×

Summit Financial Group Reports Third Quarter 2017 Results

MOOREFIELD, W.Va., Oct. 26, 2017 (GLOBE NEWSWIRE) -- Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ:SMMF) today reported third quarter 2017 net income of $5.93 million, or $0.48 per diluted share, compared to $4.28 million, or $0.40 per diluted share, for the third quarter of 2016, representing an increase of 38.5 percent, or 20.0 percent per diluted share.

For the nine months ended September 30, 2017, Summit recorded net income of $9.59 million, or $0.81 per diluted share, compared with $12.59 million, or $1.18 per diluted share, for the comparable 2016 nine-month period, representing a decrease of 23.8 percent or 31.4 percent per diluted share. The 2017 decrease in nine-month period earnings is principally attributable to a legal settlement during first quarter which reduced earnings by $0.54 per diluted share.

Highlights for Q3 2017 include:

  • Loans, excluding mortgage warehouse lines of credit, grew $22.9 million during the quarter, or 6.1 percent (on an annualized basis); loans, excluding mortgage warehouse lines of credit and First Century Bankshares, Inc.’s (“FCB”) purchased loan portfolio, have grown $75.7 million, or 8.2 percent (annualized), since year-end 2016;
  • Total revenues increased 43.6 percent compared to the year ago quarter, principally as result of the acquisitions of FCB and Highland County Bankshares, Inc. (“HCB”), but decreased 2.4 percent compared to the linked-quarter primarily as result of lower net interest income;
  • Net interest margin increased 33 basis points compared to Q3 2016, reflecting FCB’s higher yielding loan portfolio and lower cost of funds, but declined 16 basis points compared to Q2 2017, as the result of lower yields on loans coupled with rising funding costs.

H. Charles Maddy, III, President and Chief Executive Officer of Summit, commented, “I am very pleased to report Summit’s record quarterly earnings in Q3 2017, but more importantly, the 20 percent growth in diluted earnings per share over that earned in Q3 a year-ago. These results are primarily attributable to our two acquisitions which closed during this timeframe, and they validate our ability to successfully execute on a disciplined M&A growth strategy, which we believe will continue to present us with significant opportunities going forward as we seek to be a consistent, high-performing community banking institution.”

Acquisitions

On April 1, 2017, Summit completed its acquisition of FCB and its subsidiary, First Century Bank, headquartered in Bluefield, West Virginia. Accordingly, FCB’s results of operations are included in Summit’s consolidated results of operation from the date of acquisition, and therefore Summit’s results for the three and nine months ended September 30, 2017 reflect increased levels of average balances, income and expense compared to its same periods of 2016 results. At consummation, FCB had total assets of $404.8 million, loans of $229.0 million, and deposits of $350.0 million. In addition, our merger-related expenses totaled $1.58 million during first nine months of 2017, with $1.46 million of those expenses incurred during second quarter 2017.

On October 1, 2016, Summit completed its acquisition of HCB and its subsidiary, First & Citizens Bank, headquartered in Monterey, Virginia. Accordingly, HCB’s results of operations are included in Summit’s consolidated results of operation from the date of acquisition, and therefore Summit’s results for the three and nine months ended September 30, 2017 reflect increased levels of average balances, income and expense as compared to the same periods of 2016 results. At consummation, HCB had total assets of $122.8 million, loans of $60.8 million, and deposits of $106.9 million.

In conjunction with these acquisitions, Summit recognized net accretion income related to loan and time deposit fair value acquisition accounting adjustments totaling $226,000 and $76,000 in Q3 2017 and $784,000 and $167,000 for the nine months ended September 30, 2017, respectively.

Results of Operations

Total revenue for third quarter 2017, consisting of net interest income and noninterest income, grew 43.6 percent to $21.2 million, principally as result of the FCB and HCB acquisitions, compared to $14.8 million for the third quarter 2016. For the year-to-date period ended September 30, 2017, total revenue was $59.2 million compared to $44.2 million for the same period of 2016, representing a 34.1 percent increase.

For the third quarter of 2017, net interest income was $17.2 million, an increase of 43.2 percent from the $12.0 million reported in the prior-year third quarter and decreased $616,000 compared to the linked-quarter. The net interest margin for third quarter 2017 was 3.65 percent compared to 3.32 percent for the year-ago quarter, and 3.81 percent for Q2 2017. Excluding the impact of accretion and amortization of fair value acquisition accounting adjustments related to the interest earning assets and interest bearing liabilities acquired from FCB and HCB, Summit’s net interest margin was 3.59 percent for Q3 2017 and 3.61 percent for first nine months of 2017.

Noninterest income, consisting primarily of insurance commissions from Summit's insurance agency subsidiary, trust and wealth management fees and service fee income from community banking activities, for third quarter 2017 was $4.0 million compared to $2.75 million for the comparable period of 2016. Excluding realized securities gains, noninterest income was $3.97 million for third quarter 2017, compared to $2.69 million reported for third quarter 2016 and $3.83 million for the linked-quarter.

We recorded a $375,000 provision for loan losses during third quarter 2017 and none during third quarter 2016.

Q3 2017 total noninterest expense increased 47.8% to $12.45 million compared to $8.42 million for the prior-year third quarter principally due to the acquisitions of FCB and HCB. Noninterest expense for the first nine months of 2017 increased 78.7% compared to the first nine months of 2016. Summit recorded a $9.9 million charge to resolve fully all litigation with Residential Funding Company, LLC and ResCap Liquidating Trust (collectively “ResCap”) during Q1 2017. Excluding the impact of the ResCap litigation settlement charge, noninterest expense for first nine months of 2017 increased 39.7 percent to $35.5 million compared to $25.4 million for the first nine months of 2016, principally as result of the acquisitions of HCB and FCB.

Balance Sheet

At September 30, 2017, total assets were $2.10 billion, an increase of $342.5 million, or 19.5 percent since December 31, 2016. Total loans, net of unearned fees and allowance for loan losses, were $1.56 billion at September 30, 2017, up $251.5 million, or 19.2 percent, from the $1.31 billion reported at year-end 2016. Loans, excluding mortgage warehouse lines of credit, grew $22.9 million during the quarter, or 6.1 percent (on an annualized basis), and loans, excluding mortgage warehouse lines of credit and FCB’s purchased loan portfolio, have grown $75.7 million, or 8.2 percent (annualized), year-to-date.

At September 30, 2017, deposits were $1.62 billion, an increase of $321.2 million, or 24.8 percent, since year end 2016. During first nine months of 2017, checking deposits increased $201.4 million or 48.9 percent, time deposits grew by $94.5 million or 17.3 percent and savings deposits increased $25.3 million or 7.5 percent.

Shareholders’ equity was $198.8 million as of September 30, 2017 compared to $155.4 million at December 31, 2016 and $153.8 million at September 30, 2016. In conjunction with the acquisition of FCB on April 1, 2017, Summit issued 1,537,912 shares of common stock valued at $33.1 million to the former FCB shareholders.

Tangible book value per common share increased to $13.88 at September 30, 2017 compared to $13.20 at December 31, 2016 and $13.69 at September 30, 2016. Summit had 12,311,723 outstanding common shares at Q3 2017 quarter end compared to 10,736,970 at year end 2016.

Asset Quality

As of September 30, 2017, nonperforming assets (“NPAs”), consisting of nonperforming loans, foreclosed properties, and repossessed assets, were $38.7 million, or 1.84 percent of assets. This compares to $37.4 million, or 1.78 percent of assets at the linked quarter-end, and $39.2 million, or 2.36 percent of assets, at third quarter-end 2016.

Third quarter 2017 net loan charge-offs were $242,000, or 0.06 percent of average loans annualized; while we added $375,000 to the allowance for loan losses through the provision for loan losses, representing a 50 percent increase over the $250,000 provision recorded in Q2 2017 primarily as result of our loan growth. The allowance for loan losses stood at 0.79 percent of total loans at September 30, 2017, compared to 0.88 percent at year-end 2016. If the acquired FCB and HCB loans which were recorded at fair value on the acquisition dates are excluded, the allowance for loan losses to total loans ratio at September 30, 2017 and December 31, 2016 would have been 0.93 percent and 0.92 percent, respectively.

About the Company

Summit Financial Group, Inc. is a $2.10 billion financial holding company headquartered in Moorefield, West Virginia. Summit provides community banking services primarily in the Eastern Panhandle and Southern regions of West Virginia and the Northern, Shenandoah Valley and Southwestern regions of Virginia, through its bank subsidiary, Summit Community Bank, Inc., which operates thirty 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.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary -- Q3 2017 vs Q3 2016
For the Quarter Ended Percent
Dollars in thousands 9/30/20179/30/2016 Change
Condensed Statements of Income
Interest income
Loans, including fees$19,490 $14,142 37.8%
Securities 2,397 1,759 36.3%
Other 149 5 n/a
Total interest income 22,036 15,906 38.5%
Interest expense
Deposits 2,963 2,209 34.1%
Borrowings 1,841 1,660 10.9%
Total interest expense 4,804 3,869 24.2%
Net interest income 17,232 12,037 43.2%
Provision for loan losses 375 - n/a
Net interest income after provision
for loan losses 16,857 12,037 40.0%
Noninterest income
Insurance commissions 1,043 1,016 2.7%
Trust and wealth management fees 589 126 367.5%
Service fees related to deposit accounts 1,863 1,138 63.7%
Realized securities gains 26 61 -57.4%
Other income 479 408 17.4%
Total noninterest income 4,000 2,749 45.5%
Noninterest expense
Salaries and employee benefits 6,610 4,819 37.2%
Net occupancy expense 847 525 61.3%
Equipment expense 1,093 716 52.7%
Professional fees 373 270 38.1%
Amortization of intangibles 448 50 796.0%
FDIC premiums 310 200 55.0%
Merger-related expense 11 80 -86.3%
Foreclosed properties expense 171 100 71.0%
Gain on sales of foreclosed properties (29) (169)-82.8%
Write-downs of foreclosed properties 91 134 -32.1%
Other expenses 2,522 1,694 48.9%
Total noninterest expense 12,447 8,419 47.8%
Income before income taxes 8,410 6,367 32.1%
Income taxes 2,480 2,086 18.9%
Net income$ 5,930 $ 4,281 38.5%


SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary -- Q3 2017 vs Q3 2016
For the Quarter Ended Percent
9/30/20179/30/2016 Change
Per Share Data
Earnings per common share
Basic $ 0.48 $ 0.40 20.0%
Diluted $ 0.48 $ 0.40 20.0%
Cash dividends $ 0.11 $ 0.10 10.0%
Average common shares outstanding
Basic 12,299,987 10,692,423 15.0%
Diluted 12,318,959 10,727,140 14.8%
Common shares outstanding at period end 12,311,723 10,701,841 15.0%
Performance Ratios
Return on average equity 12.10% 11.29%7.2%
Return on average tangible equity 14.12% 11.86%19.1%
Return on average assets 1.14% 1.08%5.6%
Net interest margin 3.65% 3.32%9.9%
Efficiency ratio (A) 53.73% 53.30%0.8%

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 -- 2017 vs 2016
For the Nine Months Ended Percent
Dollars in thousands 9/30/20179/30/2016 Change
Condensed Statements of Income
Interest income
Loans, including fees $ 54,878 $ 41,200 33.2%
Securities 6,597 5,141 28.3%
Other 466 13 n/a
Total interest income 61,941 46,354 33.6%
Interest expense
Deposits 7,987 6,533 22.3%
Borrowings 5,245 4,271 22.8%
Total interest expense 13,232 10,804 22.5%
Net interest income 48,709 35,550 37.0%
Provision for loan losses 875 500 75.0%
Net interest income after provision
for loan losses 47,834 35,050 36.5%
Noninterest income
Insurance commissions 3,000 3,030 -1.0%
Trust and wealth management fees 1,284 358 258.7%
Service fees related to deposit accounts 4,737 3,175 49.2%
Realized securities gains 58 836 -93.1%
Other income 1,417 1,202 17.9%
Total noninterest income 10,496 8,601 22.0%
Noninterest expense
Salaries and employee benefits 18,555 14,265 30.1%
Net occupancy expense 2,239 1,576 42.1%
Equipment expense 2,859 2,059 38.9%
Professional fees 1,012 1,171 -13.6%
Amortization of intangibles 974 150 549.3%
FDIC premiums 815 800 1.9%
Merger-related expense 1,575 345 n/a
Foreclosed properties expense 397 317 25.2%
Gain on sales of foreclosed properties (111) (451)-75.4%
Write-downs of foreclosed properties 538 503 7.0%
Litigation settlement 9,900 - n/a
Other expenses 6,646 4,675 42.2%
Total noninterest expense 45,399 25,410 78.7%
Income before income taxes 12,931 18,241 -29.1%
Income taxes 3,339 5,655 -41.0%
Net income $ 9,592 $ 12,586 -23.8%


SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Nine Month Performance Summary -- 2017 vs 2016
For the Nine Months Ended Percent
9/30/20179/30/2016 Change
Per Share Data
Earnings per common share
Basic $ 0.81 $ 1.18 -31.4%
Diluted $ 0.81 $ 1.18 -31.4%
Cash dividends $ 0.33 $ 0.30 10.0%
Average common shares outstanding
Basic 11,781,342 10,682,129 10.3%
Diluted 11,807,002 10,692,346 10.4%
Common shares outstanding at period end 12,311,723 10,701,841 15.0%
Performance Ratios
Return on average equity 7.06% 11.29%-37.5%
Return on average tangible equity 8.08% 11.88%-32.0%
Return on average assets 0.65% 1.09%-40.4%
Net interest margin 3.67% 3.40%7.9%
Efficiency ratio (A) 52.76% 54.84%-3.8%

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 9/30/20176/30/20173/31/201712/31/20169/30/2016
Condensed Statements of Income (unaudited)
Interest income
Loans, including fees$19,490 $19,717 $15,671 $15,780 $14,142
Securities 2,397 2,349 1,851 1,796 1,759
Other 149 165 152 161 5
Total interest income 22,036 22,231 17,674 17,737 15,906
Interest expense
Deposits 2,963 2,634 2,390 2,430 2,209
Borrowings 1,841 1,749 1,654 1,850 1,660
Total interest expense 4,804 4,383 4,044 4,280 3,869
Net interest income 17,232 17,848 13,630 13,457 12,037
Provision for loan losses 375 250 250 - -
Net interest income after provision
for loan losses 16,857 17,598 13,380 13,457 12,037
Noninterest income
Insurance commissions 1,043 988 968 992 1,016
Trust and wealth management fees 589 595 100 111 252
Service fees related to deposit accounts 1,863 1,706 1,168 1,194 1,138
Realized securities gains (losses) 26 90 (58) 291 61
Other income 479 537 401 410 282
Total noninterest income 4,000 3,916 2,579 2,998 2,749
Noninterest expense
Salaries and employee benefits 6,610 6,758 5,187 5,308 4,819
Net occupancy expense 847 826 567 522 525
Equipment expense 1,093 1,031 735 700 716
Professional fees 373 354 285 344 270
Amortization of intangibles 448 429 97 97 50
FDIC premiums 310 295 210 75 200
Merger-related expense 11 1,455 109 588 80
Foreclosed properties expense 171 122 104 97 100
(Gain) loss on sales of foreclosed properties (29) 73 (156) (465) (169)
Write-downs of foreclosed properties 91 29 418 165 134
Litigation settlement - - 9,900 - -
Other expenses 2,522 2,564 1,560 1,961 1,694
Total noninterest expense 12,447 13,936 19,016 9,392 8,419
Income (loss) before income taxes 8,410 7,578 (3,057) 7,063 6,367
Income tax expense (benefit) 2,480 2,300 (1,441) 2,353 2,086
Net income (loss)$ 5,930 $ 5,278 $ (1,616) $ 4,710 $ 4,281


SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Five Quarter Performance Summary
For the Quarter Ended
9/30/20176/30/20173/31/201712/31/20169/30/2016
Per Share Data
Earnings per common share
Basic $ 0.48 $ 0.43 $ (0.15)$ 0.44 $ 0.40
Diluted $ 0.48 $ 0.43 $ (0.15)$ 0.44 $ 0.40
Cash dividends $ 0.11 $ 0.11 $ 0.11 $ 0.10 $ 0.10
Average common shares outstanding
Basic 12,299,987 12,288,514 10,738,365 10,710,164 10,692,423
Diluted 12,318,959 12,299,187 10,738,365 10,762,445 10,727,140
Common shares outstanding at period end 12,311,723 12,299,726 10,750,477 10,736,970 10,701,841
Performance Ratios
Return on average equity 12.10% 11.10% -4.11% 12.22% 11.29%
Return on average tangible equity 14.12% 12.95% -4.51% 13.42% 11.86%
Return on average assets 1.14% 1.01% -0.37% 1.07% 1.08%
Net interest margin 3.65% 3.81% 3.54% 3.34% 3.32%
Efficiency ratio (A) 53.73% 53.00% 51.16% 56.67% 53.30%

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 (unaudited)
Dollars in thousands, except per share amounts 9/30/20176/30/20173/31/201712/31/20169/30/2016
Assets
Cash and due from banks$ 9,220 $ 9,294 $ 19,326 $ 4,262 $ 25,067
Interest bearing deposits other banks 41,994 44,242 38,895 42,354 9,432
Securities 328,726 336,811 282,028 266,542 262,102
Loans, net 1,559,328 1,538,083 1,292,915 1,307,862 1,234,605
Property held for sale 22,622 23,592 23,491 24,504 24,767
Premises and equipment, net 34,220 33,234 26,377 23,737 21,802
Goodwill and other intangible assets 27,879 28,214 13,587 13,652 7,348
Cash surrender value of life insurance policies 41,076 41,189 39,412 39,143 38,504
Other assets 36,071 40,641 40,411 36,591 34,009
Total assets$ 2,101,136 $ 2,095,300 $ 1,776,442 $ 1,758,647 $ 1,657,636
Liabilities and Shareholders' Equity
Deposits$ 1,616,768 $ 1,613,919 $ 1,301,241 $ 1,295,519 $ 1,156,785
Short-term borrowings 202,988 205,728 228,868 224,461 234,657
Long-term borrowings and
subordinated debentures 65,344 65,348 65,804 66,259 93,735
Other liabilities 17,254 17,173 26,910 17,048 18,640
Shareholders' equity 198,782 193,132 153,619 155,360 153,819
Total liabilities and shareholders' equity$ 2,101,136 $ 2,095,300 $ 1,776,442 $ 1,758,647 $ 1,657,636
Book value per common share$ 16.15 $ 15.70 $ 14.29 $ 14.47 $ 14.37
Tangible book value per common share$ 13.88 $ 13.41 $ 13.03 $ 13.20 $ 13.69
Tangible common equity to tangible assets 8.2% 8.0% 7.9% 8.1% 8.9%


SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Regulatory Capital Ratios
9/30/2017 6/30/2017 3/31/2017 12/31/2016 9/30/2016
Summit Financial Group, Inc.
CET1 Risk-based Capital10.8%10.5%10.3%10.5%11.1%
Tier 1 Risk-based Capital11.9%11.7%11.5%11.8%12.4%
Total Risk-based Capital12.7%12.4%12.3%12.6%13.3%
Tier 1 Leverage Ratio9.5%9.2%9.4%9.4%10.4%
Summit Community Bank, Inc.
CET1 Risk-based Capital11.8%11.6%11.6%11.9%12.5%
Tier 1 Risk-based Capital11.8%11.6%11.6%11.9%12.5%
Total Risk-based Capital12.6%12.4%12.4%12.7%13.4%
Tier 1 Leverage Ratio9.4%9.2%9.4%9.5%10.5%


SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Loan Composition
Dollars in thousands9/30/20176/30/20173/31/201712/31/20169/30/2016
Commercial$ 187,193 $ 176,362 $ 134,808 $ 119,088 $ 110,466
Mortgage warehouse lines 33,525 35,068 30,217 85,966 108,983
Commercial real estate
Owner occupied 239,840 239,108 217,733 203,047 192,254
Non-owner occupied 464,543 455,439 401,795 381,921 367,196
Construction and development
Land and development 71,412 74,155 68,079 72,042 65,430
Construction 28,756 22,967 16,511 16,584 11,276
Residential real estate
Non-jumbo 355,642 355,546 266,140 265,641 228,777
Jumbo 61,253 63,899 60,780 65,628 57,276
Home equity 82,720 81,192 75,299 74,596 75,161
Consumer 36,915 37,630 24,440 25,534 19,756
Other 9,994 9,049 8,831 9,489 9,649
Total loans, net of unearned fees 1,571,793 1,550,415 1,304,633 1,319,536 1,246,224
Less allowance for loan losses 12,465 12,332 11,718 11,674 11,619
Loans, net$ 1,559,328 $ 1,538,083 $ 1,292,915 $ 1,307,862 $ 1,234,605


SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Deposit Composition
Dollars in thousands9/30/20176/30/20173/31/201712/31/20169/30/2016
Non-interest bearing checking $215,910 $234,173 $152,086 $149,737 $122,652
Interest bearing checking 397,843 372,327 275,678 262,591 212,172
Savings 362,653 373,439 342,548 337,348 321,563
Time deposits 640,362 633,980 530,929 545,843 500,398
Total deposits$ 1,616,768 $ 1,613,919 $ 1,301,241 $ 1,295,519 $ 1,156,785


SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Asset Quality Information
For the Quarter Ended
Dollars in thousands 9/30/20176/30/20173/31/201712/31/20169/30/2016
Gross loan charge-offs$ 309 $ 114 $ 315 $ 400 $ 331
Gross loan recoveries (67) (478) (108) (456) (573)
Net loan charge-offs (recoveries)$ 242 $ (364) $ 207 $ (56) $ (242)
Net loan charge-offs to average loans (annualized) 0.06% -0.09% 0.06% -0.02% -0.09%
Allowance for loan losses$ 12,465 $ 12,332 $ 11,718 $ 11,674 $ 11,619
Allowance for loan losses as a percentage
of period end loans 0.79% 0.79% 0.90% 0.88% 0.93%
Nonperforming assets:
Nonperforming loans
Commercial$ 757 $ 786 $ 226 $ 298 $ 846
Commercial real estate 2,773 2,051 4,734 4,844 4,867
Residential construction and development 3,931 3,613 3,936 4,465 4,360
Residential real estate 8,082 6,860 5,886 4,815 4,174
Consumer 529 391 162 152 169
Total nonperforming loans 16,072 13,701 14,944 14,574 14,416
Foreclosed properties
Commercial real estate 1,988 2,126 1,749 1,749 1,749
Commercial construction and development 7,392 7,527 8,276 8,610 8,664
Residential construction and development 11,852 12,402 12,635 13,265 13,741
Residential real estate 1,390 1,537 831 880 613
Total foreclosed properties 22,622 23,592 23,491 24,504 24,767
Other repossessed assets 12 57 12 12 12
Total nonperforming assets$ 38,706 $ 37,350 $ 38,447 $ 39,090 $ 39,195
Nonperforming loans to period end loans 1.02% 0.88% 1.15% 1.10% 1.16%
Nonperforming assets to period end assets 1.84% 1.78% 2.16% 2.22% 2.36%
Troubled debt restructurings
Performing$ 28,304 $ 26,472 $ 28,183 $ 28,066 $ 28,287
Nonperforming 760 464 719 564 863
Total troubled debt restructurings$ 29,064 $ 26,936 $ 28,902 $ 28,630 $ 29,150


Loans Past Due 30-89 Days
For the Quarter Ended
In thousands 9/30/2017 6/30/2017 3/31/2017 12/31/2016 9/30/2016
Commercial$378 $470 $162 $175 $405
Commercial real estate 944 976 2,758 434 626
Construction and development 238 308 291 552 235
Residential real estate 6,260 6,943 2,924 5,517 2,941
Consumer 419 548 155 375 144
Other 92 49 17 14 13
Total$ 8,331 $ 9,294 $ 6,307 $ 7,067 $ 4,364


SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q3 2017 vs Q3 2016
Q3 2017 Q3 2016
AverageEarnings /Yield / AverageEarnings /Yield /
Dollars in thousandsBalancesExpenseRate BalancesExpenseRate
ASSETS
Interest earning assets
Loans, net of unearned interest
Taxable$ 1,539,945 $ 19,387 4.99% $ 1,187,205 $ 14,008 4.69%
Tax-exempt 16,314 158 3.84% 14,300 202 5.62%
Securities
Taxable 198,913 1,283 2.56% 198,411 1,139 2.28%
Tax-exempt 145,599 1,714 4.67% 77,489 941 4.83%
Interest bearing deposits other banks
and Federal funds sold 42,926 149 1.38% 10,029 5 0.20%
Total interest earning assets 1,943,697 22,691 4.63% 1,487,434 16,295 4.36%
Noninterest earning assets
Cash & due from banks 9,591 3,938
Premises & equipment 33,667 21,613
Other assets 113,723 87,636
Allowance for loan losses (12,418) (11,567)
Total assets$ 2,088,260 $ 1,589,054
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits$ 384,539 $ 323 0.33% $ 211,264 $ 85 0.16%
Savings deposits 365,150 637 0.69% 316,358 608 0.76%
Time deposits 636,424 2,003 1.25% 481,060 1,516 1.25%
Short-term borrowings 205,536 1,160 2.24% 189,760 675 1.42%
Long-term borrowings and
subordinated debentures 65,346 681 4.13% 94,106 985 4.16%
Total interest bearing liabilities 1,656,995 4,804 1.15% 1,292,548 3,869 1.19%
Noninterest bearing liabilities
Demand deposits 217,760 124,490
Other liabilities 17,414 20,280
Total liabilities 1,892,169 1,437,318
Shareholders' equity 196,091 151,736
Total liabilities and
shareholders' equity$ 2,088,260 $ 1,589,054
NET INTEREST EARNINGS $ 17,887 $ 12,426
NET INTEREST MARGIN 3.65% 3.32%


SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q3 2017 vs Q2 2017
Q3 2017 Q2 2017
AverageEarnings /Yield / AverageEarnings /Yield /
Dollars in thousandsBalancesExpenseRate BalancesExpenseRate
ASSETS
Interest earning assets
Loans, net of unearned interest
Taxable$ 1,539,945 $ 19,387 4.99% $ 1,537,317 $ 19,550 5.10%
Tax-exempt 16,314 158 3.84% 13,030 257 7.91%
Securities
Taxable 198,913 1,283 2.56% 214,601 1,330 2.49%
Tax-exempt 145,599 1,714 4.67% 133,130 1,568 4.72%
Interest bearing deposits other banks
and Federal funds sold 42,926 149 1.38% 47,937 165 1.38%
Total interest earning assets 1,943,697 22,691 4.63% 1,946,015 22,870 4.71%
Noninterest earning assets
Cash & due from banks 9,591 10,101
Premises & equipment 33,667 34,441
Other assets 113,723 115,728
Allowance for loan losses (12,418) (11,966)
Total assets$ 2,088,260 $ 2,094,319
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits$ 384,539 $ 323 0.33% $ 378,350 $ 252 0.27%
Savings deposits 365,150 637 0.69% 389,847 616 0.63%
Time deposits 636,424 2,003 1.25% 628,358 1,766 1.13%
Short-term borrowings 205,536 1,160 2.24% 200,209 1,079 2.16%
Long-term borrowings and
subordinated debentures 65,346 681 4.13% 65,692 670 4.09%
Total interest bearing liabilities 1,656,995 4,804 1.15% 1,662,456 4,383 1.06%
Noninterest bearing liabilities
Demand deposits 217,760 221,245
Other liabilities 17,414 20,490
Total liabilities 1,892,169 1,904,191
Shareholders' equity 196,091 190,128
Total liabilities and
shareholders' equity$ 2,088,260 $ 2,094,319
NET INTEREST EARNINGS $ 17,887 $ 18,487
NET INTEREST MARGIN 3.65% 3.81%


SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
YTD 2017 vs YTD 2016
YTD 2017 YTD 2016
AverageEarnings /Yield / AverageEarnings /Yield /
Dollars in thousandsBalancesExpenseRate BalancesExpenseRate
ASSETS
Interest earning assets
Loans, net of unearned interest
Taxable$ 1,452,840 $ 54,487 5.01% $ 1,134,463 $ 40,788 4.80%
Tax-exempt 14,223 602 5.66% 14,890 624 5.60%
Securities
Taxable 199,995 3,742 2.50% 206,437 3,284 2.12%
Tax-exempt 124,860 4,392 4.70% 76,155 2,814 4.94%
Interest bearing deposits other banks
and Federal funds sold 43,862 466 1.42% 9,093 13 0.19%
Total interest earning assets 1,835,780 63,689 4.64% 1,441,038 47,523 4.41%
Noninterest earning assets
Cash & due from banks 8,071 3,819
Premises & equipment 30,904 21,575
Other assets 108,783 89,013
Allowance for loan losses (12,051) (11,517)
Total assets$ 1,971,487 $ 1,543,928
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits$ 342,358 $ 722 0.28% $ 208,755 $ 248 0.16%
Savings deposits 365,068 1,879 0.69% 296,458 1,663 0.75%
Time deposits 602,175 5,386 1.20% 474,691 4,622 1.30%
Short-term borrowings 200,929 3,233 2.15% 180,694 1,334 0.99%
Long-term borrowings and
subordinated debentures 65,725 2,012 4.09% 94,574 2,937 4.15%
1,576,255 13,232 1.12% 1,255,172 10,804 1.15%
Noninterest bearing liabilities
Demand deposits 196,019 121,701
Other liabilities 17,990 18,423
Total liabilities 1,790,264 1,395,296
Shareholders' equity 181,223 148,632
Total liabilities and
shareholders' equity$ 1,971,487 $ 1,543,928
NET INTEREST EARNINGS $ 50,457 $ 36,719
NET INTEREST MARGIN 3.67% 3.40%


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

Source:Summit Financial Group, Inc.