Summit Financial Group Reports Fourth Quarter & Full Year 2012 Results

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MOOREFIELD, W.Va., Jan. 30, 2013 (GLOBE NEWSWIRE) -- Summit Financial Group, Inc. ("Company" or "Summit") (Nasdaq:SMMF) today reported fourth quarter 2012 net income applicable to common shares of $1,911,000, or $0.22 per diluted share, compared to $1,331,000, or $0.16 per diluted share, for the fourth quarter of 2011.

Excluding from fourth quarter 2012 nonrecurring items (on a pre-tax basis) consisting of realized securities gains of $103,000, losses on sales of assets of $94,000, charges for other-than-temporary impairment ("OTTI") of securities of $76,000 and write-downs of foreclosed properties of $748,000, pro forma fourth quarter 2012 earnings were approximately $2.4 million, or $0.28 per diluted share. Excluding from fourth quarter 2011 nonrecurring realized securities gains of $542,000, gains on sales of assets of $19,000, OTTI of securities of $401,000, and write-downs of foreclosed properties of $882,000, pro forma earnings of $1.8 million would have resulted, or $0.21 per diluted share.

For the full-year 2012, Summit recorded net income applicable to common shares of $4.94 million, or $0.60 per diluted share, compared with $3.70 million, or $0.49 per diluted share, for 2011.

Excluding from the full-year 2012 nonrecurring items (on a pre-tax basis) of realized securities gains of $2.35 million, losses on sales of assets of $677,000, OTTI charges of $451,000 and write-downs of foreclosed properties of $6.86 million, and from the full-year 2011 realized securities gains of $4.01 million, gains on sales of assets of $295,000, OTTI charges of $2.65 million, and write-downs of foreclosed properties of $6.65 million, pro forma earnings for 2012 were approximately $8.49 million, or $0.97 per diluted share, compared to $6.85 million, or $0.86 per diluted share, for 2011.

Highlights for Q4 2012 include:

  • Achieved seventh consecutive quarter of positive quarterly earnings.
  • Nonperforming assets continued to decline, reaching its lowest level since Q1 2011.
  • Net interest margin increased 2 basis points quarter over quarter and 16 basis points compared to Q4 2011.
  • Recorded charges of $748,000 and $76,000, respectively, to write-down foreclosed properties and to recognize OTTI of securities, which were partially offset by $103,000 in realized securities gains.
  • Noninterest expenses remained well-controlled, declining 5.3% compared to Q4 2012 and 0.6% compared to Q3 2012.
  • Summit's leverage capital ratio is at its highest level in six years and its total risk-based capital ratio is at highest level in twelve years.

H. Charles Maddy III, President and Chief Executive Officer of Summit, commented, "We are pleased by our continued improved earnings performance, progress in reducing our portfolio of problem assets, and strengthened capital levels. I am particularly pleased that during 2012: net interest income remained stable, despite a decline in average earning assets; the net interest margin improved; core noninterest income increased, while noninterest expenses declined; and OTTI of securities charges were very modest compared to prior-year amounts, and are expected to remain at relatively low levels. Reducing our portfolio of problem assets remains our top priority, and we reduced nonperforming assets in each of the four most recent quarters. However, dispositions of foreclosed properties remain frustratingly slow -- particularly with respect to commercial and residential development properties. Further, we anticipate earnings may remain choppy quarter-to-quarter in the near term as our foreclosed properties are re-appraised and written-down to estimated fair values on an ongoing basis."

Results from Operations

Total revenue for full-year 2012, consisting of net interest income and noninterest income, was $45.2 million compared to $45.4 million for the full-year 2011. For the quarter ended December 31, 2012, total revenue was $11.9 million compared to $11.7 million for the same period in 2011.

Total revenue excluding nonrecurring items (as enumerated above) was $12.7 million for fourth quarter 2012 compared to $12.4 million in the prior-year quarter. For the full-year 2012, total revenue excluding nonrecurring items was $50.8 million versus $50.4 million for the same period in 2011.

For the fourth quarter of 2012, net interest income was $9.9 million, an increase of 2.4 percent from the $9.7 million reported in the prior-year fourth quarter and remained relatively unchanged compared to the linked quarter. The net interest margin for fourth quarter 2012 was 3.19 percent compared to 3.03 percent for the year-ago quarter, and 3.17 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 2012 was $2.00 million compared to $1.99 million for the comparable period of 2011. Excluding nonrecurring items (as enumerated above), noninterest income was $2.82 million for fourth quarter 2012, up $107,000 or 3.95 percent from the $2.71 million reported for fourth quarter 2011.

The provision for loan losses was $2.5 million for the fourth quarter of 2012 compared to $2.0 million for the linked and year-ago quarters.

Noninterest expense continues to be well-controlled. Total noninterest expense decreased 5.3% to $7.42 million compared to $7.83 million for the prior-year fourth quarter. Noninterest expense for full-year 2012 was $557,000 or 1.8 percent, less than during 2011. Our cost-saving initiatives continue and their impact remains beneficial.

Balance Sheet

At December 31, 2012, total assets were $1.39 billion, a decrease of $63.0 million, or 4.4 percent since December 31, 2011. Total loans, net of unearned fees, were $937.2 million at December 31, 2012, down $28.3 million, or 2.9 percent, from the $965.5 million reported at year-end 2011.

All loan categories have declined since year-end 2011, except for commercial real estate ("CRE"), the largest component of Summit's loan portfolio, which increased $1.4 million, or 0.3 percent. The second largest component of Summit's loan portfolio, residential real estate, declined $2.6 million, or 0.8 percent, while construction and development ("C&D") loans declined $12.9 million, or 13.4 percent and commercial ("C&I") loans declined $13.2 million, or 13.3 percent.

At year end, 2012, retail deposits were $757.4 million, a decrease of $26.6 million, or 3.4 percent, since year end 2011. During 2012, retail checking deposits grew $29.2 million, or 11.8 percent, to $276.3 million, while retail savings and time deposits declined during the same period by $15.8 million and $40.0 million, respectively, or 7.6 percent and 12.2 percent, respectively. This reflects management's ongoing effort to enhance Summit's cost of funds by improving its deposit mix by attracting lower-cost checking deposits to replace higher-cost savings and time deposits.

Long-term borrowings and subordinated debentures declined by 21.8 percent since year end 2011, as the Company paid down $67.0 million in maturing borrowings during this period.

Asset Quality

As of December 31, 2012, nonperforming assets ("NPAs"), consisting of nonperforming loans, foreclosed properties, and repossessed assets, were $94.0 million, or 6.77 percent of assets. This compares to $99.8 million, or 7.11 percent of assets at the linked quarter, and $116.6 million, or 8.04 percent of assets, at year-end 2011.

Fourth quarter 2012 net loan charge-offs were $2.4 million, or 0.99 percent of average loans annualized; for full year 2012, Summit's net loan charge-offs were $8.3 million, while adding $8.5 million to its allowance for loan losses. The allowance for loan losses stood at $17.9 million, or 1.88 percent of total loans at December 31, 2012, compared to 1.80 percent at year-end 2011.

Capital Adequacy

Shareholders' equity was $108.6 million as of December 31, 2012 compared to $102.6 million December 31, 2011.

Summit's depository institution, Summit Community Bank, Inc. (the "Bank"), remains well in excess of regulatory requirements for a "well capitalized" institution at December 31, 2012. The Bank's total risk-based capital ratio improved to 15.0 percent at December 31, 2012 compared to 13.6 percent at December 31, 2011, while its Tier 1 leverage capital ratio improved to 9.8 from the 8.9 percent reported at December 31, 2011. Total common shares outstanding as of December 31, 2012 were 7,425,472.

About the Company

Summit Financial Group, Inc. is a $1.39 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.

The Summit Financial Group, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=2990

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 these items to be unusual in nature and 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 2012 vs Q4 2011
For the Quarter Ended Percent
Dollars in thousands 12/31/2012 12/31/2011 Change
Condensed Statements of Income
Interest income
Loans, including fees $ 13,512 $ 14,362 -5.9%
Securities 1,703 2,711 -37.2%
Other 5 13 -61.5%
Total interest income 15,220 17,086 -10.9%
Interest expense
Deposits 3,017 4,302 -29.9%
Borrowings 2,307 3,123 -26.1%
Total interest expense 5,324 7,425 -28.3%
Net interest income 9,896 9,661 2.4%
Provision for loan losses 2,498 1,999 25.0%
Net interest income after provision for loan losses 7,398 7,662 -3.4%
Noninterest income
Insurance commissions 1,082 1,003 7.9%
Service fees related to deposit accounts 1,092 1,102 -0.9%
Realized securities gains 103 542 -81.0%
Gain (loss) on sale of assets (94) 18 -622.2%
Other-than-temporary impairment of securities (76) (401) -81.0%
Write-downs of foreclosed properties (748) (882) -15.2%
Other income 644 607 6.1%
Total noninterest income 2,003 1,989 0.7%
Noninterest expense
Salaries and employee benefits 3,799 3,846 -1.2%
Net occupancy expense 495 472 4.9%
Equipment expense 576 593 -2.9%
Professional fees 314 565 -44.4%
FDIC premiums 535 564 -5.1%
Foreclosed properties expense 269 377 -28.6%
Other expenses 1,434 1,417 1.2%
Total noninterest expense 7,422 7,834 -5.3%
Income before income taxes 1,979 1,817 8.9%
Income taxes (126) 337 -137.4%
Net income 2,105 1,480 42.2%
Preferred stock dividends 194 149 30.2%
Net income applicable to common shares $ 1,911 $ 1,331 43.6%
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary --- Q4 2012 vs Q4 2011
For the Quarter Ended Percent
12/31/2012 12/31/2011 Change
Per Share Data
Earnings per common share
Basic $ 0.26 $ 0.18 44.4%
Diluted $ 0.22 $ 0.16 37.5%
Average shares outstanding
Basic 7,425,472 7,425,472 0.0%
Diluted 9,601,435 9,044,976 6.2%
Performance Ratios
Return on average equity (A) 7.76% 5.87% 32.2%
Return on average assets 0.60% 0.41% 46.3%
Net interest margin 3.19% 3.03% 5.3%
Efficiency ratio (B) 54.00% 57.17% -5.5%
NOTE (A) – Net income divided by total shareholders' equity.
NOTE (B) – Computed on a tax equivalent basis excluding nonrecurring income and expense items and amortization of intangibles.
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Annual Performance Summary --- 2012 vs 2011
For the Years Ended Percent
Dollars in thousands 12/31/2012 12/31/2011 Change
Condensed Statements of Income
Interest income
Loans, including fees $ 55,567 $ 59,176 -6.1%
Securities 8,282 11,799 -29.8%
Other 35 72 -51.4%
Total interest income 63,884 71,047 -10.1%
Interest expense
Deposits 13,158 18,273 -28.0%
Borrowings 10,906 12,930 -15.7%
Total interest expense 24,064 31,203 -22.9%
Net interest income 39,820 39,844 -0.1%
Provision for loan losses 8,500 10,000 -15.0%
Net interest income after provision for loan losses 31,320 29,844 4.9%
Noninterest income
Insurance commissions 4,433 4,460 -0.6%
Service fees related to deposit accounts 4,255 4,125 3.2%
Realized securities gains 2,348 4,006 -41.4%
Gain (loss) on sale of assets (677) 295 -329.5%
Other-than-temporary impairment of securities (451) (2,646) -83.0%
Write-downs of foreclosed properties (6,862) (6,651) 3.2%
Other income 2,294 1,961 17.0%
Total noninterest income 5,340 5,550 -3.8%
Noninterest expense
Salaries and employee benefits 15,532 15,833 -1.9%
Net occupancy expense 1,939 1,935 0.2%
Equipment expense 2,349 2,342 0.3%
Professional fees 1,161 1,373 -15.4%
FDIC premiums 2,067 2,423 -14.7%
Foreclosed properties expense 1,221 1,458 -16.3%
Other expenses 5,459 4,921 10.9%
Total noninterest expense 29,728 30,285 -1.8%
Income before income taxes 6,932 5,109 35.7%
Income taxes 1,219 1,035 17.8%
Net income 5,713 4,074 40.2%
Preferred stock dividends 777 371 109.4%
Net income applicable to common shares $ 4,936 $ 3,703 33.3%
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Annual Month Performance Summary --- 2012 vs 2011
For the Years Ended Percent
12/31/2012 12/31/2011 Change
Per Share Data
Earnings per common share
Basic $ 0.66 $ 0.50 32.0%
Diluted $ 0.60 $ 0.49 22.4%
Average shares outstanding
Basic 7,425,472 7,425,472 0.0%
Diluted 9,601,169 8,338,199 15.1%
Performance Ratios
Return on average equity (A) 5.36% 4.32% 24.1%
Return on average assets 0.40% 0.28% 42.9%
Net interest margin 3.19% 3.08% 3.6%
Efficiency ratio (B) 53.78% 55.73% -3.5%
NOTE (A) – Net income divided by total shareholders' equity.
NOTE (B) – Computed on a tax equivalent basis excluding nonrecurring income and expense items and amortization of intangibles.
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Five Quarter Performance Summary
For the Quarter Ended
Dollars in thousands 12/31/2012 9/30/2012 6/30/2012 3/31/2012 12/31/2011
Condensed Statements of Income
Interest income
Loans, including fees $ 13,512 $ 13,648 $ 14,041 $ 14,365 $ 14,362
Securities 1,703 1,934 2,225 2,421 2,711
Other 5 7 12 11 13
Total interest income 15,220 15,589 16,278 16,797 17,086
Interest expense
Deposits 3,017 3,067 3,360 3,713 4,302
Borrowings 2,307 2,587 2,947 3,066 3,123
Total interest expense 5,324 5,654 6,307 6,779 7,425
Net interest income 9,896 9,935 9,971 10,018 9,661
Provision for loan losses 2,498 2,000 2,001 2,001 1,999
Net interest income after provision for loan losses 7,398 7,935 7,970 8,017 7,662
Noninterest income
Insurance commissions 1,082 1,052 1,141 1,158 1,003
Service fees related to deposit accounts 1,092 1,074 1,075 1,014 1,102
Gain (loss) on sale of assets (94) 760 320 1,165 18
Realized securities gains (losses) 103 16 (523) (77) 542
Other-than-temporary impairment of securities (76) (39) (106) (229) (401)
Write-downs of foreclosed properties (748) (2,571) (1,631) (1,912) (882)
Other income 644 514 552 584 607
Total noninterest income 2,003 806 828 1,703 1,989
Noninterest expense
Salaries and employee benefits 3,799 3,940 3,892 3,901 3,846
Net occupancy expense 495 476 490 479 472
Equipment expense 576 576 603 594 593
Professional fees 314 289 242 316 565
FDIC premiums 535 510 500 522 564
Foreclosed properties expense 269 356 233 362 377
Other expenses 1,434 1,325 1,335 1,365 1,417
Total noninterest expense 7,422 7,472 7,295 7,539 7,834
Income before income taxes 1,979 1,269 1,503 2,181 1,817
Income taxes (126) 272 590 483 337
Net income 2,105 997 913 1,698 1,480
Preferred stock dividends 194 194 194 194 149
Net income applicable to common shares $ 1,911 $ 803 $ 719 $ 1,504 $ 1,331
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Five Quarter Performance Summary
For the Quarter Ended
12/31/2012 9/30/2012 6/30/2012 3/31/2012 12/31/2011
Per Share Data
Earnings per common share
Basic $ 0.26 $ 0.11 $ 0.10 $ 0.20 $ 0.18
Diluted $ 0.22 $ 0.10 $ 0.09 $ 0.18 $ 0.16
Average shares outstanding
Basic 7,425,472 7,425,472 7,425,472 7,425,472 7,425,472
Diluted 9,601,435 9,601,278 8,927,802 9,600,017 9,044,976
Performance Ratios
Return on average equity (A) 7.76% 3.71% 3.44% 6.49% 5.87%
Return on average assets 0.60% 0.28% 0.25% 0.47% 0.41%
Net interest margin 3.19% 3.17% 3.20% 3.20% 3.03%
Efficiency ratio (B) 54.00% 54.37% 53.13% 53.71% 57.17%
NOTE (A) – Net income divided by average total shareholders' equity.
NOTE (B) – Computed on a tax equivalent basis excluding nonrecurring income and expense items and amortization of intangibles.
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Selected Balance Sheet Data
For the Quarter Ended
Dollars in thousands, except per share amounts 12/31/2012 9/30/2012 6/30/2012 3/31/2012 12/31/2011
Assets
Cash and due from banks $ 3,833 $ 3,752 $ 4,266 $ 4,059 $ 4,398
Interest bearing deposits other banks 10,969 13,441 14,288 26,855 28,294
Securities 281,539 291,992 289,151 292,002 286,599
Loans, net 937,168 940,933 948,294 957,797 965,516
Property held for sale 56,172 56,033 60,069 61,584 63,938
Premises and equipment, net 21,129 21,265 21,470 21,756 22,084
Intangible assets 8,300 8,387 8,475 8,563 8,651
Cash surrender value of life insurance policies 29,553 30,065 29,808 29,559 29,284
Other assets 38,441 38,218 40,620 42,190 41,357
Total assets $ 1,387,104 $ 1,404,086 $ 1,416,441 $ 1,444,365 $ 1,450,121
Liabilities and Shareholders' Equity
Retail deposits $ 757,429 $ 766,555 $ 767,413 $ 785,283 $ 784,029
Wholesale deposits 269,696 260,752 234,256 225,856 232,471
Short-term borrowings 3,958 20,957 10,957 15,956 15,956
Long-term borrowings and subordinated debentures 239,657 240,133 290,024 303,510 306,643
Other liabilities 7,809 8,361 8,084 9,361 8,456
Shareholders' equity 108,555 107,328 105,707 104,399 102,566
Total liabilities and shareholders' equity $ 1,387,104 $ 1,404,086 $ 1,416,441 $ 1,444,365 $ 1,450,121
Book value per common share (A) $ 11.31 $ 11.20 $ 11.01 $ 10.87 $ 10.68
Tangible book value per common share (A) $ 10.44 $ 10.33 $ 10.13 $ 9.98 $ 9.78
Tangible equity / Tangible assets 7.3% 7.1% 6.9% 6.7% 6.5%
NOTE (A) – Assumes conversion of convertible preferred stock
SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Regulatory Capital Ratios
12/31/2012 9/30/2012 6/30/2012 3/31/2012 12/31/2011
Summit Financial Group, Inc.
Total Risk Based Capital 14.0% 13.8% 13.6% 13.3% 13.0%
Tier 1 Risk Based Capital 11.6% 11.3% 11.1% 10.8% 10.5%
Tier 1 Leverage Ratio 8.3% 8.0% 7.9% 7.8% 7.6%
Summit Community Bank, Inc.
Total Risk Based Capital 15.0% 14.6% 14.3% 14.0% 13.6%
Tier 1 Risk Based Capital 13.7% 13.3% 13.1% 12.7% 12.3%
Tier 1 Leverage Ratio 9.8% 9.5% 9.3% 9.1% 8.9%
SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Loan Composition
Dollars in thousands 12/31/2012 9/30/2012 6/30/2012 3/31/2012 12/31/2011
Commercial $ 85,829 $ 88,997 $ 92,060 $ 99,386 $ 99,024
Commercial real estate
Owner occupied 154,252 150,090 152,347 153,528 158,754
Non-owner occupied 276,082 279,132 280,891 275,727 270,226
Construction and development
Land and development 79,335 82,857 84,383 88,212 93,035
Construction 3,772 2,087 1,793 2,148 2,936
Residential real estate
Non-jumbo 216,714 215,584 217,321 219,485 221,733
Jumbo 61,567 62,748 61,962 62,836 61,535
Home equity 53,263 53,455 51,692 50,884 50,898
Consumer 20,586 21,290 21,212 21,573 22,325
Other 3,701 2,513 2,523 2,540 2,762
Total loans, net of unearned fees 955,101 958,753 966,184 976,319 983,228
Less allowance for loan losses 17,933 17,820 17,890 18,522 17,712
Loans, net $ 937,168 $ 940,933 $ 948,294 $ 957,797 $ 965,516
SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Retail Deposit Composition
Dollars in thousands 12/31/2012 9/30/2012 6/30/2012 3/31/2012 12/31/2011
Non interest bearing checking $ 100,592 $ 96,764 $ 96,172 $ 87,916 $ 88,655
Interest bearing checking 175,706 177,236 164,867 172,506 158,483
Savings 193,039 197,610 204,509 212,402 208,809
Time deposits 288,092 294,945 301,865 312,459 328,082
Total retail deposits $ 757,429 $ 766,555 $ 767,413 $ 785,283 $ 784,029
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Asset Quality Information
For the Quarter Ended
Dollars in thousands 12/31/2012 9/30/2012 6/30/2012 3/31/2012 12/31/2011
Gross loan charge-offs $ 2,545 $ 2,142 $ 2,790 $ 1,340 $ 2,368
Gross loan recoveries (160) (73) (156) (149) (133)
Net loan charge-offs $ 2,385 $ 2,069 $ 2,634 $ 1,191 $ 2,235
Net loan charge-offs to average loans (annualized) 0.99% 0.86% 1.08% 0.49% 0.91%
Allowance for loan losses $ 17,933 $ 17,820 $ 17,890 $ 18,523 $ 17,712
Allowance for loan losses as a percentage
of period end loans 1.88% 1.86% 1.85% 1.89% 1.80%
Nonperforming assets:
Nonperforming loans
Commercial $ 5,002 $ 5,343 $ 6,476 $ 2,477 $ 3,259
Commercial real estate 2,556 2,803 3,536 4,282 7,163
Commercial construction and development -- 428 662 799 1,052
Residential construction and development 13,641 16,333 16,735 21,375 22,634
Residential real estate 16,522 18,809 18,550 17,754 18,187
Consumer 55 88 78 81 145
Total nonperforming loans 37,776 43,804 46,037 46,768 52,440
Foreclosed properties
Commercial -- -- -- -- --
Commercial real estate 11,835 11,802 12,029 14,703 15,721
Commercial construction and development 17,597 17,683 18,632 17,377 17,101
Residential construction and development 23,074 23,769 26,014 25,724 27,877
Residential real estate 3,666 2,779 3,393 3,780 3,239
Total foreclosed properties 56,172 56,033 60,068 61,584 63,938
Other repossessed assets 6 -- -- 266 263
Total nonperforming assets $ 93,954 $ 99,837 $ 106,105 $ 108,618 $ 116,641
Nonperforming loans to period end loans 3.96% 4.57% 4.76% 4.79% 5.33%
Nonperforming assets to period end assets 6.77% 7.11% 7.49% 7.52% 8.04%
Loans Past Due 30-89 Days
For the Quarter Ended
In thousands 12/31/2012 9/30/2012 6/30/2012 3/31/2012 12/31/2011
Commercial $ 180 $ 874 $ 300 $ 689 $ 533
Commercial real estate 437 1,264 1,787 2,776 5,746
Construction and development -- 56 293 518 1,756
Residential real estate 6,170 4,346 5,763 5,509 6,633
Consumer 326 313 408 242 466
Total $ 7,113 $ 6,853 $ 8,551 $ 9,734 $ 15,134
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q4 2012 vs Q4 2011
Q4 2012 Q4 2011
Average Earnings / Yield / Average Earnings / Yield /
Dollars in thousands Balances Expense Rate Balances Expense Rate
ASSETS
Interest earning assets
Loans, net of unearned interest
Taxable $ 956,864 $ 13,436 5.59% $ 985,496 $ 14,287 5.75%
Tax-exempt 6,184 117 7.53% 6,115 114 7.40%
Securities
Taxable 226,629 1,097 1.93% 225,089 1,817 3.20%
Tax-exempt 75,466 912 4.81% 86,389 1,353 6.21%
Interest bearing deposits other banks and Federal funds sold 10,779 4 0.15% 25,926 13 0.20%
Total interest earning assets 1,275,922 15,566 4.85% 1,329,015 17,584 5.25%
Noninterest earning assets
Cash & due from banks 4,166 4,229
Premises & equipment 21,266 22,274
Other assets 113,952 121,215
Allowance for loan losses (18,053) (18,211)
Total assets $ 1,397,253 $ 1,458,522
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing demand deposits $ 179,198 $ 78 0.17% $ 156,751 $ 94 0.24%
Savings deposits 194,839 307 0.63% 208,772 427 0.81%
Time deposits 556,748 2,632 1.88% 573,798 3,781 2.61%
Short-term borrowings 10,263 7 0.27% 11,879 6 0.20%
Long-term borrowings and subordinated debentures 239,722 2,300 3.82% 307,937 3,117 4.02%
Total interest bearing liabilities 1,180,770 5,324 1.79% 1,259,137 7,425 2.34%
Noninterest bearing liabilities
Demand deposits 99,845 89,640
Other liabilities 8,198 8,958
Total liabilities 1,288,813 1,357,735
Shareholders' equity - preferred 9,326 8,315
Shareholders' equity - common 99,114 92,472
Total liabilities and shareholders' equity $ 1,397,253 $ 1,458,522
NET INTEREST EARNINGS $ 10,242 $ 10,159
NET INTEREST MARGIN 3.19% 3.03%
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
YTD 2012 vs YTD 2011
YTD 2012 YTD 2011
Average Earnings / Yield / Average Earnings / Yield /
Dollars in thousands Balances Expense Rate Balances Expense Rate
ASSETS
Interest earning assets
Loans, net of unearned interest
Taxable $ 963,209 $ 55,248 5.74% $ 987,315 $ 58,911 5.97%
Tax-exempt 6,628 483 7.29% 5,105 402 7.87%
Securities
Taxable 233,560 5,689 2.44% 252,901 9,106 3.60%
Tax-exempt 71,937 3,929 5.46% 63,894 4,080 6.39%
Interest bearing deposits other banks and Federal funds sold 19,731 35 0.18% 33,690 72 0.21%
Total interest earning assets 1,295,065 65,384 5.05% 1,342,905 72,571 5.40%
Noninterest earning assets
Cash & due from banks 4,188 4,022
Premises & equipment 21,578 22,620
Other assets 118,427 118,408
Allowance for loan losses (18,157) (18,161)
Total assets $ 1,421,101 $ 1,469,794
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing demand deposits $ 170,698 $ 325 0.19% $ 152,552 $ 391 0.26%
Savings deposits 203,908 1,361 0.67% 207,226 1,899 0.92%
Time deposits 548,044 11,472 2.09% 601,925 15,983 2.66%
Short-term borrowings 13,248 31 0.23% 4,238 8 0.19%
Long-term borrowings and subordinated debentures 276,092 10,875 3.94% 315,900 12,921 4.09%
1,211,990 24,064 1.99% 1,281,841 31,202 2.43%
Noninterest bearing liabilities
Demand deposits 94,243 85,247
Other liabilities 8,256 8,474
Total liabilities 1,314,489 1,375,562
Shareholders' equity - preferred 9,326 4,738
Shareholders' equity - common 97,286 89,494
Total liabilities and shareholders' equity $ 1,421,101 $ 1,469,794
NET INTEREST EARNINGS $ 41,320 $ 41,369
NET INTEREST MARGIN 3.19% 3.08%
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 12/31/2012 12/31/2011 12/31/2012 12/31/2011
Net income applicable to common shares - excluding realized securities gains, gains/losses on sales of assets, other-than-temporary impairment of securities and write-downs of foreclosed properties $ 2,424 $ 1,786 $ 8,491 $ 6,850
Realized securities gains 103 542 2,348 4,006
Applicable income tax effect (38) (201) (869) (1,482)
Gain (loss) on sale of assets (94) 19 (677) 295
Applicable income tax effect 35 (7) 250 (109)
Other-than-temporary impairment of securities (76) (401) (451) (2,646)
Applicable income tax effect 28 148 167 979
Write-downs foreclosed properties (748) (882) (6,862) (6,651)
Applicable income tax effect 277 326 2,539 2,461
(513) (455) (3,555) (3,147)
GAAP net income applicable to common shares $ 1,911 $ 1,331 $ 4,936 $ 3,703
Diluted earnings per common share - excluding realized securities gains, gains/losses on sales of assets, other-than-temporary impairment of securities and write-downs of foreclosed properties $ 0.28 $ 0.21 $ 0.97 $ 0.86
Realized securities gains 0.01 0.06 0.24 0.48
Applicable income tax effect -- (0.02) (0.09) (0.18)
Gain (loss) on sale of assets (0.01) -- (0.07) 0.04
Applicable income tax effect -- -- 0.03 (0.01)
Other-than-temporary impairment of securities (0.01) (0.04) (0.05) (0.32)
Applicable income tax effect -- 0.01 0.02 0.12
Write-downs of foreclosed properties (0.08) (0.10) (0.71) (0.80)
Applicable income tax effect 0.03 0.04 0.26 0.30
(0.06) (0.05) (0.37) (0.37)
GAAP diluted earnings per common share $ 0.22 $ 0.16 $ 0.60 $ 0.49
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 12/31/2012 12/31/2011 12/31/2012 12/31/2011
Total revenue - excluding realized securities gains, gains/losses on sales of assets, other-than-temporary impairment of securities and write-downs of foreclosed properties $ 12,714 $ 12,372 $ 50,802 $ 50,390
Realized securities gains 103 542 2,348 4,006
Gain (loss) on sale of assets (94) 19 (677) 295
Other-than-temporary impairment of securities (76) (401) (451) (2,646)
Write-downs of foreclosed properties (748) (882) (6,862) (6,651)
(815) (722) (5,642) (4,996)
GAAP total revenue $ 11,899 $ 11,650 $ 45,160 $ 45,394
Total noninterest income - excluding realized securities gains, gains/losses on sales of assets, other-than- temporary impairment of securities and write-downs of foreclosed properties $ 2,818 $ 2,711 $ 10,982 $ 10,545
Realized securities gains 103 542 2,348 4,006
Gain (loss) on sale of assets (94) 19 (677) 295
Other-than-temporary impairment of securities (76) (401) (451) (2,645)
Write-downs of foreclosed properties (748) (882) (6,862) (6,651)
(815) (722) (5,642) (4,995)
GAAP total noninterest income $ 2,003 $ 1,989 $ 5,340 $ 5,550

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

Source:Summit Financial Group, Inc.