FOR RELEASE 6:00 AM EST, THURSDAY, JANUARY 29, 2009
Contact: Robert S. Tissue, Sr. Vice President & CFO
Telephone: (304) 530-0552
Email: rtissue@SummitFGI.com
SUMMIT FINANCIAL GROUP REPORTS 2008 FOURTH QUARTER AND FULL-YEAR RESULTS
MOOREFIELD, WV -- January 29, 2009 - -- Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ: SMMF) today reported fourth quarter 2008 net income of $3.6 million, or $0.48 per diluted share, compared with earnings from continuing operations of $3.9 million, or $0.52 per diluted share, in the prior-year fourth quarter. For 2008, Summit’s net income was $2.3 million, or $0.31 per diluted share, compared with 2007 earnings from continuing operations of $13.5 million, or $1.85 per diluted share.
Excluding other-than-temporary impairment (“OTTI”) charges primarily relating to investments in Fannie Mae and Freddie Mac preferred stock, aggregating $7.1 million for 2008 ($4.4 million after-tax) and pre-tax gains in the fair value of interest rate swaps of $0.7 million and $1.5 million in 2008 and 2007, respectively, pro forma earnings for the year ended December 31, 2008 were $6.3 million, or $0.85 per diluted share, compared with pro forma net income from continuing operations of $12.6 million, or $1.72 per diluted share for 2007.
Fourth quarter 2008 earnings include an OTTI pre-tax charge of $1.0 million representing a $0.7 million impairment charge on Summit’s investment in Greater Atlantic Financial Corp.’s (“Greater Atlantic”) common stock and $0.3 million in further impairments of its Fannie Mae and Freddie Mac preferred stock. Fourth quarter 2007 earnings include a gain of $0.8 million from changes in the fair value of interest rate swaps. Excluding these non-recurring or non-cash items, fourth quarter pro forma earnings were $4.2 million, or $0.57 per diluted share, in 2008 and $3.4 million, or $0.45 per diluted share in 2007.
H. Charles Maddy III, president and chief executive officer of Summit, stated, “Our core business remains healthy. We continue to see modest loan demand from existing customers, but we’ve become increasingly selective toward new business. Much of our attention has shifted to the resolution of our problem assets, which appear to be stabilizing after their sharp increase last quarter.
“Our workout team has not wasted time. Of the $23.8 million of construction and development loans we identified and transferred to nonaccrual last quarter, we reduced that amount by nearly forty percent. This includes the transfer of $6.8 million to OREO where we have the opportunity to manage the properties more efficiently. This also includes $4.5 million of charge-offs against the reserves we established for that purpose in the third quarter.
“Excluding one-time OTTI issues, swings from changes in fair value, and costs associated with credit administration, our core banking business has remained stable and well under control. Our revenue has increased gradually in synch with modest growth of noninterest expense. We are disappointed that we were not able to
consummate our merger with Greater Atlantic, but we believe its mutual termination was in the best interest of our shareholders, customers and employees.
Highlights for 2008 include:
| · | Strengthening our loan loss reserves to reflect the weaker economy and its current and future impact on asset quality. The $15.5 million loan loss provision recorded this year raised the reserve to 1.40 percent of total loans at year-end, after net loan charge-offs of $7.8 million during the course of the year. |
| · | The impact of the housing crisis as reflected by the impairment of Summit’s investments in Freddie Mac and Fannie Mae preferred stock resulting in $6.4 million in charges recorded relative to these securities in 2008. |
| · | Loan growth of $147.9 million, or 13.9 percent year-over-year, derived principally from commercial and commercial real estate loans. |
| · | Stability of the net interest margin; this continues to be a highlight of Summit’s performance despite the rapid decline of interest rates beginning in third quarter 2007. However, the impact of foregone interest income from nonaccruing loans has negatively impacted the margin in the most recent two quarters. |
| · | The mutual termination of the Greater Atlantic merger agreement. |
Results from Operations
Total revenue, composed of net interest income and noninterest income, was $46.9 million for 2008, up 1.1 percent from prior-year revenue of $46.4 million. Excluding the 2008 impairment charge on securities and the 2008 and 2007 changes in fair value of interest rate swaps, operating revenue for 2008 was $53.3 million, up 18.6 percent from the $44.9 million reported in 2007. Net interest income was $44.1 million, a 12.8 percent increase above the $39.1 million reported for 2007; a 17.0 percent increase in average earning assets over the past twelve months was partially offset by a 13 basis point decline in the net interest margin, which was 3.13 percent for 2008.
Mr. Maddy remarked, "As I have mentioned in the past, our goal has been to maintain a neutral balance sheet and a stable net interest margin, and we have been consistently successful in doing so until the third quarter jump in nonaccruals. Substantially all of our variable rate loans have interest rate floors and our balance sheet is modestly liability sensitive, so we are quite pleased with the current interest rate environment.”
Noninterest income, reported on a GAAP basis, was $2.9 million for 2008 compared with income of $7.4 million for the prior year. Excluding the 2008 OTTI charge of $7.1 million and the pre-tax changes in the fair value of interest rate swaps of $705,000 and $1,478,000 in 2008 and 2007, respectively, noninterest income from operations totaled $9.2 million for 2008 and $5.9 million for 2007. Insurance commissions increased 78.7 percent to $5.1 million for 2008 compared with $2.9 million for 2007, primarily from the purchase of the Kelly Agencies in third quarter 2007.
The $15.5 million provision for loan losses recorded for 2008 was the primary factor contributing to the decline in operating earnings for the year; the 2008 provision increased by $13.4 million above the $2.1 million recorded for 2007. Of this total, the third quarter provision accounted for the lion’s share: $12.0 million, or 77 percent of the 2008 provision. Having identified and reserved for the loss potential in each of third quarter’s new problem loans, Summit recorded a significantly lower provision of
$750,000 in the 2008 fourth quarter. In addition, two-thirds of 2008’s net charge-offs occurred in the fourth quarter: $5.2 million out of total 2008 net-charge-offs of $7.8 million. The Company ended the year with a loan loss reserve of $16.9 million, or 1.40 percent of total loans, up sharply from the prior year-end level: $9.2 million or 0.86 percent of loans.
Noninterest expense for the 2008 full year was $29.4 million, up $4.3 million, or 17.1 percent, from 2007. Salaries and employee benefits rose $2.1 million or 14.6 percent, above 2007 levels, to $16.7 million. The other expense category accounted for $7.9 million, up 30.5 percent, from $6.0 million in 2007; contributing factors include a $454,000 higher FDIC premium and the write-off of capitalized acquisition costs associated with the terminated Greater Atlantic transaction totaling $514,000. Summit's efficiency ratio, based on continuing operations and excluding one-time nonrecurring items, was 52.01 percent for 2008, a 99 basis point improvement over the 2007 ratio of 53.00 percent, benefitting primarily from a higher level of net interest income.
Balance Sheet and Asset Quality
Assets at December 31, 2008 were $1.6 billion, up $191.5 million, or 13.3 percent since the 2007 year-end. Total loans were $1.2 billion at year-end 2008, up $147.9 million, or 13.9 percent over the past twelve months. Year-over-year loan growth was derived foremost from commercial real estate lending, up $67.8 million, or 17.6 percent, followed by residential real estate, up $53.4 million, and commercial loans, up $37.5 million. Construction and development (C&D) was the only loan category to decline, by $9.8 million, or 4.4 percent, to $215.5 million. Growth was paced throughout the year, with a modest pickup in fourth quarter relative to the third.
Commercial real estate and 1-4 family residential mortgages represent 37.3 percent and 31.0 percent of total loans, respectively, at December 31, 2008. Non real estate-related commercial loans accounted for 10.7 percent of the loan portfolio, while C&D loans represented 17.8 percent of the total, down from 21.2 percent at December 31, 2007.
Nonperforming loans were $48.0 million at year-end 2008, or 3.97 percent of total loans, compared with $59.8 million, or 5.13 percent of loans, for the linked quarter, and $10.3 million, or 0.97 percent, for the year-ago quarter. Nonperforming loans were concentrated in the commercial real estate (CRE) category: $24.3 million, equivalent to 5.4 percent of CRE loans. While C&D nonperforming loans represented $18.4 million at year end 2008, this loan category has been aggressively managed and reduced by $10.7 million during this past quarter.
At December 31, 2008, foreclosed real estate was $8.1 million compared with $2.3 million for the linked quarter and $2.1 million for the year-ago quarter. Approximately $6.8 million of the $11.9 million decline in nonperforming loans this past quarter represents foreclosures. Summit believes its own workout team is often better equipped to maximize recoveries on real estate projects and shorten the collection period.
Loans in the 30-89 day delinquent category totaled $8.9 million at December 31, 2008, compared with $13.8 million in the preceding quarter and $8.7 million at December 31, 2007. Residential mortgages accounted for $5.0 million of fourth quarter 2008 30-89 day delinquencies.
The combined level of problem assets, including foreclosed properties, nonaccruing loans, and 30-89 day delinquencies, at December 31, 2008 was $64.9 million, or 4.0 percent of assets; this compares with problem assets of $75.9 million for the linked quarter and $21.1 million for the year-ago quarter, equivalent to 4.8 percent of assets and 1.5 percent of assets, respectively.
The Company recorded net charge-offs of $7.8 million, or 0.68 percent of average loans for 2008 compared with net charge-offs of $1.1 million, or 0.11 percent of average loans for 2007. For the fourth quarter, net charge-offs were $5.2 million, or an annualized 1.75 percent of average loans, compared with $917,000, or an annualized 0.32 percent for the linked quarter, and $285,000, or 0.11 percent annualized for the year earlier period. Following the $12.0 million provision for loan losses taken in the third quarter, the allowance for loan losses rose to 1.87 percent; fourth quarter net charge-offs subsequently reduced the allowance to 1.40 percent as of December 31, 2008, which compared favorably to 0.86 percent at December 31, 2007.
Total deposits at December 31, 2008 were $965.9 million compared with $945.2 million at September 30, 2008 and $828.7 million for the year-ago quarter, an increase of $20.6 million, or 2.2 percent, and $137.2, or 16.6 percent, respectively. Core deposits, which include all in-market CDs regardless of size, were $669.3 million at year-end 2008, approximately 69 percent of total deposits in the current quarter compared with 79 percent in the year-ago quarter. Summit’s remaining funding needs are met through the national broker market and the FHLB borrowings, whichever is less expensive.
Shareholders' equity at December 31, 2008 was $87.2 million, a decrease of 2.4 percent over the last twelve months. Capital ratios for Summit and its banking subsidiary, Summit Community Bank, remain in excess of regulatory requirements for "well-capitalized," the highest regulatory capital requirement under Federal regulation. As of fourth quarter-end 2008, common shares outstanding totaled 7,415,310 compared with 7,408,941 for the 2007 fourth quarter.
ABOUT THE COMPANY
Summit Financial Group, Inc., a financial holding company with total assets of $1.6 billion, operates fifteen banking locations through its wholly-owned community bank, Summit Community Bank, headquartered in Moorefield, West Virginia. Summit also operates Summit Insurance Services, LLC headquartered in Moorefield, West Virginia.
FORWARD-LOOKING STATEMENTS
This press release contains comments or information that constitute forward-looking statements (within the meaning of the Private Securities Litigation Act of 1995) that are based on current expectations that involve a number of risks and uncertainties. Words such as “expects”, “anticipates”, “believes”, “estimates” and other similar expressions or future or conditional verbs such as “will”, “should”, “would” and “could” are intended to identify such forward-looking statements.
Although we believe the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially. Factors that might cause such a difference include changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking laws and regulations; changes in tax laws; the impact of technological advances; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; and changes in the national and local economies. We undertake no obligation to revise these statements following the date of this press release.
NON-GAAP FINANCIAL MEASURES
This press release contains financial information determined by methods other than in accordance with generally accepted accounting principles in the United States of America ("GAAP"). Specifically, Summit adjusted several GAAP performance measures to exclude the effects of the non-cash, other-than-temporary impairment charges on securities and to exclude the effects of the non-cash changes in fair value of interest rate swaps included in its Statements of Income. Management deems these items to be unusual in nature and believes presentations of financial measures excluding the impact of these items provide useful supplemental information that is important for a proper understanding of the operating results of Summit's core business. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | | | | | |
| Quarterly Performance Summary -- Q4 2008 vs Q4 2007 | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | |
| | | For the Quarter Ended | | | Percent | |
| Dollars in thousands | | 12/31/2008 | | | 12/31/2007 | | | Change | |
| Condensed Statements of Income | | | | | | | | | |
| Interest income | | | | | | | | | |
| Loans, including fees | | $ | 19,343 | | | $ | 20,199 | | | | -4.2 | % |
| Securities | | | 4,305 | | | | 3,590 | | | | 19.9 | % |
| Other | | | 1 | | | | 8 | | | | -87.5 | % |
| Total interest income | | | 23,649 | | | | 23,797 | | | | -0.6 | % |
| Interest expense | | | | | | | | | | | | |
| Deposits | | | 7,081 | | | | 7,759 | | | | -8.7 | % |
| Borrowings | | | 5,190 | | | | 5,697 | | | | -8.9 | % |
| Total interest expense | | | 12,271 | | | | 13,456 | | | | -8.8 | % |
| Net interest income | | | 11,378 | | | | 10,341 | | | | 10.0 | % |
| Provision for loan losses | | | 750 | | | | 750 | | | | 0.0 | % |
| Net interest income after provision | | | | | | | | | | | | |
| for loan losses | | | 10,628 | | | | 9,591 | | | | 10.8 | % |
| Noninterest income | | | | | | | | | | | | |
| Insurance commissions | | | 1,200 | | | | 1,157 | | | | 3.7 | % |
| Service fee income | | | 851 | | | | 863 | | | | -1.4 | % |
| Other-than-temporary impairment of securities | | | (1,024 | ) | | | - | | | | n/m | |
| Net cash settlement on interest rate swaps | | | - | | | | (183 | ) | | | n/m | |
| Change in fair value of interest rate swaps | | | - | | | | 783 | | | | n/m | |
| Other income | | | 40 | | | | 78 | | | | -48.7 | % |
| Total noninterest income | | | 1,067 | | | | 2,698 | | | | -60.5 | % |
| Noninterest expense | | | | | | | | | | | | |
| Salaries and employee benefits | | | 4,047 | | | | 4,090 | | | | -1.1 | % |
| Net occupancy expense | | | 463 | | | | 466 | | | | -0.6 | % |
| Equipment expense | | | 567 | | | | 568 | | | | -0.2 | % |
| Professional fees | | | 250 | | | | 152 | | | | 64.5 | % |
| Other expenses | | | 2,534 | | | | 1,634 | | | | 55.1 | % |
| Total noninterest expense | | | 7,861 | | | | 6,910 | | | | 13.8 | % |
| Income from continuing operations before income taxes | | | 3,834 | | | | 5,379 | | | | -28.7 | % |
| Income taxes | | | 277 | | | | 1,511 | | | | -81.7 | % |
| Income from continuing operations | | | 3,557 | | | | 3,868 | | | | -8.0 | % |
| Discontinued operations | | | | | | | | | | | | |
| Exit costs and impairment of long-lived assets | | | - | | | | (435 | ) | | | n/m | |
| Operating income (loss) | | | - | | | | (9,549 | ) | | | n/m | |
| Income (loss) from discontinued operations | | | | | | | | | | | | |
| before income taxes | | | - | | | | (9,984 | ) | | | n/m | |
| Income taxes | | | - | | | | (3,347 | ) | | | n/m | |
| Income (loss) from discontinued operations | | | - | | �� | | (6,637 | ) | | | n/m | |
| | | | | | | | | | | | | |
| Net Income (loss) | | $ | 3,557 | | | $ | (2,769 | ) | | | n/m | |
| | | | | | | | | | | | | |
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | | | |
| Quarterly Performance Summary -- Q4 2008 vs Q4 2007 | | | | | | | |
| | | | | | | |
| | | For the Quarter Ended | | | Percent | |
| | | 12/31/2008 | | | 12/31/2007 | | | Change | |
| Per Share Data | | | | | | | | | |
| Earnings per share from continuing operations | | | | | | | | | |
| Basic | | $ | 0.48 | | | $ | 0.52 | | | | -7.7 | % |
| Diluted | | $ | 0.48 | | | $ | 0.52 | | | | -7.7 | % |
| Earnings per share from discontinued operations | | | | | | | | | | | | |
| Basic | | $ | - | | | $ | (0.89 | ) | | | -100.0 | % |
| Diluted | | $ | - | | | $ | (0.89 | ) | | | -100.0 | % |
| Earnings per share | | | | | | | | | | | | |
| Basic | | $ | 0.48 | | | $ | (0.37 | ) | | | -229.7 | % |
| Diluted | | $ | 0.48 | | | $ | (0.37 | ) | | | -229.7 | % |
| | | | | | | | | | | | | |
| Average shares outstanding | | | | | | | | | | | | |
| Basic | | | 7,411,577 | | | | 7,401,684 | | | | 0.1 | % |
| Diluted | | | 7,434,643 | | | | 7,450,049 | | | | -0.2 | % |
| | | | | | | | | | | | | |
| Performance Ratios | | | | | | | | | | | | |
| Return on average equity | | | 17.08 | % | | | -11.62 | % | | | -247.0 | % |
| Return on average equity - continuing operations | | | 17.08 | % | | | 16.23 | % | | | 5.2 | % |
| Return on average assets | | | 0.89 | % | | | -0.81 | % | | | -209.9 | % |
| Return on average assets - continuing operations | | | 0.89 | % | | | 1.13 | % | | | -21.2 | % |
| Net interest margin | | | 3.04 | % | | | 3.24 | % | | | -6.2 | % |
| Efficiency ratio - continuing operations (A) | | | 51.72 | % | | | 53.03 | % | | | -2.5 | % |
| | | | | | | | | | | | | |
NOTE: (A) – Computed on a tax equivalent basis excluding nonrecurring income and expense items and amortization of intangibles.
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | | | �� | | |
| Annual Performance Summary -- 2008 vs 2007 | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | For the Years Ended | | | Percent | |
| Dollars in thousands | | 12/31/2008 | | | 12/31/2007 | | | Change | |
| Condensed Statements of Income | | | | | | | | | |
| Interest income | | | | | | | | | |
| Loans, including fees | | $ | 77,515 | | | $ | 77,911 | | | | -0.5 | % |
| Securities | | | 15,961 | | | | 13,422 | | | | 18.9 | % |
| Other | | | 8 | | | | 51 | | | | -84.3 | % |
| Total interest income | | | 93,484 | | | | 91,384 | | | | 2.3 | % |
| Interest expense | | | | | | | | | | | | |
| Deposits | | | 27,343 | | | | 34,296 | | | | -20.3 | % |
| Borrowings | | | 22,066 | | | | 18,021 | | | | 22.4 | % |
| Total interest expense | | | 49,409 | | | | 52,317 | | | | -5.6 | % |
| Net interest income | | | 44,075 | | | | 39,067 | | | | 12.8 | % |
| Provision for loan losses | | | 15,500 | | | | 2,055 | | | | 654.3 | % |
| Net interest income after provision | | | | | | | | | | | | |
| for loan losses | | | 28,575 | | | | 37,012 | | | | -22.8 | % |
| Noninterest income | | | | | | | | | | | | |
| Insurance commissions | | | 5,139 | | | | 2,876 | | | | 78.7 | % |
| Service fee income | | | 3,246 | | | | 3,004 | | | | 8.1 | % |
| Realized securities gains/(losses) | | | (6 | ) | | | - | | | | - | |
| Other-than-temporary impairment of securities | | | (7,060 | ) | | | - | | | | - | |
| Net cash settlement on interest rate swaps | | | (170 | ) | | | (727 | ) | | | -76.6 | % |
| Change in fair value of interest rate swaps | | | 705 | | | | 1,478 | | | | -52.3 | % |
| Other income | | | 1,014 | | | | 726 | | | | 39.7 | % |
| Total noninterest income | | | 2,868 | | | | 7,357 | | | | -61.0 | % |
| Noninterest expense | | | | | | | | | | | | |
| Salaries and employee benefits | | | 16,742 | | | | 14,608 | | | | 14.6 | % |
| Net occupancy expense | | | 1,870 | | | | 1,758 | | | | 6.4 | % |
| Equipment expense | | | 2,173 | | | | 2,004 | | | | 8.4 | % |
| Professional fees | | | 723 | | | | 695 | | | | 4.0 | % |
| Other expenses | | | 7,876 | | | | 6,033 | | | | 30.5 | % |
| Total noninterest expense | | | 29,384 | | | | 25,098 | | | | 17.1 | % |
| Income from continuing operations before income taxes | | | 2,059 | | | | 19,271 | | | | -89.3 | % |
| Income taxes | | | (241 | ) | | | 5,734 | | | | -104.2 | % |
| Income from continuing operations | | | 2,300 | | | | 13,537 | | | | -83.0 | % |
| Discontinued operations | | | | | | | | | | | | |
| Exit costs and impairment of long-lived assets | | | - | | | | (312 | ) | | | n/m | |
| Operating income (loss) | | | - | | | | (10,347 | ) | | | n/m | |
| Income (loss) from discontinued operations | | | | | | | | | | | | |
| before income taxes | | | - | | | | (10,659 | ) | | | n/m | |
| Income taxes | | | - | | | | (3,578 | ) | | | n/m | |
| Income (loss) from discontinued operations | | | - | | | | (7,081 | ) | | | n/m | |
| | | | | | | | | | | | | |
| Net Income | | $ | 2,300 | | | $ | 6,456 | | | | -64.4 | % |
| | | | | | | | | | | | | |
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | | | |
| Annual Performance Summary -- 2008 vs 2007 | | | | | | | | | |
| | | | | | | |
| | | For the Years Ended | | | Percent | |
| | | 12/31/2008 | | | 12/31/2007 | | | Change | |
| Per Share Data | | | | | | | | | |
| Earnings per share from continuing operations | | | | | | | | | |
| Basic | | | 0.31 | | | | 1.87 | | | | -83.4 | % |
| Diluted | | | 0.31 | | | | 1.85 | | | | -83.2 | % |
| Earnings per share from discontinued operations | | | | | | | | | | | | |
| Basic | | | - | | | | (0.98 | ) | | | -100.0 | % |
| Diluted | | | - | | | | (0.97 | ) | | | -100.0 | % |
| Earnings per share | | | | | | | | | | | | |
| Basic | | $ | 0.31 | | | $ | 0.89 | | | | -65.2 | % |
| Diluted | | $ | 0.31 | | | $ | 0.88 | | | | -64.8 | % |
| | | | | | | | | | | | | |
| Average shares outstanding | | | | | | | | | | | | |
| Basic | | | 7,411,715 | | | | 7,244,011 | | | | 2.3 | % |
| Diluted | | | 7,446,991 | | | | 7,303,391 | | | | 2.0 | % |
| | | | | | | | | | | | | |
| Performance Ratios | | | | | | | | | | | | |
| Return on average equity | | | 2.59 | % | | | 7.34 | % | | | -64.7 | % |
| Return on average equity - continuing operations | | | 2.59 | % | | | 15.39 | % | | | -83.2 | % |
| Return on average assets | | | 0.15 | % | | | 0.50 | % | | | -70.0 | % |
| Return on average assets - continuing operations | | | 0.15 | % | | | 1.04 | % | | | -85.6 | % |
| Net interest margin | | | 3.13 | % | | | 3.26 | % | | | -4.0 | % |
| Efficiency ratio - continuing operations (A) | | | 52.01 | % | | | 53.00 | % | | | -1.9 | % |
| | | | | | | | | | | | | |
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 | | 12/31/2008 | | | 9/30/2008 | | | 6/30/2008 | | | 3/31/2008 | | | 12/31/2007 | |
| Condensed Statements of Income | | | | | | | | | | | | | | | |
| Interest income | | | | | | | | | | | | | | | |
| Loans, including fees | | $ | 19,343 | | | $ | 18,527 | | | $ | 19,576 | | | $ | 20,069 | | | $ | 20,199 | |
| Securities | | | 4,305 | | | | 4,108 | | | | 3,761 | | | | 3,786 | | | | 3,590 | |
| Other | | | 1 | | | | 2 | | | | 3 | | | | 4 | | | | 8 | |
| Total interest income | | | 23,649 | | | | 22,637 | | | | 23,340 | | | | 23,859 | | | | 23,797 | |
| Interest expense | | | | | | | | | | | | | | | | | | | | |
| Deposits | | | 7,081 | | | | 6,704 | | | | 6,435 | | | | 7,124 | | | | 7,759 | |
| Borrowings | | | 5,190 | | | | 5,549 | | | | 5,530 | | | | 5,796 | | | | 5,697 | |
| Total interest expense | | | 12,271 | | | | 12,253 | | | | 11,965 | | | | 12,920 | | | | 13,456 | |
| Net interest income | | | 11,378 | | | | 10,384 | | | | 11,375 | | | | 10,939 | | | | 10,341 | |
| Provision for loan losses | | | 750 | | | | 12,000 | | | | 1,750 | | | | 1,000 | | | | 750 | |
| Net interest income after provision | | | | | | | | | | | | | | | | | | | | |
| for loan losses | | | 10,628 | | | | (1,616 | ) | | | 9,625 | | | | 9,939 | | | | 9,591 | |
| Noninterest income | | | | | | | | | | | | | | | | | | | | |
| Insurance commissions | | | 1,200 | | | | 1,337 | | | | 1,275 | | | | 1,327 | | | | 1,157 | |
| Service fee income | | | 851 | | | | 828 | | | | 824 | | | | 743 | | | | 863 | |
| Other-than-temporary impairment of securities | | | (1,024 | ) | | | (4,495 | ) | | | (1,541 | ) | | | - | | | | - | |
| Net cash settlement on interest rate swaps | | | - | | | | - | | | | - | | | | (170 | ) | | | (183 | ) |
| Change in fair value of interest rate swaps | | | - | | | | - | | | | - | | | | 705 | | | | 783 | |
| Other income | | | 40 | | | | 155 | | | | 570 | | | | 243 | | | | 78 | |
| Total noninterest income | | | 1,067 | | | | (2,175 | ) | | | 1,128 | | | | 2,848 | | | | 2,698 | |
| Noninterest expense | | | | | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 4,047 | | | | 4,113 | | | | 4,187 | | | | 4,395 | | | | 4,090 | |
| Net occupancy expense | | | 463 | | | | 489 | | | | 443 | | | | 476 | | | | 466 | |
| Equipment expense | | | 567 | | | | 538 | | | | 533 | | | | 534 | | | | 568 | |
| Professional fees | | | 250 | | | | 173 | | | | 182 | | | | 118 | | | | 152 | |
| Other expenses | | | 2,534 | | | | 1,972 | | | | 1,804 | | | | 1,566 | | | | 1,634 | |
| Total noninterest expense | | | 7,861 | | | | 7,285 | | | | 7,149 | | | | 7,089 | | | | 6,910 | |
| Income before income taxes | | | 3,834 | | | | (11,076 | ) | | | 3,604 | | | | 5,698 | | | | 5,379 | |
| Income taxes | | | 277 | | | | (3,402 | ) | | | 1,010 | | | | 1,874 | | | | 1,511 | |
| Income (loss) from continuing operations | | | 3,557 | | | | (7,674 | ) | | | 2,594 | | | | 3,824 | | | | 3,868 | |
| Discontinued operations | | | | | | | | | | | | | | | | | | | | |
| Exit costs and impairment of long-lived assets | | | - | | | | - | | | | - | | | | - | | | | (435 | ) |
| Operating income (loss) | | | - | | | | - | | | | - | | | | - | | | | (9,549 | ) |
| Income (loss) from discontinued operations | | | | | | | | | | | | | | | | | | | | |
| before income taxes | | | - | | | | - | | | | - | | | | - | | | | (9,984 | ) |
| Income taxes | | | - | | | | - | | | | - | | | | - | | | | (3,347 | ) |
| Income (loss) from discontinued operations | | | - | | | | - | | | | - | | | | - | | | | (6,637 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net Income (loss) | | $ | 3,557 | | | $ | (7,674 | ) | | $ | 2,594 | | | $ | 3,824 | | | $ | (2,769 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | | | | | | | | | | | |
| Five Quarter Performance Summary | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | For the Quarter Ended | |
| | | 12/31/2008 | | | 9/30/2008 | | | 6/30/2008 | | | 3/31/2008 | | | 12/31/2007 | |
| Per Share Data | | | | | | | | | | | | | | | |
| Earnings per share from continuing operations | | | | | | | | | | | | | | | |
| Basic | | $ | 0.48 | | | $ | (1.04 | ) | | $ | 0.35 | | | $ | 0.52 | | | $ | 0.52 | |
| Diluted | | $ | 0.48 | | | $ | (1.03 | ) | | $ | 0.35 | | | $ | 0.51 | | | $ | 0.52 | |
| Earnings per share from discontinued operations | | | | | | | | | | | | | | | | | | | | |
| Basic | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | (0.89 | ) |
| Diluted | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | (0.89 | ) |
| Earnings per share | | | | | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.48 | | | $ | (1.04 | ) | | $ | 0.35 | | | $ | 0.52 | | | $ | (0.37 | ) |
| Diluted | | $ | 0.48 | | | $ | (1.03 | ) | | $ | 0.35 | | | $ | 0.51 | | | $ | (0.37 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Average shares outstanding | | | | | | | | | | | | | | | | | | | | |
| Basic | | | 7,411,577 | | | | 7,410,791 | | | | 7,410,217 | | | | 7,408,941 | | | | 7,401,684 | |
| Diluted | | | 7,434,643 | | | | 7,445,242 | | | | 7,448,170 | | | | 7,449,105 | | | | 7,450,049 | |
| | | | | | | | | | | | | | | | | | | | | |
| Performance Ratios | | | | | | | | | | | | | | | | | | | | |
| Return on average equity | | | 17.08 | % | | | -34.71 | % | | | 11.16 | % | | | 16.55 | % | | | -11.62 | % |
| Return on average equity - continuing operations | | | 17.08 | % | | | -34.71 | % | | | 11.16 | % | | | 16.55 | % | | | 16.23 | % |
| Return on average assets | | | 0.89 | % | | | -1.99 | % | | | 0.70 | % | | | 1.06 | % | | | -0.81 | % |
| Return on average assets - continuing operations | | | 0.89 | % | | | -1.99 | % | | | 0.70 | % | | | 1.06 | % | | | 1.13 | % |
| Net interest margin | | | 3.04 | % | | | 2.89 | % | | | 3.33 | % | | | 3.28 | % | | | 3.24 | % |
| Efficiency ratio - continuing operations (A) | | | 51.72 | % | | | 54.52 | % | | | 49.87 | % | | | 52.11 | % | | | 53.03 | % |
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 | | 12/31/2008 | | | 9/30/2008 | | | 6/30/2008 | | | 3/31/2008 | | | 12/31/2007 | |
| | | | | | | | | | | | | | | | |
| Assets | | $ | 1,627,066 | | | $ | 1,567,325 | | | $ | 1,525,978 | | | $ | 1,465,110 | | | $ | 1,435,536 | |
| Securities | | | 350,622 | | | | 327,648 | | | | 307,232 | | | | 302,029 | | | | 300,066 | |
| Loans, net | | | 1,192,157 | | | | 1,145,606 | | | | 1,130,483 | | | | 1,079,223 | | | | 1,052,489 | |
| Intangible assets | | | 9,704 | | | | 9,792 | | | | 9,880 | | | | 9,968 | | | | 10,055 | |
| Retail deposits | | | 669,261 | | | | 663,569 | | | | 634,007 | | | | 652,148 | | | | 652,296 | |
| Brokered time deposits | | | 296,589 | | | | 281,655 | | | | 223,742 | | | | 184,796 | | | | 176,391 | |
| Short-term borrowings | | | 153,100 | | | | 98,316 | | | | 147,900 | | | | 93,950 | | | | 172,055 | |
| Long-term borrowings and | | | | | | | | | | | | | | | | | | | | |
| subordinated debentures | | | 412,337 | | | | 434,016 | | | | 419,775 | | | | 431,918 | | | | 335,327 | |
| Shareholders' equity | | | 87,244 | | | | 80,510 | | | | 91,466 | | | | 91,955 | | | | 89,420 | |
| | | | | | | | | | | | | | | | | | | | | |
| Book value per share | | $ | 11.77 | | | $ | 10.86 | | | $ | 12.34 | | | $ | 12.41 | | | $ | 12.06 | |
| Tangible book value per share | | $ | 10.46 | | | $ | 9.54 | | | $ | 11.01 | | | $ | 11.07 | | | $ | 10.70 | |
| Tangible equity / Tangible assets | | | 4.8 | % | | | 4.5 | % | | | 5.4 | % | | | 5.6 | % | | | 5.6 | % |
| Tier 1 leverage ratio | | | 6.2 | % | | | 6.2 | % | | | 7.0 | % | | | 7.8 | % | | | 7.3 | % |
| SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF) | | | | | | | | | | | | | |
| Loan Composition | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Dollars in thousands | | 12/31/2008 | | | 9/30/2008 | | | 6/30/2008 | | | 3/31/2008 | | | 12/31/2007 | |
| | | | | | | | | | | | | | | | |
| Commercial | | $ | 130,106 | | | $ | 115,106 | | | $ | 112,793 | | | $ | 111,442 | | | $ | 92,599 | |
| Commercial real estate | | | 452,264 | | | | 423,982 | | | | 415,187 | | | | 394,619 | | | | 384,478 | |
| Construction and development | | | 215,465 | | | | 225,582 | | | | 217,623 | | | | 211,052 | | | | 225,270 | |
| Residential real estate | | | 376,026 | | | | 366,989 | | | | 361,009 | | | | 336,985 | | | | 322,640 | |
| Consumer | | | 31,519 | | | | 31,433 | | | | 30,361 | | | | 30,206 | | | | 31,956 | |
| Other | | | 6,061 | | | | 6,240 | | | | 6,206 | | | | 6,395 | | | | 6,641 | |
| Total loans | | | 1,211,441 | | | | 1,169,332 | | | | 1,143,179 | | | | 1,090,699 | | | | 1,063,584 | |
| Less unearned fees and interest | | | 2,351 | | | | 2,293 | | | | 2,347 | | | | 1,878 | | | | 1,903 | |
| Total loans net of unearned fees and interest | | | 1,209,090 | | | | 1,167,039 | | | | 1,140,832 | | | | 1,088,821 | | | | 1,061,681 | |
| Less allowance for loan losses | | | 16,933 | | | | 21,433 | | | | 10,349 | | | | 9,598 | | | | 9,192 | |
| Loans, net | | $ | 1,192,157 | | | $ | 1,145,606 | | | $ | 1,130,483 | | | $ | 1,079,223 | | | $ | 1,052,489 | |
| SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF) | | | | | | | | | | |
| Retail Deposit Composition | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Dollars in thousands | | 12/31/2008 | | | 9/30/2008 | | | 6/30/2008 | | | 3/31/2008 | | | 12/31/2007 | |
| | | | | | | | | | | | | | | | |
| Non interest bearing checking | | $ | 69,808 | | | $ | 70,353 | | | $ | 68,912 | | | $ | 64,111 | | | $ | 65,727 | |
| Interest bearing checking | | | 156,990 | | | | 182,383 | | | | 194,255 | | | | 201,820 | | | | 222,825 | |
| Savings | | | 61,688 | | | | 58,678 | | | | 60,245 | | | | 53,427 | | | | 40,845 | |
| Time deposits | | | 380,775 | | | | 352,155 | | | | 310,595 | | | | 332,790 | | | | 322,899 | |
| Total retail deposits | | $ | 669,261 | | | $ | 663,569 | | | $ | 634,007 | | | $ | 652,148 | | | $ | 652,296 | |
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | | | | | | | | | |
| Asset Quality Information | | | | | | | | | | | | | | | |
| | | For the Quarter Ended | |
| Dollars in thousands | | 12/31/2008 | | | 9/30/2008 | | | 6/30/2008 | | | 3/31/2008 | | | 12/31/2007 | |
| | | | | | | | | | | | | | | | |
| Gross loan charge-offs | | $ | 5,351 | | | $ | 969 | | | $ | 1,079 | | | $ | 646 | | | $ | 332 | |
| Gross loan recoveries | | | (102 | ) | | | (52 | ) | | | (80 | ) | | | (52 | ) | | | (47 | ) |
| Net loan charge-offs | | $ | 5,249 | | | $ | 917 | | | $ | 999 | | | $ | 594 | | | $ | 285 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net loan charge-offs to average loans (annualized) | | | 1.75 | % | | | 0.32 | % | | | 0.36 | % | | | 0.22 | % | | | 0.11 | % |
| Allowance for loan losses | | $ | 16,933 | | | $ | 21,433 | | | $ | 10,349 | | | $ | 9,598 | | | $ | 9,192 | |
| Allowance for loan losses as a percentage | | | | | | | | | | | | | | | | | | | | |
| of period end loans | | | 1.40 | % | | | 1.87 | % | | | 0.91 | % | | | 0.88 | % | | | 0.86 | % |
| Nonperforming assets: | | | | | | | | | | | | | | | | | | | | |
| Nonperforming loans | | $ | 47,969 | | | $ | 59,845 | | | $ | 15,614 | | | $ | 13,957 | | | $ | 10,333 | |
| Foreclosed properties and | | | | | | | | | | | | | | | | | | | | |
| other repossessed assets | | | 8,113 | | | | 2,284 | | | | 2,546 | | | | 2,205 | | | | 2,058 | |
| Total | | $ | 56,082 | | | $ | 62,129 | | | $ | 18,160 | | | $ | 16,162 | | | $ | 12,391 | |
| | | | | | | | | | | | | | | | | | | | | |
| Nonperforming loans to period end loans | | | 3.97 | % | | | 5.13 | % | | | 1.37 | % | | | 1.28 | % | | | 0.97 | % |
| Nonperforming assets to period end assets | | | 3.45 | % | | | 3.96 | % | | | 1.19 | % | | | 1.11 | % | | | 0.86 | % |
| | | | | | | | | | | | | | | | | | | | | |
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | | | | | | | | | |
| Nonperforming Loans | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | For the Quarter Ended | |
| Dollars in thousands | | 12/31/2008 | | | 9/30/2008 | | | 6/30/2008 | | | 3/31/2008 | | | 12/31/2007 | |
| | | | | | | | | | | | | | | | |
| Commercial | | $ | 199 | | | $ | 140 | | | $ | 81 | | | $ | 695 | | | $ | 716 | |
| Commercial real estate | | | 24,323 | | | | 27,347 | | | | 3,184 | | | | 5,095 | | | | 4,346 | |
| Construction and development | | | 18,382 | | | | 29,127 | | | | 6,460 | | | | 3,694 | | | | 2,016 | |
| Residential real estate | | | 4,986 | | | | 2,799 | | | | 5,521 | | | | 4,247 | | | | 3,012 | |
| Consumer | | | 79 | | | | 432 | | | | 368 | | | | 226 | | | | 243 | |
| Total | | $ | 47,969 | | | $ | 59,845 | | | $ | 15,614 | | | $ | 13,957 | | | $ | 10,333 | |
| | | | | | | | | | | | | | | | | | | | | |
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | | | | | | | | | |
| Loans Past Due 30-89 Days | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | For the Quarter Ended | |
| Dollars in thousands | | 12/31/2008 | | | 9/30/2008 | | | 6/30/2008 | | | 3/31/2008 | | | 12/31/2007 | |
| | | | | | | | | | | | | | | | |
| Commercial | | $ | 114 | | | $ | 706 | | | $ | 1,089 | | | $ | 321 | | | $ | 264 | |
| Commercial real estate | | | 195 | | | | 1,407 | | | | 24,606 | | | | 1,249 | | | | 1,604 | |
| Construction and development | | | 2,722 | | | | 1,996 | | | | 9,919 | | | | 1,059 | | | | 997 | |
| Residential real estate | | | 5,009 | | | | 8,537 | | | | 2,962 | | | | 3,792 | | | | 4,485 | |
| Consumer | | | 824 | | | | 1,140 | | | | 979 | | | | 946 | | | | 1,335 | |
| Total | | $ | 8,864 | | | $ | 13,786 | | | $ | 39,555 | | | $ | 7,367 | | | $ | 8,685 | |
| | | | | | | | | | | | | | | | | | | | | |
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | | | | | | |
| Average Balance Sheet, Interest Earnings & Expenses and Average Rates | | | | | | |
| Q4 2008 vs Q4 2007 | | | | | | | | | | | |
| | Q4 2008 | | Q4 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 | | $ | 1,188,368 | | | $ | 19,232 | | | | 6.44 | % | | $ | 1,015,397 | | | $ | 20,075 | | | | 7.84 | % |
| Tax-exempt | | | 8,174 | | | | 168 | | | | 8.18 | % | | | 9,259 | | | | 188 | | | | 8.06 | % |
| Securities | | | | | | | | | | | | | | | | | | | | | | | | |
| Taxable | | | 287,789 | | | | 3,786 | | | | 5.23 | % | | | 234,444 | | | | 3,008 | | | | 5.09 | % |
| Tax-exempt | | | 47,062 | | | | 786 | | | | 6.64 | % | | | 49,760 | | | | 870 | | | | 6.94 | % |
| Interest bearing deposits other banks | | | | | | | | | | | | | | | | | | | | | | | | |
| and Federal funds sold | | | 305 | | | | 1 | | | | 1.30 | % | | | 479 | | | | 9 | | | | 7.45 | % |
| Total interest earning assets | | | 1,531,698 | | | | 23,973 | | | | 6.23 | % | | | 1,309,339 | | | | 24,150 | | | | 7.32 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest earning assets | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash & due from banks | | | 20,799 | | | | | | | | | | | | 14,391 | | | | | | | | | |
| Premises & equipment | | | 22,441 | | | | | | | | | | | | 22,092 | | | | | | | | | |
| Other assets | | | 45,152 | | | | | | | | | | | | 35,362 | | | | | | | | | |
| Allowance for loan losses | | | (21,191 | ) | | | | | | | | | | | (9,033 | ) | | | | | | | | |
| Total assets | | $ | 1,598,899 | | | | | | | | | | | $ | 1,372,151 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest bearing | | | | | | | | | | | | | | | | | | | | | | | | |
| demand deposits | | $ | 165,705 | | | $ | 283 | | | | 0.68 | % | | $ | 225,686 | | | $ | 1,575 | | | | 2.77 | % |
| Savings deposits | | | 58,444 | | | | 240 | | | | 1.63 | % | | | 38,706 | | | | 145 | | | | 1.49 | % |
| Time deposits | | | 663,789 | | | | 6,558 | | | | 3.93 | % | | | 487,609 | | | | 6,039 | | | | 4.91 | % |
| Short-term borrowings | | | 118,801 | | | | 231 | | | | 0.77 | % | | | 147,144 | | | | 1,724 | | | | 4.65 | % |
| Long-term borrowings and | | | | | | | | | | | | | | | | | | | | | | | | |
| subordinated debentures | | | 422,996 | | | | 4,959 | | | | 4.66 | % | | | 299,420 | | | | 3,973 | | | | 5.26 | % |
| | | | 1,429,735 | | | | 12,271 | | | | 3.41 | % | | | 1,198,565 | | | | 13,456 | | | | 4.45 | % |
| Noninterest bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
| Demand deposits | | | 78,180 | | | | | | | | | | | | 68,123 | | | | | | | | | |
| Other liabilities | | | 7,675 | | | | | | | | | | | | 10,131 | | | | | | | | | |
| Total liabilities | | | 1,515,590 | | | | | | | | | | | | 1,276,819 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Shareholders' equity | | | 83,309 | | | | | | | | | | | | 95,332 | | | | | | | | | |
| Total liabilities and | | | | | | | | | | | | | | | | | | | | | | | | |
| shareholders' equity | | $ | 1,598,899 | | | | | | | | | | | $ | 1,372,151 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| NET INTEREST EARNINGS | | | | | | $ | 11,702 | | | | | | | | | | | $ | 10,694 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| NET INTEREST YIELD ON EARNING ASSETS | | | | | | | | 3.04 | % | | | | | | | | | | | 3.24 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | | | | | | | | | | | | |
| Average Balance Sheet, Interest Earnings & Expenses and Average Rates | | | | | | | | | | |
| YTD 2008 vs YTD 2007 | | | | | | | | | | | | | | | | | | |
| | | For the Years Ended December 31, | |
| | | 2008 | | | 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 | | $ | 1,127,808 | | | $ | 77,055 | | | | 6.83 | % | | $ | 963,116 | | | $ | 77,510 | | | | 8.05 | % |
| Tax-exempt | | | 8,528 | | | | 697 | | | | 8.17 | % | | | 9,270 | | | | 738 | | | | 7.96 | % |
| Securities | | | | | | | | | | | | | | | | | | | | | | | | |
| Taxable | | | 264,667 | | | | 13,707 | | | | 5.18 | % | | | 219,605 | | | | 11,224 | | | | 5.11 | % |
| Tax-exempt | | | 49,953 | | | | 3,380 | | | | 6.77 | % | | | 47,645 | | | | 3,289 | | | | 6.90 | % |
| Interest bearing deposits other banks | | | | | | | | | | | | | | | | | | | | | | | | |
| and Federal funds sold | | | 370 | | | | 8 | | | | 2.16 | % | | | 1,011 | | | | 51 | | | | 5.04 | % |
| Total interest earning assets | | | 1,451,326 | | | | 94,847 | | | | 6.54 | % | | | 1,240,647 | | | | 92,812 | | | | 7.48 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest earning assets | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash & due from banks | | | 18,792 | | | | | | | | | | | | 14,104 | | | | | | | | | |
| Premises & equipment | | | 22,154 | | | | | | | | | | | | 22,179 | | | | | | | | | |
| Other assets | | | 38,760 | | | | | | | | | | | | 30,795 | | | | | | | | | |
| Allowance for loan losses | | | (12,980 | ) | | | | | | | | | | | (8,683 | ) | | | | | | | | |
| Total assets | | $ | 1,518,052 | | | | | | | | | | | $ | 1,299,042 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest bearing | | | | | | | | | | | | | | | | | | | | | | | | |
| demand deposits | | $ | 190,066 | | | $ | 2,416 | | | | 1.27 | % | | $ | 227,014 | | | $ | 7,695 | | | | 3.39 | % |
| Savings deposits | | | 55,554 | | | | 908 | | | | 1.63 | % | | | 42,254 | | | | 706 | | | | 1.67 | % |
| Time deposits | | | 568,491 | | | | 24,019 | | | | 4.23 | % | | | 524,389 | | | | 25,895 | | | | 4.94 | % |
| Short-term borrowings | | | 112,383 | | | | 2,392 | | | | 2.13 | % | | | 95,437 | | | | 4,822 | | | | 5.05 | % |
| Long-term borrowings and | | | | | | | | | | | | | | | | | | | | | | | | |
| subordinated debentures | | | 419,454 | | | | 19,674 | | | | 4.69 | % | | | 245,937 | | | | 13,199 | | | | 5.37 | % |
| | | | 1,345,948 | | | | 49,409 | | | | 3.67 | % | | | 1,135,031 | | | | 52,317 | | | | 4.61 | % |
| Noninterest bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
| Demand deposits | | | 75,165 | | | | | | | | | | | | 65,060 | | | | | | | | | |
| Other liabilities | | | 7,976 | | | | | | | | | | | | 11,000 | | | | | | | | | |
| Total liabilities | | | 1,429,089 | | | | | | | | | | | | 1,211,091 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Shareholders' equity | | | 88,963 | | | | | | | | | | | | 87,951 | | | | | | | | | |
| Total liabilities and | | | | | | | | | | | | | | | | | | | | | | | | |
| shareholders' equity | | $ | 1,518,052 | | | | | | | | | | | $ | 1,299,042 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| NET INTEREST EARNINGS | | | | | | $ | 45,438 | | | | | | | | | | | $ | 40,495 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| NET INTEREST YIELD ON EARNING ASSETS | | | | | | | | 3.13 | % | | | | | | | | | | | 3.26 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | | | | | | | | |
| Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | |
| | | For the Quarter Ended | | | For the Years Ended | |
| Dollars in thousands (except per share amounts) | | 12/31/2008 | | | 12/31/2007 | | | 12/31/2008 | | | 12/31/2007 | |
| | | | | | | | | | | | | |
| Income from continuing operations - excluding other- | | | | | | | | | | | | |
| than- temporary charge on securities and change in | | | | | | | | | | | | |
| fair value of interest rate swaps | | $ | 4,202 | | | $ | 3,375 | | | $ | 6,304 | | | $ | 12,606 | |
| | | | | | | | | | | | | | | | | |
| Other-than-temporary impairment charge on securities | | | (1,024 | ) | | | - | | | | (7,060 | ) | | | - | |
| Applicable income tax effect | | | 379 | | | | - | | | | 2,612 | | | | - | |
| Change in fair value of interest rate swaps | | | - | | | | 783 | | | | 705 | | | | 1,478 | |
| Applicable income tax effect | | | - | | | | (290 | ) | | | (261 | ) | | | (547 | ) |
| | | | (645 | ) | | | 493 | | | | (4,004 | ) | | | 931 | |
| | | | | | | | | | | | | | | | | |
| GAAP income from continuing operations | | $ | 3,557 | | | $ | 3,868 | | | $ | 2,300 | | | $ | 13,537 | |
| | | | | | | | | | | | | | | | | |
| Diluted earnings per share from continuing operations - | | | | | | | | | | | | | | | | |
| excluding other-than-temporary impairment charge | | | | | | | | | | | | | | | | |
| on securities | | $ | 0.57 | | | $ | 0.45 | | | $ | 0.85 | | | $ | 1.72 | |
| | | | | | | | | | | | | | | | | |
| Other-than-temporary impairment charge on securities | | | (0.14 | ) | | | - | | | | (0.95 | ) | | | - | |
| Applicable income tax effect | | | 0.05 | | | | - | | | | 0.35 | | | | - | |
| Change in fair value of interest rate swaps | | | - | | | | 0.11 | | | | 0.09 | | | | 0.20 | |
| Applicable income tax effect | | | - | | | | (0.04 | ) | | | (0.03 | ) | | | (0.07 | ) |
| | | | (0.09 | ) | | | 0.07 | | | | (0.54 | ) | | | 0.13 | |
| | | | | | | | | | | | | | | | | |
| GAAP diluted earnings per share | | $ | 0.48 | | | $ | 0.52 | | | $ | 0.31 | | | $ | 1.85 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Total revenue - excluding other-than-temporary | | | | | | | | | | | | | | | | |
| impairment charge on securities and change in fair | | | | | | | | | | | | | | | | |
| value of interest rate swaps | | $ | 13,469 | | | $ | 12,256 | | | $ | 53,298 | | | $ | 44,946 | |
| | | | | | | | | | | | | | | | | |
| Other-than-temporary impairment charge on securities | | | (1,024 | ) | | | - | | | | (7,060 | ) | | | - | |
| Change in fair value of interest rate swaps | | | - | | | | 783 | | | | 705 | | | | 1,478 | |
| | | | (1,024 | ) | | | 783 | | | | (6,355 | ) | | | 1,478 | |
| | | | | | | | | | | | | | | | | |
| GAAP total revenue | | $ | 12,445 | | | $ | 13,039 | | | $ | 46,943 | | | $ | 46,424 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Non-interest income - excluding other-than-temporary | | | | | | | | | | | | | | | | |
| impairment charge on securities and change in fair | | | | | | | | | | | | | | | | |
| value of interest rate swaps | | $ | 2,091 | | | $ | 1,915 | | | $ | 9,223 | | | $ | 5,879 | |
| | | | | | | | | | | | | | | | | |
| Other-than-temporary impairment charge on securities | | | (1,024 | ) | | | - | | | | (7,060 | ) | | | - | |
| Change in fair value of interest rate swaps | | | - | | | | 783 | | | | 705 | | | | 1,478 | |
| | | | (1,024 | ) | | | 783 | | | | (6,355 | ) | | | 1,478 | |
| | | | | | | | | | | | | | | | | |
| GAAP non-interest income | | $ | 1,067 | | | $ | 2,698 | | | $ | 2,868 | | | $ | 7,357 | |
| | | | | | | | | | | | | | | | | |
