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Summit Financial Group Reports Second Quarter 2013 Results

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MOOREFIELD, W.Va., July 25, 2013 (GLOBE NEWSWIRE) -- Summit Financial Group, Inc. ("Company" or "Summit") (Nasdaq:SMMF) today reported second quarter 2013 net income applicable to common shares of $1,023,000, or $0.13 per diluted share, compared with $719,000, or $0.09 per diluted share, for the second quarter of 2012. Second quarter 2013 results, as compared to the same period in 2012, were positively impacted primarily by a lower provision for loan losses.

Excluding from second quarter 2013 nonrecurring items (on a pre-tax basis) consisting of realized securities losses of $57,000, losses on sales of assets of $512,000, charges for other-than-temporary impairment ("OTTI") of securities of $27,000 and write-downs of foreclosed properties of $1.49 million, and from second quarter 2012 realized securities gains of $320,000, losses on sales of assets of $523,000, charges for other-than-temporary impairment ("OTTI") of securities of $106,000 and write-downs of foreclosed properties of $1.63 million, pro forma second quarter 2013 earnings were approximately $2.34 million, or $0.27 per diluted share, compared to $1.94 million, or $0.22 per diluted share, for the year-ago period.

For the six months ended June 30, 2013, Summit recorded net income applicable to common shares of $2.62 million, or $0.31 per diluted share, compared with $2.22 million, or $0.27 per diluted share, for the comparable 2012 six-month period.

Excluding from the six month period ended June 30, 2013 nonrecurring items (on a pre-tax basis) comprised of realized securities losses of $16,000, losses on sales of assets of $552,000, OTTI charges of $80,000 and write-downs of foreclosed properties of $2.42 million, and from the 2012 first six-month period realized securities gains of $1.49 million, losses on sale of assets of $599,000, OTTI charges of $335,000 and write-downs of foreclosed properties of $3.54 million, pro forma earnings for first six months of 2013 were approximately $4.56 million, or $0.52 per diluted share, compared to $4.11 million, or $0.47 per diluted share, for the 2012 six month period.

Highlights for Q2 2013 include:

  • Achieved ninth consecutive quarter of positive quarterly earnings.
  • Nonperforming assets declined for the sixth consecutive quarter, reaching its lowest level since fourth quarter 2008; OREO is at its lowest level since fourth quarter 2009.
  • Earnings continue to be positively impacted by reduced provisions for loan losses.
  • Net interest margin decreased 11 basis points compared to Q1 2013 and decreased 8 basis points compared to Q2 2012.
  • Recorded charges of $1.49 million and $27,000, respectively, to write-down foreclosed properties and to recognize OTTI of securities.
  • Summit's leverage capital ratio is at its highest level in seven years and its total risk-based capital ratio is at highest level in thirteen years.

H. Charles Maddy, III, President and Chief Executive Officer of Summit, commented, "During the past quarter, we continue to make progress towards improving our earnings performance, reducing our portfolio of problem assets, and strengthening our capital levels. I am particularly pleased by the 14 percent reduction in nonperforming assets this past quarter, representing the sixth consecutive quarter of decline. Reducing our portfolio of problem assets remains top priority, and we are encouraged to observe continuing improvement in local real estate market conditions. However, we anticipate earnings may continue to fluctuate from quarter-to-quarter in the near term as our foreclosed properties are re-appraised and adjusted to estimated fair values on an ongoing basis."

Results from Operations

Total revenue for the second quarter 2013, consisting of net interest income and noninterest income, was $10.2 million compared to $10.8 million for the second quarter 2012. For the year-to-date period ended June 30, 2013, total revenue was $21.7 million compared to $22.5 million for the same period in 2012.

Total revenue excluding nonrecurring items (as enumerated above) was $12.3 million for second quarter 2013 compared to $12.7 million for the same prior-year quarter, a decrease of 3.6 percent. For the first half of 2013, total revenue excluding nonrecurring items was $24.8 million compared to $25.5 million for the first half of 2012.

For the second quarter of 2013, net interest income decreased to $9.5 million, compared to $10.0 million reported in the prior-year second quarter and $9.8 million reported in the linked quarter. The net interest margin for second quarter 2013 was 3.12 percent compared to 3.20 percent for the year-ago quarter, and 3.23 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 second quarter 2013 was $686,000 compared to $828,000 for the comparable period of 2012. Excluding nonrecurring items (as enumerated above), noninterest income was $2.78 million for second quarter 2013, compared to the $2.77 million reported for second quarter 2012.

The provision for loan losses was $1.0 million for the second quarter of 2013 compared to $1.5 million and $2.0 million for the linked and year-ago quarters, respectively.

Noninterest expenses continue to be well-controlled. Total noninterest expense increased 3.1% for the quarter to $7.5 million from the $7.3 million reported in second quarter 2012. Noninterest expense for the first half of 2013 increased 1.9% compared to the first half of 2012. Cost-saving initiatives continue in place and their impact remains beneficial.

Balance Sheet

At June 30, 2013, total assets were $1.37 billion, a decrease of $17.1 million, or 1.2 percent, and a decrease of $46.5 million, or 3.3 percent, since December 31, 2012 and June 30, 2012, respectively. Total loans, net of unearned fees and allowance for loan losses, were $926.0 million at June 30, 2013, down $11.2 million, or 1.2 percent, from the $937.2 million reported at year end 2012.

All loan categories have declined since year end 2012. Commercial real estate ("CRE"), the largest component of Summit's loan portfolio, decreased $2.9 million or 0.7 percent. The second largest component of Summit's loan portfolio, residential real estate, declined $2.4 million, or 0.7 percent, while construction and development ("C&D") loans declined $2.0 million, or 2.5 percent and commercial ("C&I") loans declined $6.9 million, or 8.0 percent.

At June 30, 2013, deposits were $1.04 billion, an increase of $11.0 million, or 1.1 percent, since year end 2012. During the first half of 2013, interest bearing checking deposits grew $11.5 million, or 6.6 percent, to $187.2 million, while savings and time deposits increased by $3.0 million and $4.9 million, respectively, or 1.6 percent and 0.9 percent, respectively. Long-term borrowings and subordinated debentures declined by 16.6 percent since year end 2012, as the Company paid down $39.7 million in maturing borrowings during this period.

Asset Quality

As of June 30, 2012, nonperforming assets ("NPAs"), consisting of nonperforming loans, foreclosed properties, and repossessed assets, were $78.2 million, or 5.70 percent of assets. This compares to $90.9 million, or 6.54 percent of assets at the linked quarter, and $106.1 million, or 7.49 percent of assets at June 30, 2012.

Second quarter 2013 net loan charge-offs were $3.9 million, or 1.63 percent of average loans annualized, while adding $1.0 million to the allowance for loan losses. The allowance for loan losses stood at $14.1 million, or 1.50 percent of total loans at June 30, 2013, compared to 1.88 percent at December 31, 2012.

Capital Adequacy

Shareholders' equity was $107.2 million as of June 30, 2013 compared to $108.6 million December 31, 2012.

Summit's depository institution, Summit Community Bank, Inc. (the "Bank"), is well in excess of regulatory requirements for a "well capitalized" institution at June 30, 2013. The Bank's total risk-based capital ratio improved to 15.6 percent at June 30, 2013 compared to 15.0 percent at December 31, 2012, while its Tier 1 leverage capital ratio improved to 10.2 percent from the 9.8 percent reported at December 31, 2012. Total common shares outstanding as of June 30, 2013 were 7,440,222.

About the Company

Summit Financial Group, Inc. is a $1.37 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 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 -- Q2 2013 vs Q2 2012
For the Quarter Ended Percent
Dollars in thousands 6/30/2013 6/30/2012 Change
Condensed Statements of Income
Interest income
Loans, including fees $ 12,799 $ 14,041 -8.8%
Securities 1,507 2,225 -32.3%
Other 2 12 -83.3%
Total interest income 14,308 16,278 -12.1%
Interest expense
Deposits 2,820 3,360 -16.1%
Borrowings 1,984 2,947 -32.7%
Total interest expense 4,804 6,307 -23.8%
Net interest income 9,504 9,971 -4.7%
Provision for loan losses 1,000 2,001 -50.0%
Net interest income after provision for loan losses 8,504 7,970 6.7%
Noninterest income
Insurance commissions 1,132 1,141 -0.8%
Service fees related to deposit accounts 1,085 1,075 0.9%
Realized securities gains (57) 320 -117.8%
Gain (loss) on sale of assets (512) (523) -2.1%
Other-than-temporary impairment of securities (27) (106) -74.5%
Write-downs of foreclosed properties (1,494) (1,631) -8.4%
Other income 559 552 1.3%
Total noninterest income 686 828 -17.1%
Noninterest expense
Salaries and employee benefits 3,987 3,892 2.4%
Net occupancy expense 476 490 -2.9%
Equipment expense 559 605 -7.6%
Professional fees 360 242 48.8%
FDIC premiums 515 500 3.0%
Foreclosed properties expense 295 233 26.6%
Other expenses 1,329 1,333 -0.3%
Total noninterest expense 7,521 7,295 3.1%
Income before income taxes 1,669 1,503 11.0%
Income taxes 452 590 -23.4%
Net income 1,217 913 33.3%
Preferred stock dividends 194 194 0.0%
Net income applicable to common shares $ 1,023 $ 719 42.3%
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary -- Q2 2013 vs Q2 2012
For the Quarter Ended Percent
6/30/2013 6/30/2012 Change
Per Share Data
Earnings per common share
Basic $ 0.14 $ 0.10 40.0%
Diluted $ 0.13 $ 0.09 44.4%
Average shares outstanding
Basic 7,438,401 7,425,472 0.2%
Diluted 9,619,585 8,927,802 7.7%
Performance Ratios
Return on average equity (A) 4.40% 3.44% 27.9%
Return on average assets 0.35% 0.25% 40.0%
Net interest margin 3.12% 3.20% -2.5%
Efficiency ratio (B) 56.52% 53.13% 6.4%

NOTE (A) – Net income divided by total average 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)
Six Month Performance Summary -- 2013 vs 2012
For the Six Months Ended Percent
Dollars in thousands 6/30/2013 6/30/2012 Change
Condensed Statements of Income
Interest income
Loans, including fees $ 25,703 $ 28,406 -9.5%
Securities 3,171 4,645 -31.7%
Other 3 24 -87.5%
Total interest income 28,877 33,075 -12.7%
Interest expense
Deposits 5,588 7,073 -21.0%
Borrowings 4,027 6,013 -33.0%
Total interest expense 9,615 13,086 -26.5%
Net interest income 19,262 19,989 -3.6%
Provision for loan losses 2,500 4,002 -37.5%
Net interest income after provision for loan losses 16,762 15,987 4.8%
Noninterest income
Insurance commissions 2,316 2,299 0.7%
Service fees related to deposit accounts 2,096 2,089 0.3%
Realized securities gains (16) 1,485 -101.1%
Gain (loss) on sale of assets (552) (599) -7.8%
Other-than-temporary impairment of securities (80) (335) -76.1%
Write-downs of foreclosed properties (2,423) (3,543) -31.6%
Other income 1,123 1,135 -1.1%
Total noninterest income 2,464 2,531 -2.6%
Noninterest expense
Salaries and employee benefits 8,105 7,793 4.0%
Net occupancy expense 932 968 -3.7%
Equipment expense 1,157 1,210 -4.4%
Professional fees 611 558 9.5%
FDIC premiums 1,055 1,022 3.2%
Foreclosed properties expense 575 595 -3.4%
Other expenses 2,679 2,688 -0.3%
Total noninterest expense 15,114 14,834 1.9%
Income before income taxes 4,112 3,684 11.6%
Income taxes 1,102 1,073 2.7%
Net income 3,010 2,611 15.3%
Preferred stock dividends 388 388 0.0%
Net income applicable to common shares $ 2,622 $ 2,223 17.9%
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Six Month Performance Summary -- 2013 vs 2012
For the Six Months Ended Percent
6/30/2013 6/30/2012 Change
Per Share Data
Earnings per common share
Basic $ 0.35 $ 0.30 16.7%
Diluted $ 0.31 $ 0.27 14.8%
Average shares outstanding
Basic 7,435,344 7,425,472 0.1%
Diluted 9,616,918 9,601,040 0.2%
Performance Ratios
Return on average equity (A) 5.47% 4.96% 10.3%
Return on average assets 0.43% 0.36% 19.4%
Net interest margin 3.18% 3.20% -0.6%
Efficiency ratio (B) 56.24% 53.40% 5.3%

NOTE (A) – Net income divided by total average 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 6/30/2013 3/31/2013 12/31/2012 9/30/2012 6/30/2012
Condensed Statements of Income
Interest income
Loans, including fees $ 12,799 $ 12,904 $ 13,512 $ 13,648 $ 14,041
Securities 1,507 1,664 1,703 1,934 2,225
Other 2 1 5 7 12
Total interest income 14,308 14,569 15,220 15,589 16,278
Interest expense
Deposits 2,820 2,768 3,017 3,067 3,360
Borrowings 1,984 2,043 2,307 2,587 2,947
Total interest expense 4,804 4,811 5,324 5,654 6,307
Net interest income 9,504 9,758 9,896 9,935 9,971
Provision for loan losses 1,000 1,500 2,498 2,000 2,001
Net interest income after provision for loan losses 8,504 8,258 7,398 7,935 7,970
Noninterest income
Insurance commissions 1,132 1,184 1,082 1,052 1,141
Service fees related to deposit accounts 1,085 1,012 1,092 1,074 1,075
Realized securities gains (57) 42 103 760 320
Gain (loss) on sale of assets (512) (40) (94) 16 (523)
Other-than-temporary impairment of securities (27) (54) (76) (39) (106)
Write-downs of foreclosed properties (1,494) (929) (748) (2,571) (1,631)
Other income 559 564 644 514 552
Total noninterest income 686 1,779 2,003 806 828
Noninterest expense
Salaries and employee benefits 3,987 4,117 3,799 3,940 3,892
Net occupancy expense 476 457 495 476 490
Equipment expense 559 598 577 576 605
Professional fees 360 251 314 289 242
FDIC premiums 515 540 535 510 500
Foreclosed properties expense 295 279 269 356 233
Other expenses 1,329 1,351 1,433 1,325 1,333
Total noninterest expense 7,521 7,593 7,422 7,472 7,295
Income before income taxes 1,669 2,444 1,979 1,269 1,503
Income taxes 452 651 (126) 272 590
Net income 1,217 1,793 2,105 997 913
Preferred stock dividends 194 194 194 194 194
Net income applicable to common shares $ 1,023 $ 1,599 $ 1,911 $ 803 $ 719
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Five Quarter Performance Summary
For the Quarter Ended
6/30/2013 3/31/2013 12/31/2012 9/30/2012 6/30/2012
Per Share Data
Earnings per common share
Basic $ 0.14 $ 0.22 $ 0.26 $ 0.11 $ 0.10
Diluted $ 0.13 $ 0.19 $ 0.22 $ 0.10 $ 0.09
Average shares outstanding
Basic 7,438,401 7,432,254 7,425,472 7,425,472 7,425,472
Diluted 9,619,585 9,613,886 9,601,435 9,601,278 8,927,802
Performance Ratios
Return on average equity (A) 4.40% 6.55% 7.76% 3.71% 3.44%
Return on average assets 0.35% 0.52% 0.60% 0.28% 0.25%
Net interest margin 3.12% 3.23% 3.19% 3.17% 3.20%
Efficiency ratio - (B) 56.52% 56.00% 54.00% 54.37% 53.13%

NOTE (A) – Net income divided by total average 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 6/30/2013 3/31/2013 12/31/2012 9/30/2012 6/30/2012
Assets
Cash and due from banks $ 4,336 $ 3,906 $ 3,833 $ 3,752 $ 4,266
Interest bearing deposits other banks 7,971 7,915 10,969 13,441 14,288
Securities 291,180 283,054 281,539 291,992 289,151
Loans, net 925,979 945,741 937,168 940,933 948,294
Property held for sale 47,258 54,625 56,172 56,033 60,069
Premises and equipment, net 20,936 21,023 21,129 21,265 21,470
Intangible assets 8,124 8,212 8,300 8,387 8,475
Cash surrender value of life insurance policies 30,027 29,791 29,553 30,065 29,808
Other assets 34,159 35,931 38,441 38,218 40,620
Total assets $ 1,369,970 $ 1,390,198 $ 1,387,104 $ 1,404,086 $ 1,416,441
Liabilities and Shareholders' Equity
Deposits $ 1,038,163 $ 1,066,318 $ 1,027,125 $ 1,027,307 $ 1,001,669
Short-term borrowings 16,762 5,960 3,958 20,957 10,957
Long-term borrowings and subordinated debentures 199,954 199,977 239,657 240,133 290,024
Other liabilities 7,880 7,928 7,809 8,361 8,084
Shareholders' equity 107,211 110,015 108,555 107,328 105,707
Total liabilities and shareholders' equity $ 1,369,970 $ 1,390,198 $ 1,387,104 $ 1,404,086 $ 1,416,441
Book value per common share (A) $ 11.15 $ 11.45 $ 11.31 $ 11.20 $ 11.01
Tangible book value per common share (A) $ 10.31 $ 10.60 $ 10.44 $ 10.33 $ 10.13
Tangible equity / Tangible assets 7.3% 7.4% 7.3% 7.1% 6.9%

NOTE (A) – Assumes the conversion to common stock of all outstanding shares of convertible preferred stock.

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Regulatory Capital Ratios
6/30/2013 3/31/2013 12/31/2012 9/30/2012 6/30/2012
Summit Financial Group, Inc.
Total Risk Based Capital 14.4% 14.1% 14.0% 13.8% 13.6%
Tier 1 Risk Based Capital 12.1% 11.8% 11.6% 11.3% 11.1%
Tier 1 Leverage Ratio 8.6% 8.4% 8.3% 8.0% 7.9%
Summit Community Bank, Inc.
Total Risk Based Capital 15.6% 15.2% 15.0% 14.6% 14.3%
Tier 1 Risk Based Capital 14.3% 13.9% 13.7% 13.3% 13.1%
Tier 1 Leverage Ratio 10.2% 10.0% 9.8% 9.5% 9.3%
SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Loan Composition
Dollars in thousands 6/30/2013 3/31/2013 12/31/2012 9/30/2012 6/30/2012
Commercial $ 78,964 $ 86,877 $ 85,829 $ 88,997 $ 92,060
Commercial real estate
Owner occupied 149,660 151,942 154,252 150,090 152,347
Non-owner occupied 277,773 288,475 276,082 279,132 280,891
Construction and development
Land and development 73,426 76,277 79,335 82,857 84,383
Construction 7,634 5,782 3,772 2,087 1,793
Residential real estate
Non-jumbo 216,759 213,965 216,714 215,584 217,321
Jumbo 58,567 62,849 61,567 62,748 61,962
Home equity 53,774 53,765 53,263 53,455 51,692
Consumer 20,147 19,638 20,586 21,290 21,212
Other 3,397 3,191 3,701 2,513 2,523
Total loans, net of unearned fees 940,101 962,761 955,101 958,753 966,184
Less allowance for loan losses 14,122 17,020 17,933 17,820 17,890
Loans, net $ 925,979 $ 945,741 $ 937,168 $ 940,933 $ 948,294
SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Deposit Composition
Dollars in thousands 6/30/2013 3/31/2013 12/31/2012 9/30/2012 6/30/2012
Non interest bearing checking $ 92,147 $ 93,125 $ 100,592 $ 96,764 $ 96,172
Interest bearing checking 187,244 181,327 175,706 177,236 164,867
Savings 196,069 197,587 193,039 197,610 204,509
Time deposits 562,703 594,279 557,788 555,697 536,121
Total deposits $ 1,038,163 $ 1,066,318 $ 1,027,125 $ 1,027,307 $ 1,001,669
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Asset Quality Information
For the Quarter Ended
Dollars in thousands 6/30/2013 3/31/2013 12/31/2012 9/30/2012 6/30/2012
Gross loan charge-offs $ 3,968 $ 2,497 $ 2,545 $ 2,142 $ 2,790
Gross loan recoveries (70) (84) (160) (73) (156)
Net loan charge-offs $ 3,898 $ 2,413 $ 2,385 $ 2,069 $ 2,634
Net loan charge-offs to average loans (annualized) 1.63% 1.00% 0.99% 0.86% 1.08%
Allowance for loan losses $ 14,122 $ 17,020 $ 17,933 $ 17,820 $ 17,890
Allowance for loan losses as a percentage of period end loans 1.50% 1.77% 1.88% 1.86% 1.85%
Nonperforming assets:
Nonperforming loans
Commercial $ 3,996 $ 4,763 $ 5,002 $ 5,343 $ 6,476
Commercial real estate 1,695 1,525 2,556 2,803 3,536
Commercial construction and development -- -- -- 428 662
Residential construction and development 11,505 13,076 13,641 16,333 16,735
Residential real estate 13,605 16,869 16,522 18,809 18,550
Consumer 91 72 55 88 78
Total nonperforming loans 30,892 36,305 37,776 43,804 46,037
Foreclosed properties
Commercial -- -- -- -- --
Commercial real estate 10,310 11,779 11,835 11,802 12,029
Commercial construction and development 11,492 16,670 17,597 17,683 18,632
Residential construction and development 21,591 21,929 23,074 23,769 26,014
Residential real estate 3,865 4,247 3,666 2,779 3,393
Total foreclosed properties 47,258 54,625 56,172 56,033 60,068
Other repossessed assets 2 19 6 -- --
Total nonperforming assets $ 78,152 $ 90,949 $ 93,954 $ 99,837 $ 106,105
Nonperforming loans to period end loans 3.29% 3.77% 3.96% 4.57% 4.76%
Nonperforming assets to period end assets 5.70% 6.54% 6.77% 7.11% 7.49%
Loans Past Due 30-89 Days
For the Quarter Ended
In thousands 6/30/2013 3/31/2013 12/31/2012 9/30/2012 6/30/2012
Commercial $ 199 $ 27 $ 180 $ 874 $ 300
Commercial real estate 626 2,161 437 1,264 1,787
Construction and development 698 64 -- 56 293
Residential real estate 4,479 4,522 6,170 4,346 5,763
Consumer 286 277 326 313 408
Other 53 -- -- -- --
Total $ 6,341 $ 7,051 $ 7,113 $ 6,853 $ 8,551
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q2 2013 vs Q2 2012
Q2 2013 Q2 2012
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 $ 950,397 $ 12,735 5.37% $ 966,068 $ 13,960 5.81%
Tax-exempt 5,466 98 7.19% 6,820 123 7.25%
Securities
Taxable 227,629 926 1.63% 234,196 1,554 2.67%
Tax-exempt 71,489 874 4.90% 71,077 1,007 5.70%
Interest bearing deposits other banks and Federal funds sold 8,533 2 0.09% 23,671 12 0.20%
Total interest earning assets 1,263,514 14,635 4.65% 1,301,832 16,656 5.15%
Noninterest earning assets
Cash & due from banks 4,525 4,266
Premises & equipment 21,018 21,656
Other assets 111,981 123,796
Allowance for loan losses (15,702) (18,503)
Total assets $ 1,385,336 $ 1,433,047
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing demand deposits $ 178,875 $ 62 0.14% $ 166,309 $ 82 0.20%
Savings deposits 197,362 287 0.58% 208,277 351 0.68%
Time deposits 580,760 2,471 1.71% 535,649 2,926 2.20%
Short-term borrowings 13,985 9 0.26% 15,901 11 0.28%
Long-term borrowings and subordinated debentures 199,963 1,975 3.96% 295,838 2,936 3.99%
Total interest bearing liabilities 1,170,945 4,804 1.65% 1,221,974 6,306 2.08%
Noninterest bearing liabilities
Demand deposits 96,059 93,995
Other liabilities 7,616 11,050
Total liabilities 1,274,620 1,327,019
Shareholders' equity - preferred 9,322 9,326
Shareholders' equity - common 101,394 96,702
Total liabilities and shareholders' equity $ 1,385,336 $ 1,433,047
NET INTEREST EARNINGS $ 9,831 $ 10,350
NET INTEREST MARGIN 3.12% 3.20%
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
YTD 2013 vs YTD 2012
YTD 2013 YTD 2012
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 $ 955,425 $ 25,569 5.40% $ 969,965 $ 28,239 5.85%
Tax-exempt 5,714 203 7.16% 7,034 253 7.23%
Securities
Taxable 221,998 1,955 1.78% 234,584 3,252 2.79%
Tax-exempt 75,297 1,842 4.93% 71,318 2,111 5.95%
Interest bearing deposits other banks and Federal funds sold 8,023 3 0.08% 24,277 24 0.20%
Total interest earning assets 1,266,457 29,572 4.71% 1,307,178 33,879 5.21%
Noninterest earning assets
Cash & due from banks 4,384 4,169
Premises & equipment 21,059 21,818
Other assets 113,334 124,321
Allowance for loan losses (16,632) (18,377)
Total assets $ 1,388,602 $ 1,439,109
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing demand deposits $ 176,811 $ 132 0.15% $ 163,228 $ 164 0.20%
Savings deposits 196,464 597 0.61% 210,030 733 0.70%
Time deposits 577,669 4,859 1.70% 543,169 6,176 2.29%
Short-term borrowings 20,872 26 0.25% 15,145 16 0.21%
Long-term borrowings and subordinated debentures 204,584 4,001 3.94% 300,433 5,996 4.01%
1,176,400 9,615 1.65% 1,232,005 13,085 2.14%
Noninterest bearing liabilities
Demand deposits 94,501 90,498
Other liabilities 7,632 11,323
Total liabilities 1,278,533 1,333,826
Shareholders' equity - preferred 9,324 9,326
Shareholders' equity - common 100,745 95,957
Total liabilities and shareholders' equity $ 1,388,602 $ 1,439,109
NET INTEREST EARNINGS $ 19,957 $ 20,794
NET INTEREST MARGIN 3.18% 3.20%
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures
For the Quarter Ended For the Six Months Ended
Dollars in thousands 6/30/2013 6/30/2012 6/30/2013 6/30/2012
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 $ 2,340 $ 1,941 $ 4,556 $ 4,106
Realized securities gains/(losses) (57) 320 (16) 1,485
Applicable income tax effect 21 (118) 6 (549)
(Losses) on sales of assets (512) (523) (552) (599)
Applicable income tax effect 189 194 204 222
Other-than-temporary impairment of securities (27) (106) (80) (335)
Applicable income tax effect 10 39 30 124
Write-downs foreclosed properties (1,494) (1,631) (2,423) (3,543)
Applicable income tax effect 553 603 897 1,311
(1,317) (1,222) (1,934) (1,884)
GAAP net income applicable to common shares $ 1,023 $ 719 $ 2,622 $ 2,222
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 $ 0.27 $ 0.22 $ 0.52 $ 0.47
Realized securities gains/(losses) (0.01) 0.03 -- 0.15
Applicable income tax effect -- (0.01) -- (0.06)
Gains (losses) on sales of assets (0.05) (0.05) (0.06) (0.06)
Applicable income tax effect 0.02 0.02 0.02 0.02
Other-than-temporary impairment of securities -- (0.01) (0.01) (0.03)
Applicable income tax effect -- -- -- 0.01
Write-downs of foreclosed properties (0.16) (0.17) (0.25) (0.37)
Applicable income tax effect 0.06 0.06 0.09 0.14
(0.14) (0.13) (0.21) (0.20)
GAAP diluted earnings per common share $ 0.13 $ 0.09 $ 0.31 $ 0.27
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures
For the Quarter Ended For the Six Months Ended
Dollars in thousands 6/30/2013 6/30/2012 6/30/2013 6/30/2012
Total revenue - excluding realized securities gains, other-than-temporary impairment of securities and write-downs of foreclosed properties $ 12,279 $ 12,739 $ 24,797 $ 25,512
Realized securities gains/(losses) (57) 320 (16) 1,485
(Losses) on sales of assets (512) (523) (552) (599)
Other-than-temporary impairment of securities (27) (106) (80) (335)
Write-downs of foreclosed properties (1,494) (1,631) (2,423) (3,543)
(2,090) (1,940) (3,071) (2,992)
GAAP total revenue $ 10,189 $ 10,799 $ 21,726 $ 22,520
Total noninterest income - excluding realized securities gains, other-than-temporary impairment of securities and write-downs of foreclosed properties $ 2,775 $ 2,768 $ 5,535 $ 5,523
Realized securities gains/(losses) (57) 320 (16) 1,485
(Losses) on sales of assets (512) (523) (552) (599)
Other-than-temporary impairment of securities (27) (106) (80) (335)
Write-downs of foreclosed properties (1,494) (1,631) (2,423) (3,543)
(2,090) (1,940) (3,071) (2,992)
GAAP total noninterest income $ 685 $ 828 $ 2,464 $ 2,531

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

Source:Summit Financial Group, Inc.