Summit Financial Group Reports Third Quarter and First Nine Months 2016 Results

MOOREFIELD, W.Va., Oct. 24, 2016 (GLOBE NEWSWIRE) -- Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ:SMMF) today reported third quarter 2016 net income of $4.28 million, or $0.40 per diluted share, compared to $3.66 million, or $0.34 per diluted share, for the third quarter of 2015, representing an increase of 16.9 percent, or 17.6 percent per diluted share. Q3 2016 earnings compared to Q3 2015 and Q2 2016 were positively impacted by increased net interest earnings and reduced write-downs of foreclosed properties, which were partially offset by increased personnel costs and smaller gains realized on sales of securities.

Excluding from third quarter 2016 one-time items of income, gain, expense and loss, Q3 2016 core earnings approximated $4.38 million, or $0.41 per diluted share compared to Q3 2015 core earnings of $4.11 million, or $0.38 per diluted share, and to Q2 2016 core earnings of $4.09 million, or $0.37 per diluted share.

For the nine months ended September 30, 2016, Summit recorded net income of $12.59 million, or $1.18 per diluted share, compared with $11.96 million, or $1.12 per diluted share, for the comparable 2015 nine-month period, representing an increase of 5.3 percent, or 5.4 percent per diluted share.

Excluding from the nine-month period ended September 30, 2016 one-time items of income, gain, expense and loss, core earnings approximated $12.42 million, or $1.16 per diluted share compared to core earnings of $12.50 million, or $1.18 per diluted share, for the same period of 2015.

Highlights for Q3 2016 include:

  • Core revenues increased 9.2 percent (on an annualized basis) compared to the linked quarter, and 5.8 percent compared to the year ago quarter.
  • Loans, excluding mortgage warehouse lines of credit, grew $39.4 million during the quarter, or 14.4 percent (on an annualized basis), and have grown $46.4 million, or 5.7 percent (annualized), year-to-date.
  • Nonperforming assets as a percentage of total assets declined for the sixteenth consecutive quarter to 2.36 percent, compared to 2.47 percent for the linked quarter, reaching its lowest level since Q2 2008.
  • Net interest margin declined 9 basis points compared to Q3 2015, and 8 basis points compared to the linked quarter.
  • Recorded charges of $134,000 to write-down foreclosed properties compared to $259,000 in Q2 2016 and $1,046,000 in Q3 2015.

H. Charles Maddy, III, President and Chief Executive Officer of Summit, commented, “I am very pleased to report Summit achieved solid operating results in third quarter 2016. I am particularly gratified by the growth in core revenues which principally resulted from a substantial increase in this past quarter’s lending activity. Further, we closed our acquisition of Highland County Bankshares on October 1, 2016, and our pending acquisition of First Century Bankshares has now received all requisite regulatory approvals and is expected to close in early 2017. The opportunities for us represented by these two acquisitions are significant. They combine Summit with two financially strong banks that have similar cultures, core values and guiding principles as ours, and share the same commitment to build long-term client relationships by providing service beyond expectations.”

Results from Operations

Total revenue for third quarter 2016, consisting of net interest income and noninterest income, grew 3.4 percent to $14.8 million compared to $14.3 million for the third quarter 2015. For the year-to-date period ended September 30, 2016, total revenue was $44.2 million compared to $43.3 million for the same period of 2015, representing a 2.0 percent increase.

Total core revenue, excluding nonrecurring items, described above, was $14.7 million for third quarter 2016 compared to $13.9 million for the same prior-year quarter, an increase of 5.8 percent. For the first nine months of 2016, total core revenue (excluding nonrecurring items) was $43.3 million compared to $42.1 million for the first nine months of 2015, a 2.9 percent improvement.

For the third quarter of 2016, net interest income was $12.0 million, an increase of 6.5 percent from the $11.3 million reported in the prior-year third quarter and increased $304,000 compared to the linked quarter. The net interest margin for third quarter 2016 was 3.32 percent compared to 3.41 percent for the year-ago quarter, and 3.40 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 2016 was $2.75 million compared to $2.99 million for the comparable period of 2015. Excluding realized securities gains, noninterest income was $2.69 million for third quarter 2016, compared to $2.62 million reported for third quarter 2015.

We recorded no provision for loan losses during third quarter 2016, compared to $250,000 for both the linked quarter and year-ago quarter.

Noninterest expense continues to be well-controlled. Total noninterest expense decreased 5.1 percent to $8.42 million compared to $8.87 million for the prior-year third quarter. Excluding from noninterest expense (on a pre-tax basis) merger expenses, flood losses, gains/losses on sales of foreclosed properties, and write-downs of foreclosed properties, noninterest expense would have approximated $8.21 million for Q3 2016 compared to $7.79 million for the comparable period of 2015. Noninterest expense for the first nine months of 2016 increased 1.1 percent compared to the first nine months of 2015.

Balance Sheet

At September 30, 2016, total assets were $1.66 billion, an increase of $165.2 million, or 11.1 percent since December 31, 2015. Total loans, net of unearned fees and allowance for loan losses, were $1.23 billion at September 30, 2016, up $155.3 million, or 14.4 percent, from the $1.08 billion reported at year-end 2015. Excluding mortgage warehouse lines of credit, net loans increased $46.3 million or 4.3 percent from year-end 2015.

At September 30, 2016, deposits were $1.16 billion, an increase of $90.1 million, or 8.4 percent, since year end 2015. During first nine months of 2016, checking deposits remained relatively unchanged at $334.8 million, while time deposits and savings deposits increased by $35.2 million and $54.7 million, respectively, or 7.6 percent and 20.5 percent, respectively.

Asset Quality

As of September 30, 2016, nonperforming assets (“NPAs”), consisting of nonperforming loans, foreclosed properties, and repossessed assets, were $39.2 million, or 2.36 percent of assets. This compares to $38.7 million, or 2.47 percent of assets at the linked quarter, and $45.2 million, or 3.07 percent of assets, at third quarter 2015.

Third quarter 2016 net loan charge-off recoveries were $242,000, or 0.09 percent of average loans annualized; with no provision for loan losses. The allowance for loan losses stood at $11.6 million, or 0.93 percent of total loans at September 30, 2016, compared to 1.05 percent at year-end 2015.

Capital Adequacy

Shareholders’ equity was $153.8 million as of September 30, 2016 compared to $143.7 million December 31, 2015 and $140.3 million at September 30, 2015. Tangible book value per common share increased to $13.69 at September 30, 2016 compared to $12.78 at December 31, 2015 and $12.45 at September 30, 2015. Summit had 10,701,841 outstanding common shares at Q3 2016 quarter end compared to 10,671,744 at year end 2015.

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, 2016. The Bank’s total risk-based capital ratio was 13.4 percent at September 30, 2016 compared to 14.5 percent at December 31, 2015, while its Tier 1 leverage capital ratio was 10.5 percent at September 30, 2016 compared to the 10.8 percent reported at December 31, 2015.

About the Company

Summit Financial Group, Inc. is a $1.66 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 eighteen 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 2016 vs Q3 2015
For the Quarter Ended Percent
Dollars in thousands 9/30/20169/30/2015 Change
Condensed Statements of Income
Interest income
Loans, including fees $ 14,142 $ 12,983 8.9%
Securities 1,759 1,543 14.0%
Other 5 5 0.0%
Total interest income 15,906 14,531 9.5%
Interest expense
Deposits 2,209 2,106 4.9%
Borrowings 1,659 1,120 48.1%
Total interest expense 3,868 3,226 19.9%
Net interest income 12,038 11,305 6.5%
Provision for loan losses - 250 -100.0%
Net interest income after provision
for loan losses 12,038 11,055 8.9%
Noninterest income
Insurance commissions 1,016 983 3.4%
Service fees related to deposit accounts 1,138 1,111 2.4%
Realized securities gains 61 372 -83.6%
Other income 534 527 1.3%
Total noninterest income 2,749 2,993 -8.2%
Noninterest expense
Salaries and employee benefits 4,819 4,479 7.6%
Net occupancy expense 525 496 5.8%
Equipment expense 716 582 23.0%
Professional fees 270 402 -32.8%
FDIC premiums 200 300 -33.3%
Merger expense 80 - n/a
Foreclosed properties expense 100 168 -40.5%
Loss (gain) on sales of foreclosed properties (168) 35 n/a
Write-downs of foreclosed properties 134 1,046 -87.2%
Other expenses 1,743 1,364 27.8%
Total noninterest expense 8,419 8,872 -5.1%
Income before income taxes 6,368 5,176 23.0%
Income taxes 2,087 1,515 37.8%
Net income $ 4,281 $ 3,661 16.9%


SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Quarterly Performance Summary -- Q3 2016 vs Q3 2015
For the Quarter Ended Percent
9/30/20169/30/2015 Change
Per Share Data
Earnings per common share
Basic $ 0.40 $ 0.34 17.6%
Diluted $ 0.40 $ 0.34 17.6%
Cash dividends $ 0.10 $ 0.08 25.0%
Average common shares outstanding
Basic 10,692,423 10,703,526 -0.1%
Diluted 10,727,140 10,712,203 0.1%
Common shares outstanding at period end 10,701,841 10,658,199 0.4%
Performance Ratios
Return on average equity 11.29% 10.42% 8.3%
Return on average tangible equity 11.86% 11.01% 7.7%
Return on average assets 1.08% 1.00% 8.0%
Net interest margin 3.32% 3.41% -2.6%
Efficiency ratio (A) 53.30% 52.93% 0.7%

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 -- 2016 vs 2015
For the Nine Months Ended Percent
Dollars in thousands 9/30/20169/30/2015 Change
Condensed Statements of Income
Interest income
Loans, including fees $ 41,200 $ 38,804 6.2%
Securities 5,141 5,122 0.4%
Other 13 7 85.7%
Total interest income 46,354 43,933 5.5%
Interest expense
Deposits 6,533 6,251 4.5%
Borrowings 4,271 3,399 25.7%
Total interest expense 10,804 9,650 12.0%
Net interest income 35,550 34,283 3.7%
Provision for loan losses 500 1,000 -50.0%
Net interest income after provision
for loan losses 35,050 33,283 5.3%
Noninterest income
Insurance commissions 3,030 3,191 -5.0%
Service fees related to deposit accounts 3,175 3,159 0.5%
Realized securities gains 836 1,023 -18.3%
Other income 1,560 1,619 -3.6%
Total noninterest income 8,601 8,992 -4.3%
Noninterest expense
Salaries and employee benefits 14,265 13,107 8.8%
Net occupancy expense 1,576 1,483 6.3%
Equipment expense 2,059 1,677 22.8%
Professional fees 1,171 1,109 5.6%
FDIC premiums 800 950 -15.8%
Merger expense 345 - n/a
Foreclosed properties expense 317 534 -40.6%
Loss (gain) on sales of foreclosed properties (451) 288 -256.6%
Write-downs of foreclosed properties 503 1,779 -71.7%
Other expenses 4,825 4,211 14.6%
Total noninterest expense 25,410 25,138 1.1%
Income before income taxes 18,241 17,137 6.4%
Income taxes 5,655 5,181 9.1%
Net income $ 12,586 $ 11,956 5.3%


SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Nine Month Performance Summary -- 2016 vs 2015
For the Nine Months Ended Percent
9/30/20169/30/2015 Change
Per Share Data
Earnings per common share
Basic $ 1.18 $ 1.19 -0.8%
Diluted $ 1.18 $ 1.12 5.4%
Cash dividends $ 0.30 $ 0.24 25.0%
Average common shares outstanding
Basic 10,682,129 10,069,374 6.1%
Diluted 10,692,346 10,628,139 0.6%
Common shares outstanding at period end 10,701,841 10,658,199 0.4%
Performance Ratios
Return on average equity 11.29% 11.61% -2.8%
Return on average tangible equity 11.88% 12.29% -3.3%
Return on average assets 1.09% 1.09% 0.0%
Net interest margin 3.40% 3.50% -2.9%
Efficiency ratio (A) 54.84% 51.40% 6.7%

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 9/30/20166/30/20163/31/201612/31/20159/30/2015
Condensed Statements of Income
Interest income
Loans, including fees $ 14,142 $ 13,622 $ 13,436 $ 13,265 $ 12,983
Securities 1,759 1,656 1,726 1,685 1,543
Other 5 5 3 1 5
Total interest income 15,906 15,283 15,165 14,951 14,531
Interest expense
Deposits 2,209 2,154 2,170 2,085 2,106
Borrowings 1,659 1,395 1,216 1,133 1,120
Total interest expense 3,868 3,549 3,386 3,218 3,226
Net interest income 12,038 11,734 11,779 11,733 11,305
Provision for loan losses - 250 250 250 250
Net interest income after provision
for loan losses 12,038 11,484 11,529 11,483 11,055
Noninterest income
Insurance commissions 1,016 1,090 924 851 983
Service fees related to deposit accounts 1,138 1,059 978 1,126 1,111
Realized securities gains 61 383 393 421 372
Other income 534 513 511 471 527
Total noninterest income 2,749 3,045 2,806 2,869 2,993
Noninterest expense
Salaries and employee benefits 4,819 4,764 4,682 4,530 4,479
Net occupancy expense 525 512 540 481 496
Equipment expense 716 686 656 617 582
Professional fees 270 429 472 507 402
FDIC premiums 200 300 300 270 300
Merger expense 80 153 112 - -
Foreclosed properties expense 100 93 124 150 168
Loss (gain) on sales of foreclosed properties (168) (276) (6) (314) 35
Write-downs of foreclosed properties 134 259 109 636 1,046
Other expenses 1,743 1,517 1,565 1,617 1,364
Total noninterest expense 8,419 8,437 8,554 8,494 8,872
Income before income taxes 6,368 6,092 5,781 5,858 5,176
Income taxes 2,087 1,849 1,719 1,712 1,515
Net income $ 4,281 $ 4,243 $ 4,062 $ 4,146 $ 3,661


SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Five Quarter Performance Summary
For the Quarter Ended
9/30/20166/30/20163/31/201612/31/20159/30/2015
Per Share Data
Earnings per common share
Basic $ 0.40 $ 0.40 $ 0.38 $ 0.39 $ 0.34
Diluted $ 0.40 $ 0.40 $ 0.38 $ 0.39 $ 0.34
Cash dividends $ 0.10 $ 0.10 $ 0.10 $ 0.08 $ 0.08
Average common shares outstanding
Basic 10,692,423 10,681,995 10,671,856 10,661,700 10,703,526
Diluted 10,727,140 10,701,017 10,679,301 10,669,192 10,712,203
Common shares outstanding at period end 10,701,841 10,692,320 10,681,880 10,671,744 10,658,199
Performance Ratios
Return on average equity 11.29% 11.49% 11.10% 11.66% 10.42%
Return on average tangible equity 11.86% 12.10% 11.70% 12.31% 11.01%
Return on average assets 1.08% 1.10% 1.08% 1.12% 1.00%
Net interest margin 3.32% 3.40% 3.50% 3.51% 3.41%
Efficiency ratio (A) 53.30% 55.35% 55.93% 54.46% 52.93%

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 9/30/20166/30/20163/31/201612/31/20159/30/2015
Assets
Cash and due from banks$ 25,067 $ 4,161 $ 4,005 $ 3,625 $ 4,232
Interest bearing deposits other banks 9,432 8,897 12,655 5,862 8,057
Securities 262,102 261,633 271,515 280,792 272,127
Loans, net 1,234,605 1,166,723 1,096,790 1,079,331 1,062,348
Property held for sale 24,767 23,425 24,684 25,567 29,713
Premises and equipment, net 21,802 21,405 21,589 21,572 20,457
Intangible assets 7,348 7,398 7,448 7,498 7,548
Cash surrender value of life insurance policies 38,504 38,246 37,989 37,732 37,482
Other assets 34,009 33,293 31,893 30,450 27,340
Total assets$ 1,657,636 $ 1,565,181 $ 1,508,568 $ 1,492,429 $ 1,469,304
Liabilities and Shareholders' Equity
Deposits$ 1,156,785 $ 1,096,545 $ 1,094,544 $ 1,066,709 $ 1,072,091
Short-term borrowings 234,657 205,552 153,448 171,394 145,291
Long-term borrowings and
subordinated debentures 93,735 94,214 94,692 95,170 95,648
Other liabilities 18,640 18,201 19,755 15,412 15,985
Shareholders' equity 153,819 150,669 146,129 143,744 140,289
Total liabilities and shareholders' equity$ 1,657,636 $ 1,565,181 $ 1,508,568 $ 1,492,429 $ 1,469,304
Book value per common share$ 14.37 $ 14.09 $ 13.68 $ 13.48 $ 13.16
Tangible book value per common share$ 13.69 $ 13.40 $ 12.98 $ 12.78 $ 12.45
Tangible equity to tangible assets 8.9% 9.2% 9.2% 9.2% 9.1%
Tangible common equity to tangible assets 8.9% 9.2% 9.2% 9.2% 9.1%


SUMMIT FINANCIAL GROUP INC. (NASDAQ:SMMF)
Regulatory Capital Ratios (A)
9/30/20166/30/20163/31/201612/31/20159/30/2015
Summit Financial Group, Inc.
CET1 Risk-based Capital 11.1% 11.5% 11.9% 11.8% 11.7%
Tier 1 Risk-based Capital 12.4% 12.9% 13.5% 13.4% 13.4%
Total Risk-based Capital 13.3% 13.8% 14.5% 14.4% 14.4%
Tier 1 Leverage Ratio 10.4% 10.5% 10.7% 10.7% 10.5%
Summit Community Bank, Inc.
CET1 Risk-based Capital 12.5% 13.0% 13.6% 13.6% 13.6%
Tier 1 Risk-based Capital 12.5% 13.0% 13.6% 13.6% 13.6%
Total Risk-based Capital 13.4% 13.9% 14.5% 14.5% 14.6%
Tier 1 Leverage Ratio 10.5% 10.6% 10.7% 10.8% 10.7%

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 thousands9/30/20166/30/20163/31/201612/31/20159/30/2015
Commercial $ 110,466 $ 101,521 $ 101,743 $ 97,201 $ 89,250
Mortgage warehouse lines 108,983 80,282 - - -
Commercial real estate
Owner occupied 192,254 190,534 202,680 203,555 199,068
Non-owner occupied 367,196 348,099 353,350 337,295 336,550
Construction and development
Land and development 65,430 65,702 66,483 65,500 66,164
Construction 11,276 8,506 7,997 9,970 8,419
Residential real estate
Non-jumbo 228,777 225,919 221,368 221,749 222,739
Jumbo 57,276 52,105 50,057 50,313 46,092
Home equity 75,161 75,904 74,097 74,300 73,652
Consumer 19,756 19,520 19,095 19,251 19,124
Other 9,649 10,008 11,235 11,669 12,518
Total loans, net of unearned fees 1,246,224 1,178,100 1,108,105 1,090,803 1,073,576
Less allowance for loan losses 11,619 11,377 11,315 11,472 11,228
Loans, net$ 1,234,605 $ 1,166,723 $ 1,096,790 $ 1,079,331 $ 1,062,348


SUMMIT FINANCIAL GROUP INC. (NASDAQ:SMMF)
Deposit Composition
Dollars in thousands 9/30/20166/30/20163/31/201612/31/20159/30/2015
Non interest bearing checking$ 122,652 $ 120,845 $ 122,378 $ 119,010 $ 118,887
Interest bearing checking 212,172 205,095 210,878 215,721 217,242
Savings 321,563 306,785 286,695 266,825 259,185
Time deposits 500,398 463,820 474,593 465,153 476,777
Total deposits$ 1,156,785 $ 1,096,545 $ 1,094,544 $ 1,066,709 $ 1,072,091


SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Asset Quality Information
For the Quarter Ended
Dollars in thousands 9/30/20166/30/20163/31/201612/31/20159/30/2015
Gross loan charge-offs$ 331 $ 263 $ 561 $ 132 $ 774
Gross loan recoveries (573) (75) (154) (126) (481)
Net loan charge-offs (recoveries)$ (242)$ 188 $ 407 $ 6 $ 293
Net loan charge-offs to average loans (annualized) -0.09% 0.07% 0.15% 0.00% 0.11%
Allowance for loan losses$ 11,619 $ 11,377 $ 11,315 $ 11,472 $ 11,228
Allowance for loan losses as a percentage
of period end loans 0.93% 0.97% 1.02% 1.05% 1.05%
Nonperforming assets:
Nonperforming loans
Commercial$ 846 $ 399 $ 430 $ 853 $ 884
Commercial real estate 4,867 5,773 6,140 5,955 5,294
Residential construction and development 4,360 5,400 5,467 5,623 5,345
Residential real estate 4,174 3,531 3,248 3,245 3,881
Consumer 169 91 121 92 53
Total nonperforming loans 14,416 15,194 15,406 15,768 15,457
Foreclosed properties
Commercial real estate 1,749 976 976 1,300 3,209
Commercial construction and development 8,664 8,708 8,717 8,717 9,328
Residential construction and development 13,741 12,989 13,808 14,068 14,965
Residential real estate 613 752 1,183 1,482 2,211
Total foreclosed properties 24,767 23,425 24,684 25,567 29,713
Other repossessed assets 12 38 - 5 -
Total nonperforming assets$ 39,195 $ 38,657 $ 40,090 $ 41,340 $ 45,170
Nonperforming loans to period end loans 1.16% 1.29% 1.39% 1.45% 1.44%
Nonperforming assets to period end assets 2.36% 2.47% 2.66% 2.77% 3.07%
Troubled debt restructurings
Performing$ 28,287 $ 27,750 $ 29,452 $ 29,473 $ 29,748
Nonperforming 863 2,133 897 1,051 1,294
Total troubled debt restructurings$ 29,150 $ 29,883 $ 30,349 $ 30,524 $ 31,042


Loans Past Due 30-89 Days
For the Quarter Ended
In thousands 9/30/20166/30/20163/31/201612/31/20159/30/2015
Commercial$ 405 $ 422 $ 465 $ 339 $ 42
Commercial real estate 626 214 920 543 1,926
Construction and development 235 520 218 1,182 39
Residential real estate 2,941 4,763 3,055 4,442 3,888
Consumer 144 177 73 186 216
Other 13 12 14 9 9
Total$ 4,364 $ 6,108 $ 4,745 $ 6,701 $ 6,120


SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q3 2016 vs Q3 2015
Q3 2016 Q3 2015
AverageEarnings /Yield / AverageEarnings /Yield /
Dollars in thousandsBalancesExpenseRate BalancesExpenseRate
ASSETS
Interest earning assets
Loans, net of unearned interest
Taxable$ 1,187,205 $ 14,008 4.69% $ 1,050,058 $ 12,855 4.86%
Tax-exempt 14,300 202 5.62% 13,360 194 5.76%
Securities
Taxable 198,411 1,139 2.28% 208,473 933 1.78%
Tax-exempt 77,489 941 4.83% 75,571 924 4.85%
Interest bearing deposits other banks
and Federal funds sold 10,029 5 0.20% 13,116 5 0.15%
Total interest earning assets 1,487,434 16,295 4.36% 1,360,578 14,911 4.35%
Noninterest earning assets
Cash & due from banks 3,938 3,871
Premises & equipment 21,613 20,502
Other assets 87,636 93,563
Allowance for loan losses (11,567) (11,521)
Total assets$ 1,589,054 $ 1,466,993
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits$ 211,264 $ 85 0.16% $ 210,691 $ 61 0.11%
Savings deposits 316,358 608 0.76% 251,932 450 0.71%
Time deposits 481,060 1,516 1.25% 485,453 1,595 1.30%
Short-term borrowings 189,760 675 1.42% 148,012 130 0.35%
Long-term borrowings and
subordinated debentures 94,106 985 4.16% 97,500 990 4.03%
Total interest bearing liabilities 1,292,548 3,869 1.19% 1,193,588 3,226 1.07%
Noninterest bearing liabilities
Demand deposits 124,490 118,603
Other liabilities 20,280 14,242
Total liabilities 1,437,318 1,326,433
Shareholders' equity - preferred - -
Shareholders' equity - common 151,736 140,560
Total liabilities and
shareholders' equity$ 1,589,054 $ 1,466,993
NET INTEREST EARNINGS $ 12,426 $ 11,685
NET INTEREST MARGIN 3.32% 3.41%


SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
YTD 2016 vs YTD 2015
YTD 2016 YTD 2015
AverageEarnings /Yield / AverageEarnings /Yield /
Dollars in thousandsBalancesExpenseRate BalancesExpenseRate
ASSETS
Interest earning assets
Loans, net of unearned interest
Taxable$ 1,134,463 $ 40,788 4.80% $ 1,044,010 $ 38,443 4.92%
Tax-exempt 14,890 624 5.60% 12,801 547 5.71%
Securities
Taxable 206,437 3,284 2.12% 211,642 3,302 2.09%
Tax-exempt 76,155 2,814 4.94% 75,685 2,759 4.87%
Interest bearing deposits other banks
and Federal funds sold 9,093 13 0.19% 9,395 6 0.09%
Total interest earning assets 1,441,038 47,523 4.41% 1,353,533 45,057 4.45%
Noninterest earning assets
Cash & due from banks 3,819 3,842
Premises & equipment 21,575 20,373
Other assets 89,013 96,142
Allowance for loan losses (11,517) (11,285)
Total assets$ 1,543,928 $ 1,462,605
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits$ 208,755 $ 248 0.16% $ 205,749 $ 179 0.12%
Savings deposits 296,458 1,663 0.75% 252,701 1,307 0.69%
Time deposits 474,691 4,622 1.30% 485,939 4,765 1.31%
Short-term borrowings 180,694 1,334 0.99% 149,177 368 0.33%
Long-term borrowings and
subordinated debentures 94,574 2,937 4.15% 101,245 3,030 4.00%
1,255,172 10,804 1.15% 1,194,811 9,649 1.08%
Noninterest bearing liabilities
Demand deposits 121,701 116,057
Other liabilities 18,423 14,371
Total liabilities 1,395,296 1,325,239
Shareholders' equity - preferred - 2,388
Shareholders' equity - common 148,632 134,978
Total liabilities and
shareholders' equity$ 1,543,928 $ 1,462,605
NET INTEREST EARNINGS $ 36,719 $ 35,408
NET INTEREST MARGIN 3.40% 3.50%


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 9/30/20166/30/20169/30/2015 9/30/20169/30/2015
Core earnings applicable to common shares $ 4,376 $ 4,087 $ 4,108 $ 12,415 $ 12,503
FHLB special dividend - - - - 176
Applicable income tax effect - - - - (65)
Realized securities gains 61 383 372 836 1,023
Applicable income tax effect (23) (142) (138) (309) (379)
Merger expense (80) (153) - (345) -
Applicable income tax effect 30 57 - 128 -
Flood losses (167) - - (167) -
Applicable income tax effect 62 - - 62 -
Gain (loss) on sales of foreclosed properties 169 276 (35) 451 (288)
Applicable income tax effect (63) (102) 13 (167) 107
Write-downs foreclosed properties (134) (259) (1,046) (503) (1,779)
Applicable income tax effect 50 96 387 186 658
(95) 156 (447) 171 (547)
GAAP net income applicable to common shares $ 4,281 $ 4,243 $ 3,661 $ 12,586 $ 11,956
Core diluted earnings per common share $ 0.41 $ 0.37 $ 0.38 $ 1.16 $ 1.18
FHLB special dividend - - - - 0.02
Applicable income tax effect - - - - (0.01)
Realized securities gains 0.01 0.04 0.03 0.08 0.10
Applicable income tax effect - (0.01) (0.01) (0.03) (0.04)
Merger expense (0.01) (0.01) - (0.03) -
Applicable income tax effect - - - 0.01 -
Flood losses (0.02) - - (0.02) -
Applicable income tax effect 0.01 - - 0.01 -
Gain (loss) on sales of foreclosed properties 0.02 0.03 - 0.04 (0.03)
Applicable income tax effect (0.01) (0.01) - (0.01) 0.01
Write-downs of foreclosed properties (0.01) (0.02) (0.10) (0.05) (0.17)
Applicable income tax effect - 0.01 0.04 0.02 0.06
(0.01) 0.03 (0.04) 0.02 (0.06)
GAAP diluted earnings per common share $ 0.40 $ 0.40 $ 0.34 $ 1.18 $ 1.12


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 9/30/20166/30/20169/30/2015 9/30/20169/30/2015
Total core revenue $ 14,727 $ 14,396 $ 13,926 $ 43,315 $ 42,076
FHLB special dividend - - - - 176
Realized securities gains 60 383 372 836 1,023
60 383 372 836 1,199
GAAP total revenue $ 14,787 $ 14,779 $ 14,298 $ 44,151 $ 43,275
Total core noninterest income $ 2,688 $ 2,662 $ 2,621 $ 7,765 $ 7,969
Realized securities gains 61 383 372 836 1,023
GAAP total noninterest income $ 2,749 $ 3,045 $ 2,993 $ 8,601 $ 8,992
Total core noninterest expense $ 8,207 $ 8,301 $ 7,791 $ 24,846 $ 23,161
Merger expense 80 153 - 345 -
Flood losses 167 - - 167 -
(Gain) loss on sales of foreclosed properties (169) (276) 35 (451) 198
Write-downs of foreclosed properties 134 259 1,046 503 1,779
212 136 1,081 564 1,977
GAAP total noninterest expense $ 8,419 $ 8,437 $ 8,872 $ 25,410 $ 25,138

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

Source:Summit Financial Group, Inc.