 4,084 $ 4,108 $ 3,789 $ 16,697 $ 13,638
Realized securities gains (losses) 421 372 149 1,444 213
Applicable income tax effect (156) (138) (55) (534) (79)
Gain (loss) on sale of foreclosed properties 314 (35) (628) 26 (827)
Applicable income tax effect (116) 13 232 (10) 306
Fraud loss - - (461) - (461)
Applicable income tax effect - - 171 - 171
Write-downs foreclosed properties (636) (1,046) (300) (2,415) (3,771)
Applicable income tax effect 235 387 111 894 1,395
62 (447) (781) (595) (3,053)
GAAP net income applicable to common shares $ 4,146 $ 3,661 $ 3,008 $ 16,102 $ 10,585
Core diluted earnings per common share $ 0.38 $ 0.38 $ 0.40 $ 1.56 $ 1.50
Realized securities gains (losses) 0.04 - 0.01 0.13 0.02
Applicable income tax effect (0.01) - - (0.05) (0.01)
Gain (loss) on sale of foreclosed properties 0.03 0.03 (0.06) - (0.09)
Applicable income tax effect (0.01) (0.01) 0.02 - 0.03
Fraud loss - - (0.05) - (0.05)
Applicable income tax effect - - 0.02 - 0.02
Write-downs of foreclosed properties (0.06) (0.10) (0.03) (0.23) (0.39)
Applicable income tax effect 0.02 0.04 0.01 0.09 0.14
0.01 (0.04) (0.08) (0.06) (0.33)
GAAP diluted earnings per common share $ 0.39 $ 0.34 $ 0.32 $ 1.50 $ 1.17


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 12/31/20159/30/201512/31/2014 12/31/201512/31/2014
Total core revenue $ 14,181 $ 13,926 $ 13,624 $ 56,433 $ 53,395
FHLB special dividend - - - 176 -
Realized securities gains/(losses) 421 372 149 1,444 213
421 372 149 1,444 213
GAAP total revenue $ 14,602 $ 14,298 $ 13,773 $ 57,877 $ 53,608
Total core noninterest income $ 2,448 $ 2,621 $ 2,673 $ 10,417 $ 11,010
Realized securities gains/(losses) 421 372 149 1,444 213
421 372 149 1,444 213
GAAP total noninterest income $ 2,869 $ 2,993 $ 2,822 $ 11,861 $ 11,223
Total core noninterest expense $ 8,172 $ 7,791 $ 7,721 $ 31,243 $ 30,265
Fraud loss - - 461 - 461
(Gains)/losses on sales of foreclosed properties (314) 35 628 (26) 827
Write-downs of foreclosed properties 636 1,046 300 2,415 3,771
322 1,081 1,389 2,389 5,059
GAAP total noninterest expense $ 8,494 $ 8,872 $ 9,110 $ 33,632 $ 35,324


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

Source:Summit Financial Group, Inc.