| Exhibit 99 |
FOR RELEASE 4:00 PM EST, THURSDAY, JANUARY 31, 2008
Contact: Robert S. Tissue, Sr. Vice President & CFO
Telephone: (304) 530-0552
Email: rtissue@SummitFGI.com
SUMMIT FINANCIAL GROUP REPORTS EARNINGS FOR THE YEAR AND FOURTH QUARTER 2007
MOOREFIELD, WV -- January 31, 2008--Summit Financial Group, Inc. (NASDAQ: SMMF) today reported fiscal year and fourthquarter 2007 financial results from continuing operations,which excludes from income substantially all business activities of Summit Mortgage, its residential mortgage loan origination unit, which ceased operations in January 2007. Income from continuing operations for 2007 was $13.5 million or $1.85 per diluted share, an increase of 22.4 percent and 20.1 percent, respectively, compared with $11.1 million or $1.54 per diluted share reported for the prior-year. Excluding mark-to-market changes in fair value of interest rate swaps, income from continuing operations was $12.6 million for 2007 compared to $11.1 million for 2006. 2007 results from continuing operations reflect strong loan growth, well-controlled operating expenses and a stable net interest margin year-over-year.
For the fourthquarter of 2007, Summit’s income from continuing operations was $3.9 million or $0.52 per diluted share compared with the $2.7 million or $0.39 per diluted share reported for the prior-year quarter, an increase of 40.7 percent and 33.3 percent, respectively. Excluding mark-to-market changes in fair value of interest rate swaps, fourth quarter 2007 income from continuing operations was $3.4 million compared to $2.7 million for the same period in 2006.
H. Charles Maddy, III, president and chief executive officer of Summit, commented, "This has not been an easy year for the banking industry, and we include Summit in that statement. We continue to perform well by virtue of our strong markets, our conservative loan and administration policies, and the dedication of our staff. We are expanding successfully in a weak banking environment, keeping our expenses in check and our revenues growing proportionately to our asset size. We are seeing some signs of weakness in our loan portfolio, but so far, these have been at a manageable level.”
Highlights of the year include:
| · | Settlement of the Corinthian Mortgage litigation in Q4 |
| · | Completion of the acquisition of the Kelly Agencies in Q3 |
| · | Agreement to acquire Greater Atlantic Financial Corp. in Q2; plan to close in Q1 ‘08 |
| · | Consolidation of our two subsidiary banks under the “Summit Community Bank” name in Q2 |
Mr. Maddy continued, “The big news for us in 2007 is that we have completely exited from our mortgage banking business following settlement of litigation that carried a high price. However, we are relieved to be rid of the uncertainties that have compromised our ability to focus on our core banking business. We are ready to move ahead to close and consolidate our acquisition of Greater Atlantic in the first quarter of 2008. We are confident of our ability to run an outstanding community bank, and Greater Atlantic represents an extension of our core expertise.”
“Our accomplishments this past year position us well for continued growth. We consolidated our two banks into one, unifying our brand and improving our operating efficiency. We completed the acquisition of the Kelly Agencies, two Leesburg, Virginia-based insurance agencies primarily specializing in group health, life and disability benefit plans. This acquisition is already performing well for us, generating approximately $1 million of commission revenue per quarter. Next on our agenda is the completion of the Greater Atlantic acquisition, consisting of five branches in some of the highest growth and wealthiest markets in the country. We anticipate closing on the Greater Atlantic acquisition during the first quarter of 2008.”
Consolidated net income for 2007 was $6.5 million or $0.88 per diluted share, compared with $8.3 million or $1.15 per diluted share reported for 2006, a decline of 21.8 percent and 23.5 percent, respectively. 2007 consolidated results include a loss from discontinued operations related to Summit Mortgage of $7.1 million, or $0.97 per diluted share, which includes a $5.8 million after-tax charge to settle the Corinthian litigation. 2006 results include a loss from discontinued operations of $2.8 million, or $0.39 per diluted share.
On a consolidated basis, Summit reported a fourth quarter 2007 net loss of $2.8 million, or $0.37 per diluted share, compared with net income of $207,000, or $0.03 per diluted share for the prior-year fourth quarter. Consolidated results for the fourth quarter also reflect the above-mentioned 2007 litigation settlement and a charge to terminate the mortgage company in 2006.
For 2007, the returns on average shareholders’ equity and average assets from continuing operations calculated in accordance with GAAP were 15.39 percent and 1.04 percent, respectively, compared with prior-year ratios of 13.99 percent and 0.94 percent. Fourth quarter 2007 returns on average shareholders’ equity and average assets from continuing operations were 16.23 percent and 1.13 percent, respectively, compared with prior-year ratios of 13.37 percent and 0.89 percent.
Total revenues for 2007 were $46.4 million, consisting of $39.0 million of net interest income plus $7.4 million of noninterest income, an increase of 17.4 percent compared to total revenues of $39.5 million in 2006. Net interest income for the year increased 8.8 percent above 2006, reflecting 10.7 percent growth in average earning assets, partially offset by a 12 basis point decline in the net interest margin, to 3.26 percent.
Total revenue for the fourth quarter of 2007 was $13.0 million, up 26.3 percent from fourth quarter 2006 revenue of $10.3 million. Net interest income was $10.3 million, up 10.3 percent from the year-ago quarter, from the combined impact of an 11.6 percent increase in average earning assets and an eight basis point decline in the net interest margin, to 3.24 percent. Mr. Maddy commented, “Unlike many community banks, Summit’s balance sheet is liability-sensitive, and in this sharply declining interest-rate environment, our net interest margin should strengthen. Competitive pressures from loan and deposit pricing still remain formidable, but with respect to loan pricing, some of our competitors are just not quite as competitive as they were in the past.”
Mr. Maddy added, “Our fee-based revenue has been growing solidly. Service fee income is growing incrementally each quarter, and the contribution of insurance commissions surged to approximately 50 percent of noninterest income this quarter (excluding the impact of interest rate swaps from noninterest income). We completed our acquisition of the Kelly Insurance Agencies on July 2, 2007, and for each of the two most recent 2007 quarters, insurance commissions increased by $1 million per quarter.”
For 2007, noninterest income was $7.4 million, up $3.7 million or 102.5 percent from the $3.6 million reported for fiscal 2006. Excluding changes in fair value of interest rate swaps and the net cash settlement of interest on these swaps from fiscal 2007 and 2006, and further excluding the $2.1 million of insurance revenues from the Kelly Agencies acquisition, noninterest income from organic sources was $4.5 million, up $249,000 or 5.8 percent above fiscal 2006. Service fee income increased $246,000, or 8.9 percent, to $3.0 million, compared to $2.8 million for the prior-year. For the fourth quarter of 2007, noninterest income was $2.7 million, up $1.8 million from the $946,000 recorded for the year-ago quarter. Service fee income increased $161,000, or 22.9 percent, to $863,000 for fourth quarter of 2007.
2007 noninterest expense was $25.1 million, a 16.1 percent, or $3.5 million increase over the $21.6 million record for the previous fiscal year. Salaries and benefits accounted for 79.9 percent of the increase, increasing $2.8 million, or 23.6 percent, to $14.6 million for the year; 2007 results include the addition of 34 employees associated with the acquisition of the Kelly Agencies. The efficiency ratio for continuing operations was 53.00 percent for 2007, compared with 52.15 percent for 2006. For the fourth quarter of 2007, noninterest expense was $6.9 million, up 30.4 percent or $1.6 million from the fourth quarter of 2006, and 1.3 percent or $90,000 from the linked quarter. The efficiency ratio (for continuing operations) was 53.03 percent for the fourth quarter of 2007, compared with 49.61 percent for the prior-year fourth quarter, and 53.91 percent for the linked quarter.
Assets at December 31, 2007 were $1.44 billion, an increase of $200.0 million, or 16.2 percent, over the prior-year period. Loans, net of unearned income, were $1.06 billion at period end, up $138.1 million, or 15.0 percent, year over year. Loan growth was distributed across virtually every loan category (except consumer loans); however, commercial real estate (CRE) loans, the largest loan category at 36.1 percent of the portfolio, was also the driver of 2007 loan growth, up $70.3 million year-over-year; CRE contributed approximately 50 percent of total loan growth for the year. Residential real estate, the second largest loan category at 30.3 percent, contributed approximately $40 million of loan growth, mostly in the second half of the year. Growth of construction and development loans slowed substantially this year with only a $9.5 million increase, its portfolio share reduced to 21.2 percent from 23.3 percent at year-end 2006.
At December 31, 2007, nonperforming assets were $12.4 million, or 0.86 percent of total assets, compared with $7.7 million, or 0.58 percent for the linked quarter and $5.4 million, or 0.43 percent for the year-ago quarter. Residential real estate loans account for approximately $4.9 million of nonperforming assets, and construction and development loans – largely residential – accounted for an additional $2.0 million. Commercial real estate loans totaled approximately $2.5 million of nonperforming assets. Mr. Maddy noted, “Although our level of nonperforming assets has doubled as a percent of total assets over the course of the past year, we believe our loans are solidly underwritten and supported by real property that should retain its value better than in many markets. Anticipated population growth should serve to absorb the additional housing inventory within a reasonable timeframe. A bright spot has been the CRE portfolio, which has performed well and has yet to demonstrate substantial signs of weakness.”
For the current quarter, the Company had net charge-offs of $285,000, or an annualized 0.11 percent of average loans, compared with $566,000, or an annualized 0.23 percent for the linked quarter, and $263,000, or 0.11 percent annualized for the year earlier period. Mr. Maddy commented, “We experienced very low charge-offs on loans that are part of our continuing operations. Approximately $464,000 of charge-offs during the year were loans made by Summit Mortgage; when we discontinued its operations earlier this year, we were obligated to provide recourse for up to one year with respect to nonperforming previously sold loans. We reserved accordingly, and the obligation period will end in first quarter 2008. At December 31, 2007, loan loss reserves were 0.86 percent of loans outstanding.
Total deposits at December 31, 2007 were $828.7 million compared with $888.7 million at the prior year-end, a decrease of $60 million or 6.8 percent. Brokered deposits declined by $103.2 million or 36.9 percent over the past year, to $176.4 million at December 31, 2007, while Summit’s retail deposit portfolio increased by $43.2 million, or 7.1 percent, to $652.3 million at year-end 2007. Retail deposits now account for 78.7 percent of total deposits, compared with 68.5 percent at year end 2006.
Shareholders’ equity at December 31, 2007 was $89.4 million, an increase of 13.5 percent over the last twelve months. Common shares outstanding totaled 7,408,941 at year-end, compared with 7,089,680 for the prior-year end. The increase includes the issuance of approximately 318,000 shares during the third quarter of 2007 for the acquisition of the Kelly Agencies.
ABOUT THE COMPANY
Summit Financial Group, Inc., a financial holding company with total assets of $1.44 billion, operates fifteen banking locations through its wholly-owned community bank, Summit Community Bank. Summit also operates Summit Insurance Services, LLC.
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 several GAAP performance measures to exclude the effects of the non-cash changes in fair value of interest rate swaps included in its Statements of Income . Management believes presentations of financial measures excluding the impact of this item 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.
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 economy. We undertake no obligation to revise these statements following the date of this press release.
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | ||||||||||||
| Quarterly Performance Summary -- Q4 2007 vs Q4 2006 | ||||||||||||
| For the Quarter Ended | Percent | |||||||||||
| Dollars in thousands | 12/31/2007 | 12/31/2006 | Change | |||||||||
| Condensed Statements of Income | ||||||||||||
| Interest income | ||||||||||||
| Loans, including fees | $ | 20,199 | $ | 18,746 | 7.8 | % | ||||||
| Securities | 3,590 | 3,131 | 14.7 | % | ||||||||
| Other | 8 | 7 | 14.3 | % | ||||||||
| Total interest income | 23,797 | 21,884 | 8.7 | % | ||||||||
| Interest expense | ||||||||||||
| Deposits | 7,759 | 8,990 | -13.7 | % | ||||||||
| Borrowings | 5,697 | 3,518 | 61.9 | % | ||||||||
| Total interest expense | 13,456 | 12,508 | 7.6 | % | ||||||||
| Net interest income | 10,341 | 9,376 | 10.3 | % | ||||||||
| Provision for loan losses | 750 | 930 | -19.4 | % | ||||||||
| Net interest income after provision | ||||||||||||
| for loan losses | 9,591 | 8,446 | 13.6 | % | ||||||||
| Noninterest income | ||||||||||||
| Insurance commissions | 1,157 | 228 | 407.5 | % | ||||||||
| Service fee income | 863 | 702 | 22.9 | % | ||||||||
| Securities gains (losses) | - | - | n/a | |||||||||
| Net cash settlement on interest rate swaps | (183 | ) | (197 | ) | -7.1 | % | ||||||
| Change in fair value of interest rate swaps | 783 | 50 | 1466.0 | % | ||||||||
| Other income | 78 | 163 | -52.1 | % | ||||||||
| Total noninterest income | 2,698 | 946 | 185.2 | % | ||||||||
| Noninterest expense | ||||||||||||
| Salaries and employee benefits | 4,090 | 2,899 | 41.1 | % | ||||||||
| Net occupancy expense | 466 | 378 | 23.3 | % | ||||||||
| Equipment expense | 568 | 480 | 18.3 | % | ||||||||
| Professional fees | 152 | 252 | -39.7 | % | ||||||||
| Other expenses | 1,634 | 1,291 | 26.6 | % | ||||||||
| Total noninterest expense | 6,910 | 5,300 | 30.4 | % | ||||||||
| Income from continuing operations before income taxes | 5,379 | 4,092 | 31.5 | % | ||||||||
| Income taxes | 1,511 | 1,343 | 12.5 | % | ||||||||
| Income from continuing operations | 3,868 | 2,749 | 40.7 | % | ||||||||
| Discontinued operations | ||||||||||||
| Exit costs and impairment of long-lived assets | (435 | ) | (2,480 | ) | -82.5 | % | ||||||
| Operating income (loss) | (9,549 | ) | (1,373 | ) | 595.5 | % | ||||||
| Income (loss) from discontinued operations | ||||||||||||
| before income taxes | (9,984 | ) | (3,853 | ) | 159.1 | % | ||||||
| Income taxes | (3,347 | ) | (1,311 | ) | 155.3 | % | ||||||
| Income (loss) from discontinued operations | (6,637 | ) | (2,542 | ) | 161.1 | % | ||||||
| Net Income | $ | (2,769 | ) | $ | 207 | -1437.7 | % | |||||
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | ||||||||||||
| Quarterly Performance Summary -- Q4 2007 vs Q4 2006 | ||||||||||||
| For the Quarter Ended | Percent | |||||||||||
| 12/31/2007 | 12/31/2006 | Change | ||||||||||
| Per Share Data | ||||||||||||
| Earnings per share from continuing operations | ||||||||||||
| Basic | $ | 0.52 | $ | 0.39 | 33.3 | % | ||||||
| Diluted | $ | 0.52 | $ | 0.39 | 33.3 | % | ||||||
| Earnings per share from discontinued operations | ||||||||||||
| Basic | $ | (0.89 | ) | $ | (0.36 | ) | 147.2 | % | ||||
| Diluted | $ | (0.89 | ) | $ | (0.36 | ) | 147.2 | % | ||||
| Earnings per share | ||||||||||||
| Basic | $ | (0.37 | ) | $ | 0.03 | -1333.3 | % | |||||
| Diluted | $ | (0.37 | ) | $ | 0.03 | -1333.3 | % | |||||
| Average shares outstanding | ||||||||||||
| Basic | 7,401,684 | 7,091,560 | 4.4 | % | ||||||||
| Diluted | 7,450,049 | 7,150,407 | 4.2 | % | ||||||||
| Performance Ratios | ||||||||||||
| Return on average equity | -11.62 | % | 1.01 | % | -1250.5 | % | ||||||
| Return on average equity - continuing operations | 16.23 | % | 13.37 | % | 21.4 | % | ||||||
| Return on average assets | -0.81 | % | 0.07 | % | -1257.1 | % | ||||||
| Return on average assets - continuing operations | 1.13 | % | 0.89 | % | 27.0 | % | ||||||
| Net interest margin | 3.24 | % | 3.32 | % | -2.4 | % | ||||||
| Efficiency ratio - continuing operations (A) | 53.03 | % | 49.61 | % | 6.9 | % | ||||||
NOTE: (A) – Computed on a tax equivalent basis excluding nonrecurring income and expense items, amortization of intangibles, and changes in fair value of derivatives.
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | ||||||||||||
| Annual Performance Summary -- 2007 vs 2006 | ||||||||||||
| For the Years Ended | Percent | |||||||||||
| Dollars in thousands | 12/31/2007 | 12/31/2006 | Change | |||||||||
| Condensed Statements of Income | ||||||||||||
| Interest income | ||||||||||||
| Loans, including fees | $ | 77,911 | $ | 68,656 | 13.5 | % | ||||||
| Securities | 13,422 | 11,562 | 16.1 | % | ||||||||
| Other | 51 | 60 | -15.0 | % | ||||||||
| Total interest income | 91,384 | 80,278 | 13.8 | % | ||||||||
| Interest expense | ||||||||||||
| Deposits | 34,296 | 28,312 | 21.1 | % | ||||||||
| Borrowings | 18,021 | 16,067 | 12.2 | % | ||||||||
| Total interest expense | 52,317 | 44,379 | 17.9 | % | ||||||||
| Net interest income | 39,067 | 35,899 | 8.8 | % | ||||||||
| Provision for loan losses | 2,055 | 1,845 | 11.4 | % | ||||||||
| Net interest income after provision | ||||||||||||
| for loan losses | 37,012 | 34,054 | 8.7 | % | ||||||||
| Noninterest income | ||||||||||||
| Insurance commissions | 2,876 | 924 | 211.3 | % | ||||||||
| Service fee income | 3,004 | 2,758 | 8.9 | % | ||||||||
| Securities gains (losses) | - | - | - | |||||||||
| Net cash settlement on interest rate swaps | (727 | ) | (533 | ) | 36.4 | % | ||||||
| Change in fair value of interest rate swaps | 1,478 | (91 | ) | -1724.2 | % | |||||||
| Other income | 726 | 575 | 26.3 | % | ||||||||
| Total noninterest income | 7,357 | 3,633 | 102.5 | % | ||||||||
| Noninterest expense | ||||||||||||
| Salaries and employee benefits | 14,608 | 11,821 | 23.6 | % | ||||||||
| Net occupancy expense | 1,758 | 1,557 | 12.9 | % | ||||||||
| Equipment expense | 2,004 | 1,901 | 5.4 | % | ||||||||
| Professional fees | 695 | 892 | -22.1 | % | ||||||||
| Other expenses | 6,033 | 5,438 | 10.9 | % | ||||||||
| Total noninterest expense | 25,098 | 21,609 | 16.1 | % | ||||||||
| Income from continuing operations before income taxes | 19,271 | 16,078 | 19.9 | % | ||||||||
| Income taxes | 5,734 | 5,018 | 14.3 | % | ||||||||
| Income from continuing operations | 13,537 | 11,060 | 22.4 | % | ||||||||
| Discontinued operations | ||||||||||||
| Exit costs and impairment of long-lived assets | (312 | ) | (2,480 | ) | -87.4 | % | ||||||
| Operating income (loss) | (10,347 | ) | (1,750 | ) | 491.3 | % | ||||||
| Income (loss) from discontinued operations | ||||||||||||
| before income taxes | (10,659 | ) | (4,230 | ) | 152.0 | % | ||||||
| Income taxes | (3,578 | ) | (1,427 | ) | 150.7 | % | ||||||
| Income (loss) from discontinued operations | (7,081 | ) | (2,803 | ) | 152.6 | % | ||||||
| Net Income | $ | 6,456 | $ | 8,257 | -21.8 | % | ||||||
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | ||||||||||||
| Annual Performance Summary -- 2007 vs 2006 | ||||||||||||
| For the Years Ended | Percent | |||||||||||
| 12/31/2007 | 12/31/2006 | Change | ||||||||||
| Per Share Data | ||||||||||||
| Earnings per share from continuing operations | ||||||||||||
| Basic | 1.87 | $ | 1.55 | 20.6 | % | |||||||
| Diluted | 1.85 | $ | 1.54 | 20.1 | % | |||||||
| Earnings per share from discontinued operations | ||||||||||||
| Basic | (0.98 | ) | $ | (0.39 | ) | 151.3 | % | |||||
| Diluted | (0.97 | ) | $ | (0.39 | ) | 148.7 | % | |||||
| Earnings per share | ||||||||||||
| Basic | $ | 0.89 | $ | 1.16 | -23.3 | % | ||||||
| Diluted | $ | 0.88 | $ | 1.15 | -23.5 | % | ||||||
| Average shares outstanding | ||||||||||||
| Basic | 7,244,011 | 7,120,518 | 1.7 | % | ||||||||
| Diluted | 7,303,391 | 7,183,281 | 1.7 | % | ||||||||
| Performance Ratios | ||||||||||||
| Return on average equity | 7.34 | % | 10.44 | % | -29.7 | % | ||||||
| Return on average equity - continuing operations | 15.39 | % | 13.99 | % | 10.0 | % | ||||||
| Return on average assets | 0.50 | % | 0.70 | % | -28.6 | % | ||||||
| Return on average assets - continuing operations | 1.04 | % | 0.94 | % | 10.6 | % | ||||||
| Net interest margin | 3.26 | % | 3.38 | % | -3.6 | % | ||||||
| Efficiency ratio - continuing operations (A) | 53.00 | % | 52.15 | % | 1.6 | % | ||||||
NOTE: (A) – Computed on a tax equivalent basis excluding nonrecurring income and expense items, amortization of intangibles, and changes in fair value of derivatives.
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | ||||||||||||||||||||
| Five Quarter Performance Summary | ||||||||||||||||||||
| For the Quarter Ended | ||||||||||||||||||||
| Dollars in thousands | 12/31/2007 | 9/30/2007 | 6/30/2007 | 3/31/2007 | 12/31/2006 | |||||||||||||||
| Condensed Statements of Income | ||||||||||||||||||||
| Interest income | ||||||||||||||||||||
| Loans, including fees | $ | 20,199 | $ | 19,921 | $ | 19,079 | $ | 18,712 | $ | 18,746 | ||||||||||
| Securities | 3,590 | 3,446 | 3,263 | 3,124 | 3,131 | |||||||||||||||
| Other | 8 | 9 | 27 | 6 | 7 | |||||||||||||||
| Total interest income | 23,797 | 23,376 | 22,369 | 21,842 | 21,884 | |||||||||||||||
| Interest expense | ||||||||||||||||||||
| Deposits | 7,759 | 8,627 | 8,882 | 9,028 | 8,990 | |||||||||||||||
| Borrowings | 5,697 | 4,753 | 3,960 | 3,611 | 3,518 | |||||||||||||||
| Total interest expense | 13,456 | 13,380 | 12,842 | 12,639 | 12,508 | |||||||||||||||
| Net interest income | 10,341 | 9,996 | 9,527 | 9,203 | 9,376 | |||||||||||||||
| Provision for loan losses | 750 | 525 | 390 | 390 | 930 | |||||||||||||||
| Net interest income after provision | ||||||||||||||||||||
| for loan losses | 9,591 | 9,471 | 9,137 | 8,813 | 8,446 | |||||||||||||||
| Noninterest income | ||||||||||||||||||||
| Insurance commissions | 1,157 | 1,303 | 209 | 206 | 228 | |||||||||||||||
| Service fee income | 863 | 788 | 736 | 617 | 702 | |||||||||||||||
| Securities gains (losses) | - | - | - | - | - | |||||||||||||||
| Net cash settlement on interest rate swaps | (183 | ) | (181 | ) | (179 | ) | (184 | ) | (197 | ) | ||||||||||
| Change in fair value of interest rate swaps | 783 | 752 | (273 | ) | 227 | 50 | ||||||||||||||
| Other income | 78 | 244 | 203 | 191 | 163 | |||||||||||||||
| Total noninterest income | 2,698 | 2,906 | 696 | 1,057 | 946 | |||||||||||||||
| Noninterest expense | ||||||||||||||||||||
| Salaries and employee benefits | 4,090 | 4,054 | 3,238 | 3,226 | 2,899 | |||||||||||||||
| Net occupancy expense | 466 | 466 | 408 | 418 | 378 | |||||||||||||||
| Equipment expense | 568 | 496 | 493 | 446 | 480 | |||||||||||||||
| Professional fees | 152 | 176 | 193 | 174 | 252 | |||||||||||||||
| Other expenses | 1,634 | 1,628 | 1,386 | 1,385 | 1,291 | |||||||||||||||
| Total noninterest expense | 6,910 | 6,820 | 5,718 | 5,649 | 5,300 | |||||||||||||||
| Income before income taxes | 5,379 | 5,557 | 4,115 | 4,221 | 4,092 | |||||||||||||||
| Income taxes | 1,511 | 1,802 | 1,135 | 1,286 | 1,343 | |||||||||||||||
| Income from continuing operations | 3,868 | 3,755 | 2,980 | 2,935 | 2,749 | |||||||||||||||
| Discontinued operations | ||||||||||||||||||||
| Exit costs and impairment of long-lived assets | (435 | ) | - | 43 | 80 | (2,480 | ) | |||||||||||||
| Operating income (loss) | (9,549 | ) | (200 | ) | (227 | ) | (372 | ) | (1,373 | ) | ||||||||||
| Income (loss) from discontinued operations | ||||||||||||||||||||
| before income taxes | (9,984 | ) | (200 | ) | (184 | ) | (292 | ) | (3,853 | ) | ||||||||||
| Income taxes | (3,347 | ) | (69 | ) | (66 | ) | (97 | ) | (1,311 | ) | ||||||||||
| Income (loss) from discontinued operations | (6,637 | ) | (131 | ) | (118 | ) | (195 | ) | (2,542 | ) | ||||||||||
| Net Income | $ | (2,769 | ) | $ | 3,624 | $ | 2,862 | $ | 2,740 | $ | 207 | |||||||||
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | ||||||||||||||||||||
| Five Quarter Performance Summary | ||||||||||||||||||||
| For the Quarter Ended | ||||||||||||||||||||
| 12/31/2007 | 9/30/2007 | 6/30/2007 | 3/31/2007 | 12/31/2006 | ||||||||||||||||
| Per Share Data | ||||||||||||||||||||
| Earnings per share from continuing operations | ||||||||||||||||||||
| Basic | $ | 0.52 | $ | 0.51 | $ | 0.42 | $ | 0.41 | $ | 0.39 | ||||||||||
| Diluted | $ | 0.52 | $ | 0.50 | $ | 0.42 | $ | 0.41 | $ | 0.39 | ||||||||||
| Earnings per share from discontinued operations | ||||||||||||||||||||
| Basic | $ | (0.89 | ) | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.03 | ) | $ | (0.36 | ) | |||||
| Diluted | $ | (0.89 | ) | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.03 | ) | $ | (0.36 | ) | |||||
| Earnings per share | ||||||||||||||||||||
| Basic | $ | (0.37 | ) | $ | 0.49 | $ | 0.40 | $ | 0.38 | $ | 0.03 | |||||||||
| Diluted | $ | (0.37 | ) | $ | 0.48 | $ | 0.40 | $ | 0.38 | $ | 0.03 | |||||||||
| Average shares outstanding | ||||||||||||||||||||
| Basic | 7,401,684 | 7,399,213 | 7,084,980 | 7,084,980 | 7,091,560 | |||||||||||||||
| Diluted | 7,450,049 | 7,458,515 | 7,148,241 | 7,147,170 | 7,150,407 | |||||||||||||||
| Performance Ratios | ||||||||||||||||||||
| Return on average equity | -11.62 | % | 16.13 | % | 13.59 | % | 13.40 | % | 1.01 | % | ||||||||||
| Return on average equity - continuing operations | 16.23 | % | 16.71 | % | 14.15 | % | 14.35 | % | 13.37 | % | ||||||||||
| Return on average assets | -0.81 | % | 1.11 | % | 0.91 | % | 0.88 | % | 0.07 | % | ||||||||||
| Return on average assets - continuing operations | 1.13 | % | 1.15 | % | 0.94 | % | 0.94 | % | 0.89 | % | ||||||||||
| Net interest margin | 3.24 | % | 3.28 | % | 3.28 | % | 3.26 | % | 3.32 | % | ||||||||||
| Efficiency ratio - continuing operations (A) | 53.03 | % | 53.91 | % | 51.46 | % | 53.50 | % | 49.61 | % | ||||||||||
NOTE: (A) – Computed on a tax equivalent basis excluding nonrecurring income and expense items, amortization of intangibles, and changes in fair value of derivatives.
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | ||||||||||||||||||||
| Selected Balance Sheet Data | ||||||||||||||||||||
| For the Quarter Ended | ||||||||||||||||||||
| Dollars in thousands, except per share amounts | 12/31/2007 | 9/30/2007 | 6/30/2007 | 3/31/2007 | 12/31/2006 | |||||||||||||||
| Assets | $ | 1,435,536 | $ | 1,340,679 | $ | 1,280,428 | $ | 1,254,528 | $ | 1,235,519 | ||||||||||
| Securities | 300,066 | 279,289 | 259,526 | 258,173 | 247,874 | |||||||||||||||
| Loans, net | 1,052,489 | 986,437 | 949,175 | 930,769 | 916,045 | |||||||||||||||
| Intangible assets | 10,055 | 10,143 | 3,121 | 3,159 | 3,197 | |||||||||||||||
| Retail deposits | 652,296 | 638,633 | 626,617 | 623,431 | 609,064 | |||||||||||||||
| Brokered time deposits | 176,391 | 189,966 | 223,771 | 253,794 | 279,623 | |||||||||||||||
| Short-term borrowings | 172,055 | 124,699 | 100,901 | 79,886 | 60,428 | |||||||||||||||
| Long-term borrowings and | ||||||||||||||||||||
| subordinated debentures | 335,327 | 283,268 | 236,347 | 203,408 | 195,698 | |||||||||||||||
| Shareholders' equity | 89,420 | 93,475 | 81,910 | 81,950 | 78,752 | |||||||||||||||
| Book value per share | $ | 12.06 | $ | 12.63 | $ | 11.56 | $ | 11.57 | $ | 11.12 | ||||||||||
| Tangible book value per share | $ | 10.70 | $ | 11.26 | $ | 11.12 | $ | 11.12 | $ | 10.66 | ||||||||||
| Tangible equity / Tangible assets | 5.6 | % | 6.3 | % | 6.2 | % | 6.3 | % | 6.1 | % | ||||||||||
| Tier 1 leverage ratio | 7.3 | % | 8.1 | % | 7.9 | % | 7.9 | % | 7.8 | % | ||||||||||
| SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF) | ||||||||||||||||||||
| Loan Composition | ||||||||||||||||||||
| Dollars in thousands | 12/31/2007 | 9/30/2007 | 6/30/2007 | 3/31/2007 | 12/31/2006 | |||||||||||||||
| Commercial | $ | 92,599 | $ | 87,018 | $ | 81,292 | $ | 69,700 | $ | 69,470 | ||||||||||
| Commercial real estate | 384,478 | 352,396 | 354,833 | 329,561 | 314,199 | |||||||||||||||
| Construction and development | 225,270 | 212,570 | 198,721 | 220,430 | 215,820 | |||||||||||||||
| Residential real estate | 322,640 | 305,016 | 283,821 | 279,564 | 282,512 | |||||||||||||||
| Consumer | 31,956 | 33,255 | 33,937 | 33,845 | 36,455 | |||||||||||||||
| Other | 6,641 | 6,793 | 7,111 | 7,209 | 6,968 | |||||||||||||||
| Total loans | 1,063,584 | 997,048 | 959,715 | 940,309 | 925,424 | |||||||||||||||
| Less unearned fees and interest | 1,903 | 1,884 | 1,772 | 1,757 | 1,868 | |||||||||||||||
| Total loans net of unearned fees and interest | 1,061,681 | 995,164 | 957,943 | 938,552 | 923,556 | |||||||||||||||
| Less allowance for loan losses | 9,192 | 8,727 | 8,768 | 7,783 | 7,511 | |||||||||||||||
| Loans, net | $ | 1,052,489 | $ | 986,437 | $ | 949,175 | $ | 930,769 | $ | 916,045 | ||||||||||
| SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF) | ||||||||||||||||||||
| Retail Deposit Composition | ||||||||||||||||||||
| Dollars in thousands | 12/31/2007 | 9/30/2007 | 6/30/2007 | 3/31/2007 | 12/31/2006 | |||||||||||||||
| Non interest bearing checking | $ | 65,727 | $ | 65,230 | $ | 64,373 | $ | 60,645 | $ | 62,591 | ||||||||||
| Interest bearing checking | 222,825 | 230,491 | 230,509 | 230,634 | 220,167 | |||||||||||||||
| Savings | 40,845 | 39,596 | 41,910 | 44,713 | 47,984 | |||||||||||||||
| Time deposits | 322,899 | 303,316 | 289,825 | 287,439 | 278,322 | |||||||||||||||
| Total retail deposits | $ | 652,296 | $ | 638,633 | $ | 626,617 | $ | 623,431 | $ | 609,064 | ||||||||||
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | ||||||||||||||||||||
| Asset Quality Information | ||||||||||||||||||||
| For the Quarter Ended | ||||||||||||||||||||
| Dollars in thousands | 12/31/2007 | 9/30/2007 | 6/30/2007 | 3/31/2007 | 12/31/2006 | |||||||||||||||
| Gross loan charge-offs | $ | 332 | $ | 599 | $ | 141 | $ | 206 | $ | 313 | ||||||||||
| Gross loan recoveries | (47 | ) | (33 | ) | (45 | ) | (87 | ) | (50 | ) | ||||||||||
| Net loan charge-offs | $ | 285 | $ | 566 | $ | 96 | $ | 119 | $ | 263 | ||||||||||
| Net loan charge-offs to average loans (annualized) | 0.11 | % | 0.23 | % | 0.04 | % | 0.05 | % | 0.11 | % | ||||||||||
| Allowance for loan losses | $ | 9,192 | $ | 8,727 | $ | 8,768 | $ | 7,783 | $ | 7,511 | ||||||||||
| Allowance for loan losses as a percentage | ||||||||||||||||||||
| of period end loans | 0.86 | % | 0.88 | % | 0.91 | % | 0.83 | % | 0.81 | % | ||||||||||
| Nonperforming assets: | ||||||||||||||||||||
| Nonperforming loans | $ | 10,333 | $ | 6,916 | $ | 7,307 | $ | 4,474 | $ | 5,276 | ||||||||||
| Foreclosed properties and | ||||||||||||||||||||
| other repossessed assets | 2,058 | 815 | 851 | 43 | 77 | |||||||||||||||
| Total | $ | 12,391 | $ | 7,731 | $ | 8,158 | $ | 4,517 | $ | 5,353 | ||||||||||
| Nonperforming loans to period end loans | 0.97 | % | 0.69 | % | 0.76 | % | 0.48 | % | 0.57 | % | ||||||||||
| Nonperforming assets to period end assets | 0.86 | % | 0.58 | % | 0.64 | % | 0.36 | % | 0.43 | % | ||||||||||
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | |||||||||||
| Average Balance Sheet, Interest Earnings & Expenses and Average Rates | |||||||||||
| Q4 2007 vs Q4 2006 | |||||||||||
| Q4 2007 | Q4 2006 | ||||||||||
| 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 | $ 1,015,397 | $ 20,075 | 7.84% | $ 914,050 | $ 18,735 | 8.13% | |||||
| Tax-exempt | 9,259 | 188 | 8.06% | 8,591 | 166 | 7.67% | |||||
| Securities | |||||||||||
| Taxable | 234,444 | 3,008 | 5.09% | 202,758 | 2,566 | 5.02% | |||||
| Tax-exempt | 49,760 | 870 | 6.94% | 47,666 | 842 | 7.01% | |||||
| Interest bearing deposits other banks | |||||||||||
| and Federal funds sold | 479 | 9 | 7.45% | 517 | 11 | 8.44% | |||||
| Total interest earning assets | 1,309,339 | 24,150 | 7.32% | 1,173,582 | 22,320 | 7.55% | |||||
| Noninterest earning assets | |||||||||||
| Cash & due from banks | 14,391 | �� 12,393 | |||||||||
| Premises & equipment | 22,092 | 23,309 | |||||||||
| Other assets | 35,362 | 26,786 | |||||||||
| Allowance for loan losses | (9,033) | (7,339) | |||||||||
| Total assets | $ 1,372,151 | $ 1,228,731 | |||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||
| Liabilities | |||||||||||
| Interest bearing liabilities | |||||||||||
| Interest bearing | |||||||||||
| demand deposits | $ 225,686 | $ 1,575 | 2.77% | $ 221,943 | $ 2,066 | 3.69% | |||||
| Savings deposits | 38,706 | 145 | 1.49% | 46,804 | 243 | 2.06% | |||||
| Time deposits | 487,609 | 6,039 | 4.91% | 549,785 | 6,679 | 4.82% | |||||
| Short-term borrowings | 147,144 | 1,724 | 4.65% | 77,044 | 1,040 | 5.36% | |||||
| Long-term borrowings and | |||||||||||
| subordinated debentures | 299,420 | 3,973 | 5.26% | 176,932 | 2,478 | 5.56% | |||||
| 1,198,565 | 13,456 | 4.45% | 1,072,508 | 12,506 | 4.63% | ||||||
| Noninterest bearing liabilities | |||||||||||
| Demand deposits | 68,123 | 63,671 | |||||||||
| Other liabilities | 10,131 | 10,307 | |||||||||
| Total liabilities | 1,276,819 | 1,146,486 | |||||||||
| Shareholders' equity | 95,332 | 82,245 | |||||||||
| Total liabilities and | |||||||||||
| shareholders' equity | $ 1,372,151 | $ 1,228,731 | |||||||||
| NET INTEREST EARNINGS | $ 10,694 | $ 9,814 | |||||||||
| NET INTEREST YIELD ON EARNING ASSETS | 3.24% | 3.32% | |||||||||
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | ||||||||||||||||||||||||
| Average Balance Sheet, Interest Earnings & Expenses and Average Rates | ||||||||||||||||||||||||
| YTD 2007 vs YTD 2006 | ||||||||||||||||||||||||
| For the Years Ended December 31, | ||||||||||||||||||||||||
| 2007 | 2006 | |||||||||||||||||||||||
| 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 | $ | 963,116 | $ | 77,510 | 8.05 | % | $ | 872,017 | $ | 68,915 | 7.90 | % | ||||||||||||
| Tax-exempt | 9,270 | 738 | 7.96 | % | 8,428 | 642 | 7.62 | % | ||||||||||||||||
| Securities | ||||||||||||||||||||||||
| Taxable | 219,605 | 11,224 | 5.11 | % | 193,046 | 9,403 | 4.87 | % | ||||||||||||||||
| Tax-exempt | 47,645 | 3,289 | 6.90 | % | 46,382 | 3,227 | 6.96 | % | ||||||||||||||||
| Interest bearing deposits other banks | ||||||||||||||||||||||||
| and Federal funds sold | 1,011 | 51 | 5.04 | % | 1,216 | 62 | 5.10 | % | ||||||||||||||||
| Total interest earning assets | 1,240,647 | 92,812 | 7.48 | % | 1,121,089 | 82,249 | 7.34 | % | ||||||||||||||||
| Noninterest earning assets | ||||||||||||||||||||||||
| Cash & due from banks | 14,104 | 13,417 | ||||||||||||||||||||||
| Premises & equipment | 22,179 | 23,496 | ||||||||||||||||||||||
| Other assets | 30,795 | 26,422 | ||||||||||||||||||||||
| Allowance for loan losses | (8,683 | ) | (6,849 | ) | ||||||||||||||||||||
| Total assets | $ | 1,299,042 | $ | 1,177,575 | ||||||||||||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||
| Interest bearing liabilities | ||||||||||||||||||||||||
| Interest bearing | ||||||||||||||||||||||||
| demand deposits | $ | 227,014 | $ | 7,695 | 3.39 | % | $ | 215,642 | $ | 7,476 | 3.47 | % | ||||||||||||
| Savings deposits | 42,254 | 706 | 1.67 | % | 42,332 | 554 | 1.31 | % | ||||||||||||||||
| Time deposits | 524,389 | 25,895 | 4.94 | % | 458,864 | 20,282 | 4.42 | % | ||||||||||||||||
| Short-term borrowings | 95,437 | 4,822 | 5.05 | % | 130,771 | 6,612 | 5.06 | % | ||||||||||||||||
| Long-term borrowings and | ||||||||||||||||||||||||
| subordinated debentures | 245,937 | 13,199 | 5.37 | % | 176,422 | 9,455 | 5.36 | % | ||||||||||||||||
| 1,135,031 | 52,317 | 4.61 | % | 1,024,031 | 44,379 | 4.33 | % | |||||||||||||||||
| Noninterest bearing liabilities | ||||||||||||||||||||||||
| Demand deposits | 65,060 | 64,380 | ||||||||||||||||||||||
| Other liabilities | 11,000 | 10,106 | ||||||||||||||||||||||
| Total liabilities | 1,211,091 | 1,098,517 | ||||||||||||||||||||||
| Shareholders' equity | 87,951 | 79,058 | ||||||||||||||||||||||
| Total liabilities and | ||||||||||||||||||||||||
| shareholders' equity | $ | 1,299,042 | $ | 1,177,575 | ||||||||||||||||||||
| NET INTEREST EARNINGS | $ | 40,495 | $ | 37,870 | ||||||||||||||||||||
| NET INTEREST YIELD ON EARNING ASSETS | 3.26 | % | 3.38 | % | ||||||||||||||||||||
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | ||||||||||||||||
| Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures | ||||||||||||||||
| For the Quarter Ended | For the Year Ended | |||||||||||||||
| Dollars in thousands | 12/31/2007 | 12/31/2006 | 12/31/2007 | 12/31/2006 | ||||||||||||
| Income from continuing operations - | ||||||||||||||||
| excluding changes in fair | ||||||||||||||||
| value of interest rate swaps | $ | 3,375 | $ | 2,718 | $ | 12,606 | $ | 11,117 | ||||||||
| Changes in fair value of | ||||||||||||||||
| interest rate swaps | 783 | 49 | 1,478 | (91 | ) | |||||||||||
| Applicable income tax effect | (290 | ) | (18 | ) | (547 | ) | 34 | |||||||||
| 493 | 31 | 931 | (57 | ) | ||||||||||||
| GAAP income from continuing | ||||||||||||||||
| operations | $ | 3,868 | $ | 2,749 | $ | 13,537 | $ | 11,060 | ||||||||