OREANDA-NEWS. Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ:SMMF) today reported second quarter 2016 net income of $4.24 million, or $0.40 per diluted share, compared to $4.01 million, or $0.38 per diluted share, for the second quarter of 2015, representing an increase of 5.8 percent, or 5.3 percent per diluted share. Q2 2016 earnings compared to Q2 2015 and Q4 2015 were negatively impacted by increased personnel costs and other noninterest expenses, which were offset by increased net interest earnings, reductions in write-downs of foreclosed properties, and increased gains realized on sales of both securities and foreclosed properties. 

Excluding from second quarter 2016 one-time items of income, gain, expense and loss, Q2 2016 core earnings approximated $3.90 million, or $0.37 per diluted share compared to Q2 2015 core earnings of $4.07 million, or $0.39 per diluted share, and to Q1 2016 core earnings of $3.95 million, or $0.37 per diluted share.

For the six months ended June 30, 2016, Summit recorded net income of $8.31 million, or $0.78 per diluted share, compared with $8.29 million, or $0.78 per diluted share, for the comparable 2015 six-month period, representing an increase of 0.1%, with no change per diluted share.

Excluding from the six-month period ended June 30, 2016 one-time items of income, gain, expense and loss, core earnings approximated $7.71 million, or $0.75 per diluted share compared to the comparable period of 2015 core earnings of $8.39 million, or $0.78 per diluted share.

Highlights for Q2 2016 include:

  • Loans grew $70.0 million during the quarter, or 25.3 percent (on an annualized basis), and have grown $87.3 million, or 16.0 percent (annualized), year-to-date.
  • Nonperforming assets declined for the fifteenth consecutive quarter. Compared to the linked quarter, nonperforming assets as a percentage of total assets declined from 2.66 percent to 2.47 percent, reaching its lowest level since Q2 2008; foreclosed properties are at the lowest level since Q3 2009.
  • Core revenues increased 1.44 percent compared to the linked quarter, and 1.75 percent compared to the year ago quarter.
  • Net interest margin declined 9 basis points compared to Q2 2015, and 10 basis points compared to the linked quarter.
  • Recorded charges of $259,000 to write-down foreclosed properties compared to $109,000 in Q1 2016 and $160,000 in Q2 2015.
  • Announced our entering into a definitive merger agreement to acquire First Century Bankshares, Inc. headquartered in Bluefield, West Virginia.

H. Charles Maddy, III, President and Chief Executive Officer of Summit, commented, “Summit achieved another quarter of solid operating results in Q2 2016, despite the challenges of higher overhead costs from the important investments we are making both in our people and in our infrastructure to assist us in maintaining our growth momentum. Our strong core earnings, growing loan portfolio and continued reductions in our portfolio of problem assets are all very gratifying to note; but I am particularly pleased by the opportunities represented by our two pending acquisitions of First Century Bankshares, announced during the quarter just ended and expected to close at beginning of the year 2016; and of Highland County Bankshares, which has received all requisite shareholder and regulatory approvals and is expected to close on October 1, 2016. These deals serve to 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 second quarter 2016, consisting of net interest income and noninterest income, grew 3.2 percent to $14.8 million compared to $14.3 million for the second quarter 2015. For the year-to-date period ended June 30, 2016, total revenue was $29.4 million compared to $29.0 million for the same period of 2015, representing a 1.3 percent increase.

Total core revenue, excluding nonrecurring items, described above, was $14.4 million for second quarter 2016 compared to $14.1 million for the same prior-year quarter, an increase of 1.8 percent. For the first half of 2016, total core revenue (excluding nonrecurring items) was $28.6 million compared to $28.2 million for the first half of 2015, a 1.6 percent improvement.

For the second quarter of 2016, net interest income was $11.7 million, an increase of 2.4 percent from the $11.5 million reported in the prior-year second quarter and decreased $45,000 compared to the linked quarter. The net interest margin for second quarter 2016 was 3.40 percent compared to 3.49 percent for the year-ago quarter, and 3.50 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 2016 was $3.05 million compared to $2.86 million for the comparable period of 2015. Excluding realized securities gains, noninterest income was $2.66 million for second quarter 2016, compared to $2.69 million reported for second quarter 2015.

The second quarter 2016 provision for loan losses totaled $250,000, compared to $250,000 for the linked quarter, and $500,000 for the year-ago quarter.

Core noninterest expense continues to be well-controlled. Total noninterest expense increased 4.7% to $8.44 million compared to $8.06 million for the prior-year second quarter. Excluding from noninterest expense (on a pre-tax basis) merger expenses, gains/losses on sales of foreclosed properties, and write-downs of foreclosed properties, noninterest expense would have approximated $8.30 million for Q2 2016 compared to $7.80 million for the comparable period of 2015. Noninterest expense for the first half of 2016 increased 4.5% compared to the first half of 2015.

Balance Sheet

At June 30, 2016, total assets were $1.57 billion, an increase of $72.8 million, or 4.9 percent since December 31, 2015. Total loans, net of unearned fees and allowance for loan losses, were $1.17 billion at June 30, 2016, up $87.4 million, or 8.1 percent, from the $1.08 billion reported at year-end 2015.

At June 30, 2016, deposits were $1.10 billion, an increase of $29.8 million, or 2.8 percent, since year end 2015. During first half 2016, checking and time deposits declined by $8.8 million and $1.3 million, respectively, or 2.6 percent and 0.3 percent respectively, while savings increased $40.0 million or 15.0 percent.

Asset Quality

As of June 30, 2016, nonperforming assets (“NPAs”), consisting of nonperforming loans, foreclosed properties, and repossessed assets, were $38.7 million, or 2.47 percent of assets. This compares to $40.1 million, or 2.66 percent of assets at the linked quarter, and $45.1 million, or 3.05 percent of assets, at second quarter 2015.

Second quarter 2016 net loan charge-offs were $188,000, or 0.07 percent of average loans annualized; while adding $250,000 to the allowance for loan losses. The allowance for loan losses stood at $11.4 million, or 0.97 percent of total loans at June 30, 2016, compared to 1.05 percent at year-end 2015.

Capital Adequacy

Shareholders’ equity was $150.7 million as of June 30, 2016 compared to $143.7 million December 31, 2015 and $140.1 million at June 30, 2015. Tangible book value per common share increased to $13.40 at June 30, 2016 compared to $12.78 at December 31, 2015 and $12.22 at June 30, 2015. Summit had 10,692,320 outstanding common shares at Q2 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 June 30, 2016. The Bank’s total risk-based capital ratio was 13.9 percent at June 30, 2016 compared to 14.5 percent at December 31, 2015, while its Tier 1 leverage capital ratio was 10.6 percent at June 30, 2016 compared to the 10.8 percent reported at December 31, 2015.

About the Company

Summit Financial Group, Inc. is a $1.57 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.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF) 
Quarterly Performance Summary -- Q2 2016 vs Q2 2015 
         
       
     For the Quarter Ended   Percent 
 Dollars in thousands  6/30/2016 6/30/2015  Change 
 Condensed Statements of Income       
   Interest income       
    Loans, including fees  $   13,622   $   12,972     5.0 %
    Securities      1,656       1,685     -1.7 %
    Other      5       1     400.0 %
   Total interest income      15,283       14,658     4.3 %
   Interest expense                   
    Deposits      2,154       2,074     3.9 %
    Borrowings      1,395       1,126     23.9 %
   Total interest expense      3,549       3,200     10.9 %
   Net interest income      11,734       11,458     2.4 %
   Provision for loan losses      250       500     -50.0 %
   Net interest income after provision                   
    for loan losses      11,484       10,958     4.8 %
                     
   Noninterest income                   
    Insurance commissions      1,090       1,080     0.9 %
    Service fees related to deposit accounts      1,059       1,072     -1.2 %
    Realized securities gains      383       170     125.3 %
    Other income      513       538     -4.6 %
  Total noninterest income     3,045       2,860     6.5 %
   Noninterest expense                   
    Salaries and employee benefits     4,764       4,442     7.2 %
    Net occupancy expense     512       489     4.7 %
    Equipment expense     686       560     22.5 %
    Professional fees     429       372     15.3 %
    FDIC premiums     300       320     -6.3 %
    Merger expense     153       -   n/a
    Foreclosed properties expense     93       158     -41.1 %
    Loss (gain) on sales of foreclosed properties     (276 )     103     -368.0 %
    Write-downs of foreclosed properties     259       160     61.9 %
    Other expenses     1,517       1,457     4.1 %
  Total noninterest expense     8,437       8,061     4.7 %
   Income before income taxes      6,092       5,757     5.8 %
   Income taxes      1,849       1,747     5.8 %
   Net income  $   4,243   $   4,010     5.8 %
                     
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF) 
Quarterly Performance Summary -- Q2 2016 vs Q2 2015 
       
     For the Quarter Ended   Percent 
    6/30/2016 6/30/2015  Change 
 Per Share Data       
   Earnings per common share       
    Basic  $   0.40   $   0.38     5.3 %
    Diluted  $   0.40   $   0.38     5.3 %
         
   Cash dividends  $   0.10   $   0.08     25.0 %
         
   Average common shares outstanding       
    Basic      10,681,995       10,667,892     0.1 %
    Diluted      10,701,017       10,676,474     0.2 %
         
   Common shares outstanding at period end      10,692,320       10,843,676     -1.4 %
         
 Performance Ratios       
   Return on average equity    11.49 %   11.67 %   -1.5 %
   Return on average tangible equity    12.10 %   12.36 %   -2.1 %
   Return on average assets    1.10 %   1.09 %   0.9 %
   Net interest margin    3.40 %   3.49 %   -2.6 %
   Efficiency ratio (A)    55.35 %   52.05 %   6.3 %
         

NOTE (A) – 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 -- 2016 vs 2015
         
         
     For the Six Months Ended   Percent 
 Dollars in thousands  6/30/2016 6/30/2015  Change 
 Condensed Statements of Income       
   Interest income       
    Loans, including fees  $   27,059   $   25,821     4.8 %
    Securities      3,382       3,579     -5.5 %
    Other      7       2     250.0 %
   Total interest income      30,448       29,402     3.6 %
   Interest expense                   
    Deposits      4,324       4,145     4.3 %
    Borrowings      2,611       2,279     14.6 %
   Total interest expense      6,935       6,424     8.0 %
   Net interest income      23,513       22,978     2.3 %
   Provision for loan losses      500       750     -33.3 %
   Net interest income after provision                   
    for loan losses      23,013       22,228     3.5 %
                     
   Noninterest income                   
    Insurance commissions      2,013       2,208     -8.8 %
    Service fees related to deposit accounts      2,038       2,048     -0.5 %
    Realized securities gains (losses)      775       650     19.2 %
    Other income      1,026       1,093     -6.1 %
  Total noninterest income     5,852       5,999     -2.5 %
   Noninterest expense                   
    Salaries and employee benefits     9,446       8,629     9.5 %
    Net occupancy expense     1,051       988     6.4 %
    Equipment expense     1,343       1,095     22.6 %
    Professional fees     901       707     27.4 %
    FDIC premiums     600       650     -7.7 %
    Merger expense     264       -     n/a  
    Foreclosed properties expense     217       366     -40.7 %
    Loss (gain) on sales of foreclosed properties     (282 )     253     -211.5 %
    Write-downs of foreclosed properties     369       732     -49.6 %
    Other expenses     3,082       2,846     8.3 %
  Total noninterest expense     16,991       16,266     4.5 %
   Income before income taxes      11,874       11,961     -0.7 %
   Income taxes      3,569       3,667     -2.7 %
   Net income  $   8,305   $   8,294     0.1 %
                     
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF) 
Six Month Performance Summary -- 2016 vs 2015
       
     For the Six Months Ended   Percent 
    6/30/2016 6/30/2015  Change 
 Per Share Data       
   Earnings per common share       
    Basic  $   0.78   $   0.85     -8.2 %
    Diluted  $   0.78   $   0.78     0.0 %
         
   Cash dividends  $   0.20   $   0.16     25.0 %
         
   Average common shares outstanding       
    Basic      10,676,925       9,747,042     9.5 %
    Diluted      10,685,290       10,585,411     0.9 %
         
   Common shares outstanding at period end      10,692,320       10,843,676     -1.4 %
         
 Performance Ratios       
   Return on average equity    11.29 %   12.22 %   -7.6 %
   Return on average tangible equity    11.90 %   12.95 %   -8.1 %
   Return on average assets    1.09 %   1.14 %   -4.4 %
   Net interest margin    3.45 %   3.54 %   -2.5 %
   Efficiency ratio (A)    55.63 %   50.65 %   9.8 %
         

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  6/30/2016 3/31/2016 12/31/2015 9/30/2015 6/30/2015
 Condensed Statements of Income           
   Interest income           
    Loans, including fees  $   13,622   $   13,436   $   13,265   $   12,983   $   12,972  
    Securities      1,656       1,726       1,685       1,543       1,685  
    Other      5       3       1       5       1  
   Total interest income      15,283       15,165       14,951       14,531       14,658  
   Interest expense                               
    Deposits      2,154       2,170       2,085       2,106       2,074  
    Borrowings      1,395       1,216       1,133       1,120       1,126  
   Total interest expense      3,549       3,386       3,218       3,226       3,200  
   Net interest income      11,734       11,779       11,733       11,305       11,458  
             
   Provision for loan losses      250       250       250       250       500  
   Net interest income after provision                               
    for loan losses      11,484       11,529       11,483       11,055       10,958  
                                 
   Noninterest income                               
    Insurance commissions      1,090       924       851       983       1,080  
    Service fees related to deposit accounts      1,059       978       1,126       1,111       1,072  
    Realized securities gains (losses)      383       393       421       372       170  
    Other income      513       511       471       527       538  
  Total noninterest income     3,045       2,806       2,869       2,993       2,860  
   Noninterest expense                               
    Salaries and employee benefits     4,764       4,682       4,530       4,479       4,442  
    Net occupancy expense     512       540       481       496       489  
    Equipment expense     686       656       617       582       560  
    Professional fees     429       472       507       402       372  
    FDIC premiums     300       300       270       300       320  
    Merger expense     153       112       -       -       -  
    Foreclosed properties expense     93       124       150       168       158  
    Loss (gain) on sale of foreclosed properties      (276 )     (6 )     (314 )     35       103  
    Write-downs of foreclosed properties      259       109       636       1,046       160  
    Other expenses     1,517       1,565       1,617       1,364       1,457  
  Total noninterest expense     8,437       8,554       8,494       8,872       8,061  
   Income before income taxes      6,092       5,781       5,858       5,176       5,757  
   Income taxes      1,849       1,719       1,712       1,515       1,747  
   Net income  $   4,243   $   4,062   $   4,146   $   3,661   $   4,010  
                                 
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF) 
Five Quarter Performance Summary 
           
     For the Quarter Ended 
    6/30/2016 3/31/2016 12/31/2015 9/30/2015 6/30/2015
 Per Share Data           
   Earnings per common share           
    Basic  $   0.40   $   0.38   $   0.39   $   0.34   $   0.38  
    Diluted  $   0.40   $   0.38   $   0.39   $   0.34   $   0.38  
             
   Cash dividends  $   0.10   $   0.10   $   0.08   $   0.08   $   0.08  
             
   Average common shares outstanding           
    Basic      10,681,995       10,671,856       10,661,700       10,703,526       10,667,892  
    Diluted      10,701,017       10,679,301       10,669,192       10,712,203       10,676,474  
             
   Common shares outstanding at period end      10,692,320       10,681,880       10,671,744       10,658,199       10,843,676  
             
 Performance Ratios           
   Return on average equity    11.49 %   11.10 %   11.66 %   10.42 %   11.67 %
   Return on average tangible equity    12.10 %   11.70 %   12.31 %   11.01 %   12.36 %
   Return on average assets    1.10 %   1.08 %   1.12 %   1.00 %   1.09 %
   Net interest margin    3.40 %   3.50 %   3.51 %   3.41 %   3.49 %
   Efficiency ratio (A)    55.35 %   55.93 %   54.46 %   52.93 %   52.05 %

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  6/30/2016 3/31/2016 12/31/2015 9/30/2015 6/30/2015
             
 Assets           
  Cash and due from banks $   4,161   $   4,005   $   3,625   $   4,232   $   3,988  
  Interest bearing deposits other banks     8,897       12,655       5,862       8,057       9,274  
  Securities     261,633       271,515       280,792       272,127       276,661  
  Loans, net     1,166,723       1,096,790       1,079,331       1,062,348       1,064,472  
  Property held for sale     23,425       24,684       25,567       29,713       31,500  
  Premises and equipment, net     21,405       21,589       21,572       20,457       20,490  
  Intangible assets     7,398       7,448       7,498       7,548       7,598  
  Cash surrender value of life insurance policies     38,246       37,989       37,732       37,482       37,222  
  Other assets     33,293       31,893       30,450       27,340       28,764  
    Total assets $   1,565,181   $   1,508,568   $   1,492,429   $   1,469,304   $   1,479,969  
                                 
 Liabilities and Shareholders' Equity                               
  Deposits $   1,096,545   $   1,094,544   $   1,066,709   $   1,072,091   $   1,053,310  
  Short-term borrowings     205,552       153,448       171,394       145,291       174,599  
  Long-term borrowings and                              
    subordinated debentures     94,214       94,692       95,170       95,648       98,625  
  Other liabilities     18,201       19,755       15,412       15,985       13,363  
  Shareholders' equity     150,669       146,129       143,744       140,289       140,072  
    Total liabilities and shareholders' equity $   1,565,181   $   1,508,568   $   1,492,429   $   1,469,304   $   1,479,969  
                                 
  Book value per common share $   14.09   $   13.68   $   13.48   $   13.16   $   12.92  
  Tangible book value per common share $   13.40   $   12.98   $   12.78   $   12.45   $   12.22  
  Tangible equity to tangible assets   9.2 %   9.2 %   9.2 %   9.1 %   9.0 %
  Tangible common equity to tangible assets   9.2 %   9.2 %   9.2 %   9.1 %   9.0 %
                                 
SUMMIT FINANCIAL GROUP INC. (NASDAQ:  SMMF)   
Regulatory Capital Ratios (A)   
               
    6/30/2016 3/31/2016 12/31/2015 9/30/2015 6/30/2015  
Summit Financial Group, Inc.            
  CET1 Risk-based Capital   11.5 %   11.9 %   11.8 %   11.7 %   11.6 %  
  Tier 1 Risk-based Capital   12.9 %   13.5 %   13.4 %   13.4 %   13.2 %  
  Total Risk-based Capital   13.8 %   14.5 %   14.4 %   14.4 %   14.2 %  
  Tier 1 Leverage Ratio   10.5 %   10.7 %   10.7 %   10.5 %   10.4 %  
               
Summit Community Bank, Inc.            
  CET1 Risk-based Capital   13.0 %   13.6 %   13.6 %   13.6 %   13.4 %  
  Tier 1 Risk-based Capital   13.0 %   13.6 %   13.6 %   13.6 %   13.4 %  
  Total Risk-based Capital   13.9 %   14.5 %   14.5 %   14.6 %   14.4 %  
  Tier 1 Leverage Ratio   10.6 %   10.7 %   10.8 %   10.7 %   10.6 %  
               

NOTE (A) – Computed in accordance with Basel III regulatory capital guidelines beginning January 1, 2015 

SUMMIT FINANCIAL GROUP INC. (NASDAQ:  SMMF)        
Loan Composition            
               
Dollars in thousands 6/30/2016 3/31/2016 12/31/2015 9/30/2015 6/30/2015  
               
Commercial   $   101,521   $   101,743   $   97,201   $   89,250   $   97,284    
Mortgage warehouse lines     80,282       -       -       -       -    
Commercial real estate            
  Owner occupied     190,534       202,680       203,555       199,068       191,743    
  Non-owner occupied     348,099       353,350       337,295       336,550       331,056    
Construction and development            
  Land and development     65,702       66,483       65,500       66,164       64,435    
  Construction       8,506       7,997       9,970       8,419       18,214    
Residential real estate            
  Non-jumbo       225,919       221,368       221,749       222,739       220,199    
  Jumbo       52,105       50,057       50,313       46,092       49,203    
  Home equity       75,904       74,097       74,300       73,652       72,504    
Consumer       19,520       19,095       19,251       19,124       18,683    
Other       10,008       11,235       11,669       12,518       12,423    
Total loans, net of unearned fees     1,178,100       1,108,105       1,090,803       1,073,576       1,075,744    
Less allowance for loan losses     11,377       11,315       11,472       11,228       11,272    
Loans, net $   1,166,723   $   1,096,790   $   1,079,331   $   1,062,348   $   1,064,472    
                                   

 

SUMMIT FINANCIAL GROUP INC. (NASDAQ:  SMMF)  
Deposit Composition   
               
Dollars in thousands   6/30/2016 3/31/2016 12/31/2015 9/30/2015 6/30/2015  
Non interest bearing checking $   120,845   $   122,378   $   119,010   $   118,887   $   113,256    
Interest bearing checking     205,095       210,878       215,721       217,242       202,957    
Savings       306,785       286,695       266,825       259,185       246,949    
Time deposits       463,820       474,593       465,153       476,777       490,148    
Total deposits $   1,096,545   $   1,094,544   $   1,066,709   $   1,072,091   $   1,053,310    
                                   
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF) 
Asset Quality Information 
             
     For the Quarter Ended 
 Dollars in thousands  6/30/2016 3/31/2016 12/31/2015 9/30/2015 6/30/2015
             
  Gross loan charge-offs $   263   $   561   $   132   $   774   $   463  
  Gross loan recoveries     (75 )     (154 )     (126 )     (481 )     (407 )
    Net loan charge-offs $   188   $   407   $   6   $   293   $   56  
             
  Net loan charge-offs to average loans (annualized)   0.07 %   0.15 %   0.00 %   0.11 %   0.02 %
  Allowance for loan losses $   11,377   $   11,315   $   11,472   $   11,228   $   11,272  
  Allowance for loan losses as a percentage          
    of period end loans   0.97 %   1.02 %   1.05 %   1.05 %   1.05 %
  Nonperforming assets:          
    Nonperforming loans          
    Commercial $   399   $   430   $   853   $   884   $   1,065  
    Commercial real estate     5,773       6,140       5,955       5,294       2,421  
    Commercial construction and development     -       -       -       -       -  
    Residential construction and development     5,400       5,467       5,623       5,345       5,627  
    Residential real estate     3,531       3,248       3,245       3,881       4,433  
    Consumer     91       121       92       53       45  
  Total nonperforming loans     15,194       15,406       15,768       15,457       13,591  
    Foreclosed properties          
    Commercial     -       -       -       -       -  
    Commercial real estate     976       976       1,300       3,209       3,279  
    Commercial construction and development     8,708       8,717       8,717       9,328       10,178  
    Residential construction and development     12,989       13,808       14,068       14,965       15,839  
    Residential real estate     752       1,183       1,482       2,211       2,204  
  Total foreclosed properties     23,425       24,684       25,567       29,713       31,500  
    Other repossessed assets     38       -       5       -       55  
  Total nonperforming assets $   38,657   $   40,090   $   41,340   $   45,170   $   45,146  
             
  Nonperforming loans to period end loans   1.29 %   1.39 %   1.45 %   1.44 %   1.26 %
  Nonperforming assets to period end assets   2.47 %   2.66 %   2.77 %   3.07 %   3.05 %
             

 

Loans Past Due 30-89 Days
     For the Quarter Ended 
 In thousands  6/30/2016 3/31/2016 12/31/2015 9/30/2015 6/30/2015
             
  Commercial $   422   $   465   $   339   $   42   $   344  
  Commercial real estate     214       920       543       1,926       4,945  
  Construction and development     520       218       1,182       39       21  
  Residential real estate     4,763       3,055       4,442       3,888       3,932  
  Consumer     177       73       186       216       211  
  Other     12       14       9       9       7  
    Total $   6,108   $   4,745   $   6,701   $   6,120   $   9,460  
                                 
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)  
Average Balance Sheet, Interest Earnings & Expenses and Average Rates  
Q2 2016 vs Q2 2015   
  Q2 2016   Q2 2015  
  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 $   1,126,519   $   13,488     4.82 %   $   1,046,203   $   12,854     4.93 %  
  Tax-exempt     14,554       203     5.61 %       12,466       179     5.76 %  
  Securities                
  Taxable     211,624       1,062     2.02 %       216,063       1,093     2.03 %  
  Tax-exempt     71,649       900     5.05 %       74,430       898     4.84 %  
  Interest bearing deposits other banks                
  and Federal funds sold     9,152       4     0.18 %       7,923       1     0.05 %  
Total interest earning assets     1,433,498       15,657     4.39 %       1,357,085       15,025     4.44 %  
                 
Noninterest earning assets                
  Cash & due from banks     3,752             3,973        
  Premises & equipment     21,517             20,409        
  Other assets     89,773             96,231        
  Allowance for loan losses     (11,420 )           (11,095 )      
  Total assets $   1,537,120         $   1,466,603        
                 
 LIABILITIES AND SHAREHOLDERS' EQUITY              
                 
Liabilities                
Interest bearing liabilities                
  Interest bearing                 
  demand deposits $   205,242   $   79     0.15 %   $   206,597   $   59     0.11 %  
  Savings deposits     295,402       550     0.75 %       251,802       429     0.68 %  
  Time deposits     471,343       1,526     1.30 %       486,396       1,586     1.31 %  
  Short-term borrowings     183,673       419     0.92 %       154,704       125     0.32 %  
  Long-term borrowings and                
  subordinated debentures     94,568       975     4.15 %       100,583       1,001     3.99 %  
Total interest bearing liabilities     1,250,228       3,549     1.14 %       1,200,082       3,200     1.07 %  
                 
Noninterest bearing liabilities                
  Demand deposits     120,118             114,327        
  Other liabilities     19,044             14,771        
  Total liabilities     1,389,390             1,329,180        
                 
Shareholders' equity - preferred     -             -        
Shareholders' equity - common     147,730             137,423        
  Total liabilities and                                        
  shareholders' equity $   1,537,120         $   1,466,603        
                 
NET INTEREST EARNINGS   $   12,108         $   11,825      
                 
NET INTEREST MARGIN       3.40 %         3.49 %  
                 
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)  
Average Balance Sheet, Interest Earnings & Expenses and Average Rates  
YTD 2016 vs YTD 2015   
     
  YTD 2016   YTD 2015  
  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 $   1,107,801   $   26,778     4.86 %   $   1,040,935   $   25,588     4.96 %  
  Tax-exempt     15,189       424     5.61 %       12,516       353     5.69 %  
  Securities                
  Taxable     210,494       2,146     2.05 %       213,252       2,368     2.24 %  
  Tax-exempt     75,482       1,873     4.99 %       75,744       1,835     4.89 %  
  Interest bearing deposits other banks                
  and Federal funds sold     8,621       7     0.16 %       7,504       2     0.05 %  
Total interest earning assets     1,417,587       31,228     4.43 %       1,349,951       30,146     4.50 %  
                 
Noninterest earning assets                
  Cash & due from banks     3,757             3,827        
  Premises & equipment     21,556             20,307        
  Other assets     89,708             97,454        
  Allowance for loan losses     (11,491 )           (11,166 )      
  Total assets $   1,521,117         $   1,460,373        
                 
 LIABILITIES AND SHAREHOLDERS' EQUITY              
                 
Liabilities                
Interest bearing liabilities                
  Interest bearing                 
  demand deposits $   207,487   $   162     0.16 %   $   203,237   $   118     0.12 %  
  Savings deposits     286,399       1,055     0.74 %       253,093       857     0.68 %  
  Time deposits     471,470       3,106     1.32 %       486,187       3,169     1.31 %  
  Short-term borrowings     176,111       659     0.75 %       149,769       238     0.32 %  
  Long-term borrowings and                
  subordinated debentures     94,811       1,952     4.14 %       103,148       2,041     3.99 %  
      1,236,278       6,934     1.13 %       1,195,434       6,423     1.08 %  
Noninterest bearing liabilities                
  Demand deposits     120,291             114,761        
  Other liabilities     17,485             14,435        
  Total liabilities     1,374,054             1,324,630        
                 
Shareholders' equity - preferred     -             3,602        
Shareholders' equity - common     147,063             132,141        
  Total liabilities and                
  shareholders' equity $   1,521,117         $   1,460,373        
                 
NET INTEREST EARNINGS   $   24,294         $   23,723      
                 
NET INTEREST MARGIN       3.45 %         3.54 %  
                 
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  6/30/2016 3/31/2016 6/30/2015   6/30/2016 6/30/2015  
               
               
 Core earnings applicable to common shares  $   3,895   $   3,950   $   4,069     $   7,705   $   8,394    
               
  FHLB special dividend      -       -       -         -       176    
  Applicable income tax effect      -       -       -         -       (65 )  
  Realized securities gains (losses)      383       393       170         775       650    
  Applicable income tax effect      (142 )     (145 )     (63 )       (287 )     (241 )  
  Merger expense      153       (112 )     -         264       -    
  Applicable income tax effect      (57 )     41       -         (98 )     -    
  Gain (loss) on sale of foreclosed properties      276       6       (103 )       282       (253 )  
  Applicable income tax effect      (102 )     (2 )     38         (104 )     94    
  Write-downs foreclosed properties      (259 )     (109 )     (160 )       (369 )     (732 )  
  Applicable income tax effect      96       40       59         137       271    
      348       112       (59 )       600       (100 )  
 GAAP net income applicable to common shares  $   4,243   $   4,062   $   4,010     $   8,305   $   8,294    
                                   
                                   
                                   
 Core diluted earnings per common share  $   0.37   $   0.37   $   0.39     $   0.75   $   0.78    
               
  FHLB special dividend      -        -       -          -        0.02    
  Applicable income tax effect      -        -       -          -        (0.01 )  
  Realized securities gains (losses)      0.04       0.04       0.02         0.07       0.06    
  Applicable income tax effect      (0.01 )     (0.01 )     (0.01 )       (0.03 )     (0.02 )  
  Merger expense      (0.01 )     (0.01 )     -          (0.02 )     -     
  Applicable income tax effect      -        -        -          0.01       -     
  Gain (loss) on sale of foreclosed properties      0.03       -        (0.01 )       0.03       (0.02 )  
  Applicable income tax effect      (0.01 )     -        -          (0.01 )     0.01    
  Write-downs of foreclosed properties      (0.02 )     (0.01 )     (0.01 )       (0.03 )     (0.07 )  
  Applicable income tax effect      0.01       -        -          0.01       0.03    
      0.03       0.01       (0.01 )       0.03       -     
 GAAP diluted earnings per common share  $   0.40   $   0.38   $   0.38     $   0.78   $   0.78    
                                   
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  6/30/2016 3/31/2016 6/30/2015   6/30/2016 6/30/2015
             
 Total core revenue  $   14,396   $   14,192   $   14,148     $   28,590   $   28,151  
             
  FHLB special dividend     -       -       -         -       176  
  Realized securities gains/(losses)     383       393       170         775       650  
  Other-than-temporary impairment of securities      -       -       -         -       -  
      383       393       170         775       826  
 GAAP total revenue  $   14,779   $   14,585   $   14,318     $   29,365   $   28,977  
                                 
                                 
 Total core noninterest income  $   2,662   $   2,413   $   2,690     $   5,077   $   5,349  
             
  Realized securities gains/(losses)     383       393       170         775       650  
  Other-than-temporary impairment of securities      -       -       -         -       -  
      383       393       170         775       650  
 GAAP total noninterest income  $   3,045   $   2,806   $   2,860     $   5,852   $   5,999  
                                 
                                 
 Total core noninterest expense  $   8,301   $   8,339   $   7,798     $   16,640   $   15,281  
                                 
  Merger expense     153       112       -         264       -  
  (Gains)/losses on sales of foreclosed properties     (276 )     (6 )     103         (282 )     253  
  Write-downs of foreclosed properties      259       109       160         369       732  
      136       215       263         351       985  
 GAAP total noninterest expense  $   8,437   $   8,554   $   8,061     $   16,991   $   16,266