FOR RELEASE 6:00 AM EDT, THURSDAY, APRIL 24, 2008
Contact: Robert S. Tissue, Sr. Vice President & CFO
Telephone: (304) 530-0552
Email: rtissue@SummitFGI.com
SUMMIT FINANCIAL GROUP REPORTS FIRST QUARTER 2008 EARNINGS
EPS Grows 24.4 Percent to $0.51
MOOREFIELD, WV -- April 24, 2008 – Summit Financial Group, Inc. (the “Company” or “Summit”) (NASDAQ: SMMF) today reported net income for first quarter 2008 of $3.8 million or $0.51 per diluted share. First quarter 2007 income from continuing operations was $2.9 million, or $0.41 per diluted share; this excludes income from substantially all business activities of Summit Mortgage, its residential mortgage loan origination unit, which ceased operations in January 2007. Net income for first quarter 2008 increased 30.3 percent and 24.4 percent per diluted share, respectively, from 2007 first quarter income from continuing operations. Excluding mark-to-market changes in fair value of interest rate swaps, pro forma first quarter net income was $3.4 million for 2008 compared with $2.8 million pro forma income from continuing operations for 2007. First quarter 2008 results reflect strong loan growth year over year, a stable net interest margin, and exceptional growth in noninterest income derived from Summit’s insurance operations.
For the first quarter of 2008, the returns on average shareholders' equity and average assets in accordance with GAAP were 16.55 percent and 1.06 percent, respectively, compared with prior-year first quarter ratios of 14.35 percent and 0.94 percent, excluding discontinued operations.
Highlights of the first quarter include:
| · | Strong loan growth year-over-year and year-to-date 2008 |
| · | Stable net interest margin |
| · | Termination of agreement to acquire Reston, VA-based Greater Atlantic Financial Corp. |
H. Charles Maddy, III, president and chief executive officer of Summit, commented, "Earnings growth continues to be strong, despite the growing weakness in the general economy, which is even affecting some of our more affluent communities. We still benefit from the resilient markets in which we operate. However, life is not as easy as it used to be, especially for bankers. Notwithstanding, we still enjoy robust profit growth derived primarily from the strength of our revenue stream. Net interest income is strong from a combination of margin stability and loan growth, although originations have been moderating since year-end. Fee income is a bright spot for us; we are well on the way to achieving the diversity and growth in noninterest income that is one of Summit’s important strategic objectives. Our recently-acquired Kelly Agencies has generated approximately $1 million dollars of commission income per quarter, and we believe there are still many opportunities ahead for our insurance agency.
“Credit quality issues are taking up more of our time these days, but we believe we are still ahead of the curve. We began this cycle with a very clean portfolio, and now we have 1.1 percent of our portfolio classified as nonperforming. However, our markets are some of the fastest growing and most affluent in the country, and I am confident that these properties will be snapped up as soon as it is apparent that the bottom has arrived.
“We announced earlier this month that we exercised our right to terminate our agreement with Greater Atlantic Financial Corp. (Pink Sheets: GAFC). According to the agreement, either party could terminate if the acquisition wasn’t closed by March 31, 2008. We have re-entered negotiations with Greater Atlantic toward structuring a new deal; however, it is too early to tell what the outcome may be.”
Total revenue was $13.8 million for the first quarter of 2008, up 34.4 percent from first quarter 2007 revenue of $10.3 million. Net interest income for the current quarter was $10.9 million, up 18.9 percent from the year-ago quarter, from the combined impact of a 16.0 percent increase in average earning assets and a two basis point increase in the net interest margin, to 3.28 percent; year over year, Summit’s quarterly net interest margin has ranged from 3.24 percent to 3.28 percent. Mr. Maddy commented, "Our net interest margin has remained within a narrow band over the past twelve months, benefiting from our balanced portfolio of earning assets. We are modestly liability-sensitive, which should continue to contribute to the stability of our net interest margin in the current rate environment.”
Noninterest income, reported on a GAAP basis, was $2.9 million for the current first quarter compared with $1.1 million for the year-ago quarter, an increase of 169.7 percent. Excluding changes in fair value of interest rate swaps and the net cash settlement of interest on these swaps of $535,000 in the 2008 quarter and $42,000 in the 2007 quarter, and further excluding the approximate $1.1 million of insurance revenues contributed by the Kelly Agencies in the 2008 quarter, pro forma noninterest income on a comparable basis with the 2007 first quarter was $1.2 million, up $200,000 or 19.6 percent above pro forma noninterest income of $1.0 million for first quarter of 2007. Service fees for the 2008 quarter were $743,000, an increase of 20.4 percent over last year; apart from the aforementioned adjustments, service fees accounted for approximately 61 percent of pro forma 2008 noninterest income.
The provision for loan losses was $1.0 million this quarter, an increase of $250,000 or 33.3 percent above 2007 fourth quarter, and $610,000 above the first quarter of last year. The larger provision addresses the increasing weakness of Summit’s asset quality over the course of the past twelve months. Net loan charge-offs were $594,000 for the current quarter, and nonperforming assets were $16.2 million, an increase of $3.8 million from the linked quarter.
For the first quarter of 2007, noninterest expense was $7.1 million, up 25.5 percent or $1.4 million from the first quarter of 2007. More relevant is a comparison with the linked quarter which includes operations of the Kelly Agencies, acquired in the third quarter of 2007; noninterest expense grew 2.6 percent or $179,000 from the fourth quarter of 2007. Salaries and employee benefits, the major expense category, were $4.4 million, up $305,000 or 7.5 percent (29.8 percent annualized) from the fourth quarter of 2007. The efficiency ratio was 52.11 percent for the first quarter of 2008, an improvement from 53.03 percent for the linked quarter and 53.50 percent for the first quarter of 2007 (both 2007 ratios from continuing operations).
Assets at March 31, 2008 were $1.5 billion, an increase of $210.6 million, or 16.8 percent, over the prior-year first quarter. Loans, net of unearned income, were $1.1 billion at period end, up $148.5 million or 15.9 percent year over year. Loan growth over the past twelve months was led by commercial real estate (CRE), residential real estate, and commercial loans, with growth of $68.5 million, $54.4 million, and $42.7 million, respectively. Loan growth slowed from year-end 2007, advancing only $27.1 million during the first quarter of 2008 or 10.2 percent (annualized). Strong commercial loan growth – up $19.8 million or 85.4 percent annualized – was offset by a $15.5 million reduction in Construction and Development (C&D) loans, down 27.6 percent annualized.
Although nonperforming assets have more than tripled over the past year, the level of troubled credits still remains within reasonable limits in the context of the current banking environment. At March 31, 2008, nonperforming assets were $16.2 million, or 1.11 percent of total assets, compared with $12.4 million, or 0.86 percent for the linked quarter and $4.5 million, or 0.36 percent, for the year-ago quarter. Of this total, $2.2 million in 2008 was foreclosed real estate or repossessed assets, $147,000 higher than fourth quarter 2007 and $2.2 million above the year-ago first quarter.
Nonperforming loans of $14.0 million were concentrated in three major categories: commercial real estate with $5.1 million of nonperforming loans, or 1.3 percent of the CRE portfolio, C&D with $3.7 million of nonperforming loans, or 1.8 percent of the C&D portfolio, and residential real estate has $4.2 million of nonperforming loans, or 1.3 percent of the residential real estate portfolio.
Mr. Maddy added, “We have solid real estate as collateral for the majority of our problem loans, and virtually all of these loans carry a personal guaranty of the borrower.” For the current quarter, the Company had net charge-offs of $594,000, or an annualized 0.22 percent of average loans, compared with $285,000, or an annualized 0.11 percent for the linked quarter, and $119,000, or 0.05 percent annualized for the year earlier period. At March 31, 2008, loan loss reserves were 0.88 percent of loans outstanding.
Total deposits at March 31, 2008 were $836.9 million compared with $877.2 million at March 31, 2007, a decrease of $40.3 million or 4.6 percent. Brokered deposits declined by $69.0 million or 27.2 percent over the past year, to $184.8 million at March 31, 2008, while Summit's retail deposit portfolio increased by $28.7 million, or 4.6 percent, to $652.1 million. Retail deposits now account for 77.9 percent of total deposits, compared with 71.1 percent at March 31, 2007. Over the past twelve months, the cost of deposits has declined 15.1 percent, from 4.44 percent for first quarter 2007 to 3.77 percent for the current quarter, well in excess of the 8.2 percent decline in loan yields.
Shareholders' equity at March 31, 2008 was $92.0 million, an increase of 12.2 percent over the last twelve months. Common shares outstanding totaled 7,408,941 at quarter-end, compared with 7,084,980 at March 31, 2007. 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 $1.5 billion, provides community banking and insurance services. Summit Community Bank, its wholly-owned community bank, operates fifteen banking offices located in the Shenandoah Valley and Northern regions of Virginia and the Eastern Panhandle and South Central regions of West Virginia. 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 GAAP earnings 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 -- Q1 2008 vs Q1 2007 | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | |
| | | For the Quarter Ended | | | Percent | |
| Dollars in thousands | | 3/31/2008 | | | 3/31/2007 | | | Change | |
| Condensed Statements of Income | | | | | | | | | |
| Interest income | | | | | | | | | |
| Loans, including fees | | $ | 20,069 | | | $ | 18,712 | | | | 7.3 | % |
| Securities | | | 3,786 | | | | 3,124 | | | | 21.2 | % |
| Other | | | 4 | | | | 6 | | | | -33.3 | % |
| Total interest income | | | 23,859 | | | | 21,842 | | | | 9.2 | % |
| Interest expense | | | | | | | | | | | | |
| Deposits | | | 7,124 | | | | 9,028 | | | | -21.1 | % |
| Borrowings | | | 5,796 | | | | 3,611 | | | | 60.5 | % |
| Total interest expense | | | 12,920 | | | | 12,639 | | | | 2.2 | % |
| Net interest income | | | 10,939 | | | | 9,203 | | | | 18.9 | % |
| Provision for loan losses | | | 1,000 | | | | 390 | | | | 156.4 | % |
| Net interest income after provision | | | | | | | | | | | | |
| for loan losses | | | 9,939 | | | | 8,813 | | | | 12.8 | % |
| Noninterest income | | | | | | | | | | | | |
| Insurance commissions | | | 1,327 | | | | 206 | | | | 544.2 | % |
| Service fee income | | | 743 | | | | 617 | | | | 20.4 | % |
| Securities gains (losses) | | | - | | | | - | | | | n/a | |
| Net cash settlement on interest rate swaps | | | (170 | ) | | | (184 | ) | | | -7.6 | % |
| Change in fair value of interest rate swaps | | | 705 | | | | 226 | | | | 211.9 | % |
| Other income | | | 243 | | | | 191 | | | | 27.2 | % |
| Total noninterest income | | | 2,848 | | | | 1,056 | | | | 169.7 | % |
| Noninterest expense | | | | | | | | | | | | |
| Salaries and employee benefits | | | 4,395 | | | | 3,226 | | | | 36.2 | % |
| Net occupancy expense | | | 476 | | | | 418 | | | | 13.9 | % |
| Equipment expense | | | 534 | | | | 446 | | | | 19.7 | % |
| Professional fees | | | 118 | | | | 174 | | | | -32.2 | % |
| Other expenses | | | 1,566 | | | | 1,385 | | | | 13.1 | % |
| Total noninterest expense | | | 7,089 | | | | 5,649 | | | | 25.5 | % |
| Income from continuing operations before income taxes | | | 5,698 | | | | 4,220 | | | | 35.0 | % |
| Income taxes | | | 1,874 | | | | 1,286 | | | | 45.7 | % |
| Income from continuing operations | | | 3,824 | | | | 2,934 | | | | 30.3 | % |
| Discontinued operations | | | | | | | | | | | | |
| Exit costs and impairment of long-lived assets | | | - | | | | 80 | | | | n/m | |
| Operating income (loss) | | | - | | | | (372 | ) | | | n/m | |
| Income (loss) from discontinued operations | | | | | | | | | | | | |
| before income taxes | | | - | | | | (292 | ) | | | n/m | |
| Income taxes | | | - | | | | (97 | ) | | | n/m | |
| Income (loss) from discontinued operations | | | - | | | | (195 | ) | | | n/m | |
| | | | | | | | | | | | | |
| Net Income | | $ | 3,824 | | | $ | 2,739 | | | | 39.6 | % |
| | | | | | | | | | | | | |
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | | | |
| Quarterly Performance Summary -- Q1 2008 vs Q1 2007 | | | | | | | |
| | | | | | | |
| | | For the Quarter Ended | | | Percent | |
| | | 3/31/2008 | | | 3/31/2007 | | | Change | |
| Per Share Data | | | | | | | | | |
| Earnings per share from continuing operations | | | | | | | | | |
| Basic | | $ | 0.52 | | | $ | 0.41 | | | | 26.8 | % |
| Diluted | | $ | 0.51 | | | $ | 0.41 | | | | 24.4 | % |
| Earnings per share from discontinued operations | | | | | | | | | | | | |
| Basic | | $ | - | | | $ | (0.03 | ) | | | n/m | |
| Diluted | | $ | - | | | $ | (0.03 | ) | | | n/m | |
| Earnings per share | | | | | | | | | | | | |
| Basic | | $ | 0.52 | | | $ | 0.39 | | | | 33.3 | % |
| Diluted | | $ | 0.51 | | | $ | 0.38 | | | | 34.2 | % |
| | | | | | | | | | | | | |
| Average shares outstanding | | | | | | | | | | | | |
| Basic | | | 7,408,941 | | | | 7,084,980 | | | | 4.6 | % |
| Diluted | | | 7,449,105 | | | | 7,147,170 | | | | 4.2 | % |
| | | | | | | | | | | | | |
| Performance Ratios | | | | | | | | | | | | |
| Return on average equity | | | 16.55 | % | | | 13.40 | % | | | 23.5 | % |
| Return on average equity - continuing operations | | | 16.55 | % | | | 14.35 | % | | | 15.3 | % |
| Return on average assets | | | 1.06 | % | | | 0.88 | % | | | 20.5 | % |
| Return on average assets - continuing operations | | | 1.06 | % | | | 0.94 | % | | | 12.8 | % |
| Net interest margin | | | 3.28 | % | | | 3.26 | % | | | 0.6 | % |
| Efficiency ratio - continuing operations (A) | | | 52.11 | % | | | 53.50 | % | | | -2.6 | % |
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 | | 3/31/2008 | | | 12/31/2007 | | | 9/30/2007 | | | 6/30/2007 | | | 3/31/2007 | |
| Condensed Statements of Income | | | | | | | | | | | | | | | |
| Interest income | | | | | | | | | | | | | | | |
| Loans, including fees | | $ | 20,069 | | | $ | 20,199 | | | $ | 19,921 | | | $ | 19,079 | | | $ | 18,712 | |
| Securities | | | 3,786 | | | | 3,590 | | | | 3,446 | | | | 3,263 | | | | 3,124 | |
| Other | | | 4 | | | | 8 | | | | 9 | | | | 27 | | | | 6 | |
| Total interest income | | | 23,859 | | | | 23,797 | | | | 23,376 | | | | 22,369 | | | | 21,842 | |
| Interest expense | | | | | | | | | | | | | | | | | | | | |
| Deposits | | | 7,124 | | | | 7,759 | | | | 8,627 | | | | 8,882 | | | | 9,028 | |
| Borrowings | | | 5,796 | | | | 5,697 | | | | 4,753 | | | | 3,960 | | | | 3,611 | |
| Total interest expense | | | 12,920 | | | | 13,456 | | | | 13,380 | | | | 12,842 | | | | 12,639 | |
| Net interest income | | | 10,939 | | | | 10,341 | | | | 9,996 | | | | 9,527 | | | | 9,203 | |
| Provision for loan losses | | | 1,000 | | | | 750 | | | | 525 | | | | 390 | | | | 390 | |
| Net interest income after provision | | | | | | | | | | | | | | | | | | | | |
| for loan losses | | | 9,939 | | | | 9,591 | | | | 9,471 | | | | 9,137 | | | | 8,813 | |
| Noninterest income | | | | | | | | | | | | | | | | | | | | |
| Insurance commissions | | | 1,327 | | | | 1,157 | | | | 1,303 | | | | 209 | | | | 206 | |
| Service fee income | | | 743 | | | | 863 | | | | 788 | | | | 736 | | | | 617 | |
| Securities gains (losses) | | | - | | | | - | | | | - | | | | - | | | | - | |
| Net cash settlement on interest rate swaps | | | (170 | ) | | | (183 | ) | | | (181 | ) | | | (179 | ) | | | (184 | ) |
| Change in fair value of interest rate swaps | | | 705 | | | | 783 | | | | 752 | | | | (273 | ) | | | 226 | |
| Other income | | | 243 | | | | 78 | | | | 244 | | | | 203 | | | | 191 | |
| Total noninterest income | | | 2,848 | | | | 2,698 | | | | 2,906 | | | | 696 | | | | 1,056 | |
| Noninterest expense | | | | | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 4,395 | | | | 4,090 | | | | 4,054 | | | | 3,238 | | | | 3,226 | |
| Net occupancy expense | | | 476 | | | | 466 | | | | 466 | | | | 408 | | | | 418 | |
| Equipment expense | | | 534 | | | | 568 | | | | 496 | | | | 493 | | | | 446 | |
| Professional fees | | | 118 | | | | 152 | | | | 176 | | | | 193 | | | | 174 | |
| Other expenses | | | 1,566 | | | | 1,634 | | | | 1,628 | | | | 1,386 | | | | 1,385 | |
| Total noninterest expense | | | 7,089 | | | | 6,910 | | | | 6,820 | | | | 5,718 | | | | 5,649 | |
| Income before income taxes | | | 5,698 | | | | 5,379 | | | | 5,557 | | | | 4,115 | | | | 4,220 | |
| Income taxes | | | 1,874 | | | | 1,511 | | | | 1,802 | | | | 1,135 | | | | 1,286 | |
| Income from continuing operations | | | 3,824 | | | | 3,868 | | | | 3,755 | | | | 2,980 | | | | 2,934 | |
| Discontinued operations | | | | | | | | | | | | | | | | | | | | |
| Exit costs and impairment of long-lived assets | | | - | | | | (435 | ) | | | - | | | | 43 | | | | 80 | |
| Operating income (loss) | | | - | | | | (9,549 | ) | | | (200 | ) | | | (227 | ) | | | (372 | ) |
| Income (loss) from discontinued operations | | | | | | | | | | | | | | | | | | | | |
| before income taxes | | | - | | | | (9,984 | ) | | | (200 | ) | | | (184 | ) | | | (292 | ) |
| Income taxes | | | - | | | | (3,347 | ) | | | (69 | ) | | | (66 | ) | | | (97 | ) |
| Income (loss) from discontinued operations | | | - | | | | (6,637 | ) | | | (131 | ) | | | (118 | ) | | | (195 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net Income | | $ | 3,824 | | | $ | (2,769 | ) | | $ | 3,624 | | | $ | 2,862 | | | $ | 2,739 | |
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | | | | | | | | | | | |
| Five Quarter Performance Summary | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | For the Quarter Ended | |
| | | 3/31/2008 | | | 12/31/2007 | | | 9/30/2007 | | | 6/30/2007 | | | 3/31/2007 | |
| Per Share Data | | | | | | | | | | | | | | | |
| Earnings per share from continuing operations | | | | | | | | | | | | | | | |
| Basic | | $ | 0.52 | | | $ | 0.52 | | | $ | 0.51 | | | $ | 0.42 | | | $ | 0.41 | |
| Diluted | | $ | 0.51 | | | $ | 0.52 | | | $ | 0.50 | | | $ | 0.42 | | | $ | 0.41 | |
| Earnings per share from discontinued operations | | | | | | | | | | | | | | | | | | | | |
| Basic | | $ | - | | | $ | (0.89 | ) | | $ | (0.02 | ) | | $ | (0.02 | ) | | $ | (0.03 | ) |
| Diluted | | $ | - | | | $ | (0.89 | ) | | $ | (0.02 | ) | | $ | (0.02 | ) | | $ | (0.03 | ) |
| Earnings per share | | | | | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.52 | | | $ | (0.37 | ) | | $ | 0.49 | | | $ | 0.40 | | | $ | 0.39 | |
| Diluted | | $ | 0.51 | | | $ | (0.37 | ) | | $ | 0.48 | | | $ | 0.40 | | | $ | 0.38 | |
| | | | | | | | | | | | | | | | | | | | | |
| Average shares outstanding | | | | | | | | | | | | | | | | | | | | |
| Basic | | | 7,408,941 | | | | 7,401,684 | | | | 7,399,213 | | | | 7,084,980 | | | | 7,084,980 | |
| Diluted | | | 7,449,105 | | | | 7,450,049 | | | | 7,458,515 | | | | 7,148,241 | | | | 7,147,170 | |
| | | | | | | | | | | | | | | | | | | | | |
| Performance Ratios | | | | | | | | | | | | | | | | | | | | |
| Return on average equity | | | 16.55 | % | | | -11.62 | % | | | 16.13 | % | | | 13.59 | % | | | 13.40 | % |
| Return on average equity - continuing operations | | | 16.55 | % | | | 16.23 | % | | | 16.71 | % | | | 14.15 | % | | | 14.35 | % |
| Return on average assets | | | 1.06 | % | | | -0.81 | % | | | 1.11 | % | | | 0.91 | % | | | 0.88 | % |
| Return on average assets - continuing operations | | | 1.06 | % | | | 1.13 | % | | | 1.15 | % | | | 0.94 | % | | | 0.94 | % |
| Net interest margin | | | 3.28 | % | | | 3.24 | % | | | 3.28 | % | | | 3.28 | % | | | 3.26 | % |
| Efficiency ratio - continuing operations (A) | | | 52.11 | % | | | 53.03 | % | | | 53.91 | % | | | 51.46 | % | | | 53.50 | % |
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 | | 3/31/2008 | | | 12/31/2007 | | | 9/30/2007 | | | 6/30/2007 | | | 3/31/2007 | |
| | | | | | | | | | | | | | | | |
| Assets | | $ | 1,465,110 | | | $ | 1,435,536 | | | $ | 1,340,679 | | | $ | 1,280,428 | | | $ | 1,254,528 | |
| Securities | | | 302,029 | | | | 300,066 | | | | 279,289 | | | | 259,526 | | | | 258,173 | |
| Loans, net | | | 1,079,223 | | | | 1,052,489 | | | | 986,437 | | | | 949,175 | | | | 930,769 | |
| Intangible assets | | | 9,968 | | | | 10,055 | | | | 10,143 | | | | 3,121 | | | | 3,159 | |
| Retail deposits | | | 652,147 | | | | 652,296 | | | | 638,633 | | | | 626,617 | | | | 623,431 | |
| Brokered time deposits | | | 184,797 | | | | 176,391 | | | | 189,966 | | | | 223,771 | | | | 253,794 | |
| Short-term borrowings | | | 93,950 | | | | 172,055 | | | | 124,699 | | | | 100,901 | | | | 79,886 | |
| Long-term borrowings and | | | | | | | | | | | | | | | | | | | | |
| subordinated debentures | | | 431,918 | | | | 335,327 | | | | 283,268 | | | | 236,347 | | | | 203,408 | |
| Shareholders' equity | | | 91,955 | | | | 89,420 | | | | 93,475 | | | | 81,910 | | | | 81,950 | |
| | | | | | | | | | | | | | | | | | | | | |
| Book value per share | | $ | 12.41 | | | $ | 12.06 | | | $ | 12.63 | | | $ | 11.56 | | | $ | 11.57 | |
| Tangible book value per share | | $ | 11.07 | | | $ | 10.70 | | | $ | 11.26 | | | $ | 11.12 | | | $ | 11.12 | |
| Tangible equity / Tangible assets | | | 5.6 | % | | | 5.6 | % | | | 6.3 | % | | | 6.2 | % | | | 6.3 | % |
| Tier 1 leverage ratio | | | 7.8 | % | | | 7.3 | % | | | 8.1 | % | | | 7.9 | % | | | 7.9 | % |
| SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF) | | | | | | | | | | | | | |
| Loan Composition | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Dollars in thousands | | 3/31/2008 | | | 12/31/2007 | | | 9/30/2007 | | | 6/30/2007 | | | 3/31/2007 | |
| | | | | | | | | | | | | | | | |
| Commercial | | $ | 112,367 | | | $ | 92,599 | | | $ | 87,018 | | | $ | 81,292 | | | $ | 69,700 | |
| Commercial real estate | | | 398,049 | | | | 384,478 | | | | 352,396 | | | | 354,833 | | | | 329,561 | |
| Construction and development | | | 209,737 | | | | 225,270 | | | | 212,570 | | | | 198,721 | | | | 220,430 | |
| Residential real estate | | | 333,945 | | | | 322,640 | | | | 305,016 | | | | 283,821 | | | | 279,564 | |
| Consumer | | | 30,206 | | | | 31,956 | | | | 33,254 | | | | 33,937 | | | | 33,845 | |
| Other | | | 6,395 | | | | 6,641 | | | | 6,794 | | | | 7,111 | | | | 7,209 | |
| Total loans | | | 1,090,699 | | | | 1,063,584 | | | | 997,048 | | | | 959,715 | | | | 940,309 | |
| Less unearned fees and interest | | | 1,878 | | | | 1,903 | | | | 1,884 | | | | 1,772 | | | | 1,757 | |
| Total loans net of unearned fees and interest | | | 1,088,821 | | | | 1,061,681 | | | | 995,164 | | | | 957,943 | | | | 938,552 | |
| Less allowance for loan losses | | | 9,598 | | | | 9,192 | | | | 8,727 | | | | 8,768 | | | | 7,783 | |
| Loans, net | | $ | 1,079,223 | | | $ | 1,052,489 | | | $ | 986,437 | | | $ | 949,175 | | | $ | 930,769 | |
| SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF) | | | | | | | | | | |
| Retail Deposit Composition | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Dollars in thousands | | 3/31/2008 | | | 12/31/2007 | | | 9/30/2007 | | | 6/30/2007 | | | 3/31/2007 | |
| | | | | | | | | | | | | | | | |
| Non interest bearing checking | | $ | 64,111 | | | $ | 65,727 | | | $ | 65,230 | | | $ | 64,373 | | | $ | 60,645 | |
| Interest bearing checking | | | 201,820 | | | | 222,825 | | | | 230,491 | | | | 230,509 | | | | 230,634 | |
| Savings | | | 53,426 | | | | 40,845 | | | | 39,596 | | | | 41,910 | | | | 44,713 | |
| Time deposits | | | 332,790 | | | | 322,899 | | | | 303,316 | | | | 289,825 | | | | 287,439 | |
| Total retail deposits | | $ | 652,147 | | | $ | 652,296 | | | $ | 638,633 | | | $ | 626,617 | | | $ | 623,431 | |
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | | | | | | | | | |
| Asset Quality Information | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | For the Quarter Ended | |
| Dollars in thousands | | 3/31/2008 | | | 12/31/2007 | | | 9/30/2007 | | | 6/30/2007 | | | 3/31/2007 | |
| | | | | | | | | | | | | | | | |
| Gross loan charge-offs | | $ | 646 | | | $ | 332 | | | $ | 599 | | | $ | 141 | | | $ | 206 | |
| Gross loan recoveries | | | (52 | ) | | | (47 | ) | | | (33 | ) | | | (45 | ) | | | (87 | ) |
| Net loan charge-offs | | $ | 594 | | | $ | 285 | | | $ | 566 | | | $ | 96 | | | $ | 119 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net loan charge-offs to average loans (annualized) | | | 0.22 | % | | | 0.11 | % | | | 0.23 | % | | | 0.04 | % | | | 0.05 | % |
| Allowance for loan losses | | $ | 9,598 | | | $ | 9,192 | | | $ | 8,727 | | | $ | 8,768 | | | $ | 7,783 | |
| Allowance for loan losses as a percentage | | | | | | | | | | | | | | | | | | | | |
| of period end loans | | | 0.88 | % | | | 0.86 | % | | | 0.88 | % | | | 0.91 | % | | | 0.83 | % |
| Nonperforming assets: | | | | | | | | | | | | | | | | | | | | |
| Nonperforming loans | | $ | 13,957 | | | $ | 10,333 | | | $ | 6,916 | | | $ | 7,307 | | | $ | 4,474 | |
| Foreclosed properties and | | | | | | | | | | | | | | | | | | | | |
| other repossessed assets | | | 2,205 | | | | 2,058 | | | | 815 | | | | 851 | | | | 43 | |
| Total | | $ | 16,162 | | | $ | 12,391 | | | $ | 7,731 | | | $ | 8,158 | | | $ | 4,517 | |
| | | | | | | | | | | | | | | | | | | | | |
| Nonperforming loans to period end loans | | | 1.28 | % | | | 0.97 | % | | | 0.69 | % | | | 0.76 | % | | | 0.48 | % |
| Nonperforming assets to period end assets | | | 1.11 | % | | | 0.86 | % | | | 0.58 | % | | | 0.64 | % | | | 0.36 | % |
| | | | | | | | | | | | | | | | | | | | | |
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | | | | | | | | | |
| Nonperforming Loans by Type | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | For the Quarter Ended | |
| Dollars in thousands | | 3/31/2008 | | | 12/31/2007 | | | 9/30/2007 | | | 6/30/2007 | | | 3/31/2007 | |
| | | | | | | | | | | | | | | | |
| Commercial | | $ | 695 | | | $ | 716 | | | $ | 712 | | | $ | 124 | | | $ | 48 | |
| Commercial real estate | | | 5,095 | | | | 4,346 | | | | 582 | | | | 84 | | | | 84 | |
| Construction and development | | | 3,694 | | | | 2,016 | | | | 2,557 | | | | 4,177 | | | | 2,781 | |
| Residential real estate | | | 4,247 | | | | 3,012 | | | | 2,871 | | | | 2,683 | | | | 1,504 | |
| Consumer | | | 226 | | | | 243 | | | | 194 | | | | 239 | | | | 57 | |
| Total nonperforming loans | | $ | 13,957 | | | $ | 10,333 | | | $ | 6,916 | | | $ | 7,307 | | | $ | 4,474 | |
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | | | | | | |
| Average Balance Sheet, Interest Earnings & Expenses and Average Rates | | | | | | |
| Q1 2008 vs Q1 2007 | | | | | | | | | | | |
| | Q1 2008 | | Q1 2007 |
| | | 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 | | $ | 1,073,218 | | | $ | 19,949 | | | | 7.48 | % | | $ | 928,979 | | | $ | 18,665 | | | | 8.15 | % |
| Tax-exempt | | | 8,949 | | | | 183 | | | | 8.22 | % | | | 8,917 | | | | 173 | | | | 7.87 | % |
| Securities | | | | | | | | | | | | | | | | | | | | | | | | |
| Taxable | | | 251,767 | | | | 3,196 | | | | 5.11 | % | | | 208,315 | | | | 2,577 | | | | 5.02 | % |
| Tax-exempt | | | 50,426 | | | | 879 | | | | 7.01 | % | | | 47,289 | | | | 814 | | | | 6.98 | % |
| Interest bearing deposits other banks | | | | | | | | | | | | | | | | | | | | | | | | |
| and Federal funds sold | | | 456 | | | | 3 | | | | 2.65 | % | | | 446 | | | | 5 | | | | 4.55 | % |
| Total interest earning assets | | | 1,384,816 | | | | 24,210 | | | | 7.03 | % | | | 1,193,946 | | | | 22,234 | | | | 7.55 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest earning assets | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash & due from banks | | | 12,613 | | | | | | | | | | | | 13,099 | | | | | | | | | |
| Premises & equipment | | | 22,110 | | | | | | | | | | | | 22,332 | | | | | | | | | |
| Other assets | | | 35,585 | | | | | | | | | | | | 26,993 | | | | | | | | | |
| Allowance for loan losses | | | (9,533 | ) | | | | | | | | | | | (8,135 | ) | | | | | | | | |
| Total assets | | $ | 1,445,591 | | | | | | | | | | | $ | 1,248,235 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest bearing | | | | | | | | | | | | | | | | | | | | | | | | |
| demand deposits | | $ | 207,661 | | | $ | 930 | | | | 1.80 | % | | $ | 221,924 | | | $ | 2,066 | | | | 3.78 | % |
| Savings deposits | | | 46,551 | | | | 195 | | | | 1.68 | % | | | 46,407 | | | | 217 | | | | 1.90 | % |
| Time deposits | | | 506,036 | | | | 5,999 | | | | 4.77 | % | | | 556,525 | | | | 6,745 | | | | 4.92 | % |
| Short-term borrowings | | | 108,898 | | | | 919 | | | | 3.39 | % | | | 72,415 | | | | 958 | | | | 5.37 | % |
| Long-term borrowings and | | | | | | | | | | | | | | | | | | | | | | | | |
| subordinated debentures | | | 409,938 | | | | 4,877 | | | | 4.78 | % | | | 196,005 | | | | 2,653 | | | | 5.49 | % |
| | | | 1,279,084 | | | | 12,920 | | | | 4.06 | % | | | 1,093,276 | | | | 12,639 | | | | 4.69 | % |
| Noninterest bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
| Demand deposits | | | 64,472 | | | | | | | | | | | | 61,288 | | | | | | | | | |
| Other liabilities | | | 9,604 | | | | | | | | | | | | 11,881 | | | | | | | | | |
| Total liabilities | | | 1,353,160 | | | | | | | | | | | | 1,166,445 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Shareholders' equity | | | 92,431 | | | | | | | | | | | | 81,790 | | | | | | | | | |
| Total liabilities and | | | | | | | | | | | | | | | | | | | | | | | | |
| shareholders' equity | | $ | 1,445,591 | | | | | | | | | | | $ | 1,248,235 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| NET INTEREST EARNINGS | | | | | | $ | 11,290 | | | | | | | | | | | $ | 9,595 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| NET INTEREST YIELD ON EARNING ASSETS | | | | | | | | 3.28 | % | | | | | | | | | | | 3.26 | % |
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | |
| Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures | |
| | | | | | | |
| | | | |
| | | For the Quarter Ended | |
| Dollars in thousands | | 3/31/2008 | | | 3/31/2007 | |
| | | | | | | |
| | | | | | | |
| Income from continuing operations - | | | | | | |
| excluding changes in fair | | | | | | |
| value of interest rate swaps | | $ | 3,380 | | | $ | 2,792 | |
| | | | | | | | | |
| Changes in fair value of | | | | | | | | |
| interest rate swaps | | | 705 | | | | 226 | |
| Applicable income tax effect | | | (261 | ) | | | (84 | ) |
| | | | 444 | | | | 142 | |
| GAAP income from continuing | | | | | | | | |
| operations | | $ | 3,824 | | | $ | 2,934 | |
| | | | | | | | | |
