Exhibit 99 |
FOR RELEASE 6:00 AM EDT, FRIDAY, JULY 31, 2009
Contact: Robert S. Tissue, Sr. Vice President & CFO
Telephone: (304) 530-0552
Email: rtissue@SummitFGI.com
SUMMIT FINANCIAL GROUP REPORTS SECOND QUARTER 2009 RESULTS
MOOREFIELD, WV -- July 31, 2009 -- Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ: SMMF) today reported a second quarter 2009 net loss of $3.5 million, or ($0.46) per diluted share, compared with net income of $2.6 million, or $0.35 per diluted share, for the second quarter of 2008. Second quarter 2009 results were impacted by an increased loan loss provision, the special FDIC assessment of $735,000 pretax ($463,000 after-tax, or $0.06 per diluted share), and an other-than-temporary impairment (“OTTI”) charge of $4.8 million ($3.0 million after-tax, or $0.40 per diluted share) relating to the write-downs of residential mortgage-backed securities.
Excluding from second quarter 2009 the one-time OTTI charge of $4.8 million and the FDIC special assessment of $735,000, and from second quarter 2008 an OTTI charge of $1.5 million ($971,000 million after-tax, or $0.13 per diluted share) resulting from the write-down of Fannie Mae and Freddie Mac preferred stock, pro forma second quarter 2009 earnings were approximately $17,000, or $0.00 per diluted share, compared to pro forma earnings of $3.6 million, or $0.48 per diluted share, for the year-ago period.
For the six months ended June 30, 2009, the Company recorded a net loss of $1.7 million, or ($0.23) per diluted share, compared with net income of $6.4 million, or $0.86 per diluted share, for the comparable 2008 six-month period. Excluding from the first six months of 2009 net one-time pre-tax charges of $5.7 million ($3.6 million after-tax), and from the 2008 six-month period net one-time pre-tax charges of $836,000 ($527,000 after-tax), pro forma 2009 earnings were $1.9 million, or $0.25 per diluted share, a decline of 72.0 percent from pro forma earnings of $6.9 million, or $0.93 per diluted share, for the 2008 six month period.
One-time pretax charges in the first half of 2009 include the FDIC special assessment of $735,000, OTTI write-down charges of $4.8 million on residential mortgage-backed securities and $215,000 relating to an equity investment, and for the first six months of 2008, an OTTI write-down of $1.5 million on Freddie Mac and Fannie Mae preferred stock and changes in the fair-value of interest rate swaps of $705,000 ($444,000 after-tax).
H. Charles Maddy III, President and Chief Executive Officer of Summit Financial Group, Inc., commented, “We continue to work through our portfolio of problem assets as thoroughly and efficiently as we possibly can. It is our job one. We made substantial progress this quarter improving our credit profile, particularly with regard to our construction and development portfolio. Our foreclosed real estate is quite a bit higher than last quarter – a trend which will continue as we work through and out of our problem loans."
“Meanwhile, we believe the overall level of our nonperforming assets during this economic downturn has peaked, and we are beginning to see some modest improvement in housing and other economic trends within our markets, particularly in Virginia. Our core banking business remains healthy and stable. Revenue and expenses have not deteriorated for lack of attention, and we are successfully adjusting to the higher level of expenses associated with our own credit issues. Our deposit gathering initiatives have been extremely successful, helping to support our net interest margin despite our high levels of nonaccruing loans."
“Accordingly, we anticipate a return to profitability in third quarter 2009, and our earnings will range between $0.22 and $0.25 per diluted share.”
Highlights of the second quarter include:
· | Core banking operations continue to perform at historically sound levels, with net interest income, fee income and controllable expenses well-managed and virtually unchanged from year-ago results. |
· | Net interest margin remains virtually unchanged at approximately 3.00 percent for the past three quarters, with the variance which occurred in the third quarter 2008 attributable to adjustments for interest reversals on loans reclassified as nonaccruing. |
· | Loans have remained stable over the past five quarters; reductions in construction and development loans were offset by growth of commercial real estate loans. |
· | The deposit mix continues to improve, with higher levels of savings accounts and local time deposits replacing brokered deposits and FHLB borrowings. |
· | Net charge-offs and real estate foreclosed upon during second quarter 2009 totaled approximately $26 million, substantially reducing the level of problem loans held in portfolio. |
· | Capital remains in excess of regulatory guidelines for a “well-capitalized” institution, and we are evaluating options for raising additional capital. |
Results from Operations
Total revenue, consisting of net interest income and noninterest income, was $8.8 million for the second quarter of 2009, compared to $12.5 million for the year-ago period. Excluding the OTTI charges of $4.8 million and $1.5 million in the second quarters of 2009 and 2008, respectively, operating revenue was $13.5 million for the current quarter, compared to $14.0 million for the year-prior quarter. Net interest income was $11.1 million, a 2.4 percent decrease from the $11.4 million reported in the year-ago quarter; an 8.5 percent increase in average earning assets was offset by a 33 basis point, or 9.9 percent, decline in the net interest margin, to 3.00 percent for the second quarter of 2009.
For the second quarter of 2009, noninterest income, reported on a GAAP basis, was a negative $2.3 million compared to $1.1 million for the year-ago period. Excluding from the second quarter OTTI charges of $4.8 million in 2009 and a $1.5 million in 2008, noninterest income from operations was $2.4 million in the 2009 quarter compared to $2.7 million for 2008.
The provision for loan losses continues to be the primary factor impacting operating earnings. The Company recorded a $5.5 million provision in the second quarter of 2009, and for the six-month period, the provision was $9.5 million; this compares to second quarter and six-month 2008 provisions of $1.75 million and $2.75 million, respectively. The Company aggressively recognized total gross charge-offs of $13.8 million this past quarter. As of June 30, 2009, the allowance for loan losses stands at $14.3 million, or approximately 1.21 percent of total loans compared to 1.82 percent of total loans for the first quarter of 2009.
Noninterest expense was $8.7 million for the second quarter of 2009, an increase of $1.6 million, or 21.8 percent, from the 2008 second quarter. Controllable expenses, including salaries, employee benefits, occupancy and equipment expense, were virtually unchanged compared to the year-ago quarter. By contrast, FDIC assessment premiums and costs associated with credit administration and credit quality, including associated legal costs, continue to increase quarterly. FDIC insurance premiums increased by $1.1 million over the prior-year second quarter, including the one-time special assessment of $735,000 reported this quarter.
Balance Sheet and Asset Quality
Assets at June 30, 2009 were $1.6 billion, up $57.9 million, or 3.8 percent, since second quarter 2008, while total loans increased $35.2 million, or 3.1 percent, over the same 12-month period. However, loan growth has been systematically reduced since year-end 2008, declining $29.1 million, or 2.4 percent over the past six months. Commercial real estate (“CRE”) has been the only loan category to grow over the past six months, up $7.4 million or 1.6 percent.
Summit’s loan portfolio is composed primarily of CRE and 1-4 family residential mortgages which represent 38.9 and 31.8 percent, respectively, of total loans. Non real estate-related commercial loans account for 10.7 percent of loans, while construction & development (“C&D”) loans account for 15.5 percent, down from 17.8 percent at December 31, 2008.
Nonperforming loans were $61.7 million at June 30, 2009, or 5.22 percent of total loans, compared with $79.6 million, or 6.58 percent, for the linked-quarter, and $15.6 million, or 1.37 percent, for the year-ago quarter. Mr. Maddy stated that much of the improvement was derived from a combination of charge-offs and transfer of properties to OREO this past quarter. In total, gross loans of $13.3 million were charged off this quarter, of which $12.0 million consisted of C&D loans. Also, a net additional $12.6 million of property was transferred to OREO, increasing Summit’s portfolio of foreclosed real estate to $20.4 million in total. “As we discussed last quarter,” Maddy continued, “we worked out a plan for each major project and acted decisively to either charge it off, or take control of the workout process. This has substantially reduced our balance sheet exposure to construction lending.” During the past quarter, performing C&D loans declined by $12.4 million, or 7.5 percent, to $166.7 million, and nonperforming C&D loans declined by $16.5 million. $29.5 million of C&D loans remain classified as nonperforming.
In addition to C&D loans, the next largest component is commercial real estate, with $23.3 million of loans on nonaccrual status which relates principally to a single relationship. Otherwise, the commercial real estate portfolio, for the most part, has been performing well.
As of June 30, 2009, loans in the 30-89 day delinquent category totaled $13.4 million, down from $20.6 million for the linked quarter and $39.6 million for the year-ago quarter. “The good news this quarter relates to recent delinquencies, which declined substantially from the first quarter of 2009,” Mr. Maddy continued. “Most importantly, virtually no C&D loans are on that list.” In aggregate, C&D and residential real estate accounted for $9.1 million of the decline.
Nonperforming assets, including foreclosed properties and nonaccruing loans, totaled $82.1 million for the current quarter, or 5.19 percent of total assets, compared with 5.47 percent for the first quarter of 2009, and 1.19 percent of assets for the year-ago quarter.
The Company recorded net loan charge-offs of $13.2 million for the current quarter, or 4.37 percent (annualized) of average loans, compared with a $1.1 million recovery in the linked-quarter and $1.0 million of net charge-offs, or 0.36 percent of average loans (annualized), in the year-ago period. Following the extensive charge-offs and additional $5.5 million provision taken in the second quarter, the allowance for loan losses stands at $14.3 million, or 1.21 percent of total loans, down from 1.82 percent at first quarter-end and up from 0.91 percent for the year-ago quarter.
Total deposits at June 30, 2009 were $954.2 million, a decline of $11.6 million, or 1.2 percent, from $965.8 million at year-end 2008; by comparison, retail deposits increased by $36.7 million, or 5.5 percent, to $706.0 million within the same timeframe. Retail deposits now account for 74.0 percent of total deposits compared with 69.3 percent only six months ago. Growth in retail deposits was driven by exceptional growth of savings accounts, up $44.1 million over the past six months. Mr. Maddy commented that such outstanding savings account growth resulted from a combination of favorable factors, included a highly successful campaign to market the Summit Advantage checking and savings products, a less favorable environment for equity investments, and the expanded FDIC deposit guaranty program.”
Capital Adequacy
Shareholders’ equity at June 30, 2009 was $83.8 million, compared to $83.6 million and $91.5 million, respectively, for the linked and year-ago quarters. Capital ratios remain in excess of regulatory requirements for “well-capitalized” for both Summit and its banking subsidiary, Summit Community Bank. As of second quarter-end 2009, common shares outstanding totaled 7,425,472. Mr. Maddy concluded by adding that Summit continues to evaluate capital raising alternatives to provide additional strength and safety, and provide for future growth.
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 other-than-temporary impairment charge on securities, the FDIC’s special assessment and 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 these items provide useful supplemental information that is important for a proper understanding of the operating results of Summit's core business. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | ||||||||||||
Quarterly Performance Summary -- Q2 2009 vs Q2 2008 | ||||||||||||
For the Quarter Ended | Percent | |||||||||||
Dollars in thousands | 6/30/2009 | 6/30/2008 | Change | |||||||||
Condensed Statements of Income | ||||||||||||
Interest income | ||||||||||||
Loans, including fees | $ | 18,050 | $ | 19,576 | -7.8 | % | ||||||
Securities | 4,710 | 3,761 | 25.2 | % | ||||||||
Other | 1 | 3 | -66.7 | % | ||||||||
Total interest income | 22,761 | 23,340 | -2.5 | % | ||||||||
Interest expense | ||||||||||||
Deposits | 6,358 | 6,435 | -1.2 | % | ||||||||
Borrowings | 5,296 | 5,530 | -4.2 | % | ||||||||
Total interest expense | 11,654 | 11,965 | -2.6 | % | ||||||||
Net interest income | 11,107 | 11,375 | -2.4 | % | ||||||||
Provision for loan losses | 5,500 | 1,750 | 214.3 | % | ||||||||
Net interest income after provision | ||||||||||||
for loan losses | 5,607 | 9,625 | -41.7 | % | ||||||||
Noninterest income | ||||||||||||
Insurance commissions | 1,283 | 1,275 | 0.6 | % | ||||||||
Service fee income | 857 | 824 | 4.0 | % | ||||||||
Realized securities gains (losses) | 39 | - | n/a | |||||||||
Other-than-temporary impairment of securities | (4,768 | ) | (1,541 | ) | 209.4 | % | ||||||
Other income | 247 | 570 | -56.7 | % | ||||||||
Total noninterest income | (2,342 | ) | 1,128 | -307.6 | % | |||||||
Noninterest expense | ||||||||||||
Salaries and employee benefits | 4,308 | 4,187 | 2.9 | % | ||||||||
Net occupancy expense | 466 | 443 | 5.2 | % | ||||||||
Equipment expense | 527 | 533 | -1.1 | % | ||||||||
Professional fees | 403 | 182 | 121.4 | % | ||||||||
FDIC premiums | 1,245 | 180 | 591.7 | % | ||||||||
Other expenses | 1,760 | 1,624 | 8.4 | % | ||||||||
Total noninterest expense | 8,709 | 7,149 | 21.8 | % | ||||||||
Income (loss) before income taxes | (5,444 | ) | 3,604 | -251.1 | % | |||||||
Income taxes | (1,994 | ) | 1,010 | -297.4 | % | |||||||
Net income (loss) | $ | (3,450 | ) | $ | 2,594 | -233.0 | % |
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | ||||||||||||
Quarterly Performance Summary -- Q2 2009 vs Q2 2008 | ||||||||||||
For the Quarter Ended | Percent | |||||||||||
6/30/2009 | 6/30/2008 | Change | ||||||||||
Per Share Data | ||||||||||||
Earnings per share from continuing operations | ||||||||||||
Basic | $ | (0.47 | ) | $ | 0.35 | -234.3 | % | |||||
Diluted | $ | (0.46 | ) | $ | 0.35 | -231.4 | % | |||||
Average shares outstanding | ||||||||||||
Basic | 7,419,974 | 7,410,217 | 0.1 | % | ||||||||
Diluted | 7,431,969 | 7,448,170 | -0.2 | % | ||||||||
Performance Ratios | ||||||||||||
Return on average equity | -16.13 | % | 11.16 | % | -244.5 | % | ||||||
Return on average assets | -0.86 | % | 0.70 | % | -222.9 | % | ||||||
Net interest margin | 3.00 | % | 3.33 | % | -9.9 | % | ||||||
Efficiency ratio - continuing operations (A) | 56.50 | % | 49.87 | % | 13.3 | % |
NOTE: (A) – Computed on a tax equivalent basis excluding nonrecurring income and expense items and amortization of intangibles.
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | ||||||||||||
Six Month Performance Summary -- 2009 vs 2008 | ||||||||||||
For the Six Months Ended | Percent | |||||||||||
Dollars in thousands | 6/30/2009 | 6/30/2008 | Change | |||||||||
Condensed Statements of Income | ||||||||||||
Interest income | ||||||||||||
Loans, including fees | $ | 36,303 | $ | 39,645 | -8.4 | % | ||||||
Securities | 9,447 | 7,548 | 25.2 | % | ||||||||
Other | 1 | 6 | -83.3 | % | ||||||||
Total interest income | 45,751 | 47,199 | -3.1 | % | ||||||||
Interest expense | ||||||||||||
Deposits | 12,979 | 13,559 | -4.3 | % | ||||||||
Borrowings | 10,330 | 11,327 | -8.8 | % | ||||||||
Total interest expense | 23,309 | 24,886 | -6.3 | % | ||||||||
Net interest income | 22,442 | 22,313 | 0.6 | % | ||||||||
Provision for loan losses | 9,500 | 2,750 | 245.5 | % | ||||||||
Net interest income after provision | ||||||||||||
for loan losses | 12,942 | 19,563 | -33.8 | % | ||||||||
Noninterest income | ||||||||||||
Insurance commissions | 2,627 | 2,602 | 1.0 | % | ||||||||
Service fee income | 1,593 | 1,567 | 1.7 | % | ||||||||
Net cash settlement on interest rate swaps | - | (170 | ) | -100.0 | % | |||||||
Change in fair value of interest rate swaps | - | 705 | -100.0 | % | ||||||||
Realized securities gains (losses) | 295 | - | n/a | |||||||||
Other-than-temporary impairment of securities | (4,983 | ) | (1,541 | ) | 223.4 | % | ||||||
Other income | 567 | 813 | -30.3 | % | ||||||||
Total noninterest income | 99 | 3,976 | -97.5 | % | ||||||||
Noninterest expense | ||||||||||||
Salaries and employee benefits | 8,587 | 8,581 | 0.1 | % | ||||||||
Net occupancy expense | 1,063 | 919 | 15.7 | % | ||||||||
Equipment expense | 1,095 | 1,068 | 2.5 | % | ||||||||
Professional fees | 737 | 300 | 145.7 | % | ||||||||
FDIC premiums | 1,628 | 354 | 359.9 | % | ||||||||
Other expenses | 3,350 | 3,015 | 11.1 | % | ||||||||
Total noninterest expense | 16,460 | 14,237 | 15.6 | % | ||||||||
Income (loss) before income taxes | (3,419 | ) | 9,302 | -136.8 | % | |||||||
Income taxes | (1,734 | ) | 2,884 | -160.1 | % | |||||||
Net income (loss) | $ | (1,685 | ) | $ | 6,418 | -126.3 | % |
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | ||||||||||||
Six Month Performance Summary -- 2009 vs 2008 | ||||||||||||
For the Six Months Ended | Percent | |||||||||||
6/30/2009 | 6/30/2008 | Change | ||||||||||
Per Share Data | ||||||||||||
Earnings per share | ||||||||||||
Basic | (0.23 | ) | 0.87 | -126.4 | % | |||||||
Diluted | (0.23 | ) | 0.86 | -126.7 | % | |||||||
Average shares outstanding | ||||||||||||
Basic | 7,417,642 | 7,409,579 | 0.1 | % | ||||||||
Diluted | 7,433,494 | 7,448,974 | -0.2 | % | ||||||||
Performance Ratios | ||||||||||||
Return on average equity | -3.89 | % | 13.80 | % | -128.2 | % | ||||||
Return on average assets | -0.21 | % | 0.88 | % | -123.9 | % | ||||||
Net interest margin | 3.02 | % | 3.31 | % | -8.8 | % | ||||||
Efficiency ratio (A) | 55.56 | % | 50.96 | % | 9.0 | % |
NOTE: (A) – Computed on a tax equivalent basis excluding nonrecurring income and expense items and amortization of intangibles.
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | ||||||||||||||||||||
Five Quarter Performance Summary | ||||||||||||||||||||
For the Quarter Ended | ||||||||||||||||||||
Dollars in thousands | 6/30/2009 | 3/31/2009 | 12/31/2008 | 9/30/2008 | 6/30/2008 | |||||||||||||||
Condensed Statements of Income | ||||||||||||||||||||
Interest income | ||||||||||||||||||||
Loans, including fees | $ | 18,050 | $ | 18,254 | $ | 19,343 | $ | 18,527 | $ | 19,576 | ||||||||||
Securities | 4,710 | 4,737 | 4,305 | 4,108 | 3,761 | |||||||||||||||
Other | 1 | - | 1 | 2 | 3 | |||||||||||||||
Total interest income | 22,761 | 22,991 | 23,649 | 22,637 | 23,340 | |||||||||||||||
Interest expense | ||||||||||||||||||||
Deposits | 6,358 | 6,620 | 7,081 | 6,704 | 6,435 | |||||||||||||||
Borrowings | 5,296 | 5,035 | 5,190 | 5,549 | 5,530 | |||||||||||||||
Total interest expense | 11,654 | 11,655 | 12,271 | 12,253 | 11,965 | |||||||||||||||
Net interest income | 11,107 | 11,336 | 11,378 | 10,384 | 11,375 | |||||||||||||||
Provision for loan losses | 5,500 | 4,000 | 750 | 12,000 | 1,750 | |||||||||||||||
Net interest income after provision | ||||||||||||||||||||
for loan losses | 5,607 | 7,336 | 10,628 | (1,616 | ) | 9,625 | ||||||||||||||
Noninterest income | ||||||||||||||||||||
Insurance commissions | 1,283 | 1,344 | 1,200 | 1,337 | 1,275 | |||||||||||||||
Service fee income | 857 | 736 | 851 | 828 | 824 | |||||||||||||||
Realized securities gains (losses) | 39 | 256 | - | - | - | |||||||||||||||
Other-than-temporary impairment of securities | (4,768 | ) | (215 | ) | (1,024 | ) | (4,495 | ) | (1,541 | ) | ||||||||||
Other income | 247 | 319 | 40 | 155 | 570 | |||||||||||||||
Total noninterest income | (2,342 | ) | 2,440 | 1,067 | (2,175 | ) | 1,128 | |||||||||||||
Noninterest expense | ||||||||||||||||||||
Salaries and employee benefits | 4,308 | 4,279 | 4,047 | 4,113 | 4,187 | |||||||||||||||
Net occupancy expense | 466 | 597 | 463 | 489 | 443 | |||||||||||||||
Equipment expense | 527 | 568 | 567 | 538 | 533 | |||||||||||||||
Professional fees | 403 | 334 | 250 | 173 | 182 | |||||||||||||||
FDIC premiums | 1,245 | 383 | 210 | 180 | 120 | |||||||||||||||
Other expenses | 1,760 | 1,590 | 2,324 | 1,792 | 1,684 | |||||||||||||||
Total noninterest expense | 8,709 | 7,751 | 7,861 | 7,285 | 7,149 | |||||||||||||||
Income (loss) before income taxes | (5,444 | ) | 2,025 | 3,834 | (11,076 | ) | 3,604 | |||||||||||||
Income taxes | (1,994 | ) | 260 | 277 | (3,402 | ) | 1,010 | |||||||||||||
Net income (loss) | $ | (3,450 | ) | $ | 1,765 | $ | 3,557 | $ | (7,674 | ) | $ | 2,594 |
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | ||||||||||||||||||||
Five Quarter Performance Summary | ||||||||||||||||||||
For the Quarter Ended | ||||||||||||||||||||
6/30/2009 | 3/31/2009 | 12/31/2008 | 9/30/2008 | 6/30/2008 | ||||||||||||||||
Per Share Data | ||||||||||||||||||||
Earnings per share | ||||||||||||||||||||
Basic | $ | (0.47 | ) | $ | 0.24 | $ | 0.48 | $ | (1.04 | ) | $ | 0.35 | ||||||||
Diluted | $ | (0.46 | ) | $ | 0.24 | $ | 0.48 | $ | (1.03 | ) | $ | 0.35 | ||||||||
Average shares outstanding | ||||||||||||||||||||
Basic | 7,419,974 | 7,415,310 | 7,411,577 | 7,410,791 | 7,410,217 | |||||||||||||||
Diluted | 7,431,969 | 7,435,510 | 7,434,643 | 7,445,242 | 7,448,170 | |||||||||||||||
Performance Ratios | ||||||||||||||||||||
Return on average equity | -16.13 | % | 7.94 | % | 17.08 | % | -34.71 | % | 11.16 | % | ||||||||||
Return on average assets | -0.86 | % | 0.43 | % | 0.89 | % | -1.99 | % | 0.70 | % | ||||||||||
Net interest margin | 3.00 | % | 3.04 | % | 3.04 | % | 2.89 | % | 3.33 | % | ||||||||||
Efficiency ratio - continuing operations (A) | 56.50 | % | 54.63 | % | 51.14 | % | 54.52 | % | 49.87 | % |
NOTE: (A) – Computed on a tax equivalent basis excluding nonrecurring income and expense items and amortization of intangibles.
Selected Balance Sheet Data | ||||||||||||||||||||
For the Quarter Ended | ||||||||||||||||||||
Dollars in thousands, except per share amounts | 6/30/2009 | 3/31/2009 | 12/31/2008 | 9/30/2008 | 6/30/2008 | |||||||||||||||
Assets | $ | 1,583,910 | $ | 1,598,968 | $ | 1,627,066 | $ | 1,567,325 | $ | 1,525,978 | ||||||||||
Securities | 289,267 | 295,706 | 350,622 | 327,648 | 307,232 | |||||||||||||||
Loans, net | 1,165,653 | 1,186,042 | 1,192,157 | 1,145,606 | 1,130,483 | |||||||||||||||
Intangible assets | 9,529 | 9,617 | 9,704 | 9,792 | 9,880 | |||||||||||||||
Retail deposits | 705,953 | 699,065 | 669,261 | 663,569 | 634,007 | |||||||||||||||
Brokered time deposits | 248,271 | 256,293 | 296,589 | 281,655 | 223,742 | |||||||||||||||
Short-term borrowings | 104,718 | 120,480 | 153,100 | 98,316 | 147,900 | |||||||||||||||
Long-term borrowings and | ||||||||||||||||||||
subordinated debentures | 432,391 | 430,687 | 412,337 | 434,016 | 419,775 | |||||||||||||||
Shareholders' equity | 83,753 | 83,604 | 87,244 | 80,510 | 91,466 | |||||||||||||||
Book value per share | $ | 11.28 | $ | 11.27 | $ | 11.77 | $ | 10.86 | $ | 12.34 | ||||||||||
Tangible book value per share | $ | 10.00 | $ | 9.98 | $ | 10.46 | $ | 9.54 | $ | 11.01 | ||||||||||
Tangible equity / Tangible assets | 4.7 | % | 4.7 | % | 4.8 | % | 4.5 | % | 5.4 | % | ||||||||||
Tier 1 leverage ratio | 6.1 | % | 6.2 | % | 6.2 | % | 6.2 | % | 7.0 | % |
SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF) | ||||||||||||||||||||
Loan Composition | ||||||||||||||||||||
Dollars in thousands | 6/30/2009 | 3/31/2009 | 12/31/2008 | 9/30/2008 | 6/30/2008 | |||||||||||||||
Commercial | $ | 126,661 | $ | 128,707 | $ | 130,106 | $ | 115,106 | $ | 112,793 | ||||||||||
Commercial real estate | 459,671 | 452,987 | 452,264 | 423,982 | 415,187 | |||||||||||||||
Construction and development | 183,733 | 211,849 | 215,465 | 225,582 | 217,623 | |||||||||||||||
Residential real estate | 376,019 | 380,351 | 376,026 | 366,989 | 361,009 | |||||||||||||||
Consumer | 30,179 | 30,201 | 31,519 | 31,433 | 30,361 | |||||||||||||||
Other | 5,760 | 6,133 | 6,061 | 6,240 | 6,206 | |||||||||||||||
Total loans | 1,182,023 | 1,210,228 | 1,211,441 | 1,169,332 | 1,143,179 | |||||||||||||||
Less unearned fees and interest | 2,065 | 2,190 | 2,351 | 2,293 | 2,347 | |||||||||||||||
Total loans net of unearned fees and interest | 1,179,958 | 1,208,038 | 1,209,090 | 1,167,039 | 1,140,832 | |||||||||||||||
Less allowance for loan losses | 14,305 | 21,996 | 16,933 | 21,433 | 10,349 | |||||||||||||||
Loans, net | $ | 1,165,653 | $ | 1,186,042 | $ | 1,192,157 | $ | 1,145,606 | $ | 1,130,483 |
SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF) | ||||||||||||||||||||
Retail Deposit Composition | ||||||||||||||||||||
Dollars in thousands | 6/30/2009 | 3/31/2009 | 12/31/2008 | 9/30/2008 | 6/30/2008 | |||||||||||||||
Non interest bearing checking | $ | 69,878 | $ | 70,483 | $ | 69,808 | $ | 70,353 | $ | 68,912 | ||||||||||
Interest bearing checking | 152,498 | 155,157 | 156,990 | 182,383 | 194,255 | |||||||||||||||
Savings | 105,828 | 94,294 | 61,688 | 58,678 | 60,245 | |||||||||||||||
Time deposits | 377,749 | 379,131 | 380,775 | 352,155 | 310,595 | |||||||||||||||
Total retail deposits | $ | 705,953 | $ | 699,065 | $ | 669,261 | $ | 663,569 | $ | 634,007 |
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | ||||||||||||||||||||
Asset Quality Information | ||||||||||||||||||||
For the Quarter Ended | ||||||||||||||||||||
Dollars in thousands | 6/30/2009 | 3/31/2009 | 12/31/2008 | 9/30/2008 | 6/30/2008 | |||||||||||||||
Gross loan charge-offs | $ | 13,288 | $ | 522 | $ | 5,351 | $ | 969 | $ | 1,079 | ||||||||||
Gross loan recoveries | (98 | ) | (1,585 | ) | (102 | ) | (52 | ) | (80 | ) | ||||||||||
Net loan charge-offs | $ | 13,190 | $ | (1,063 | ) | $ | 5,249 | $ | 917 | $ | 999 | |||||||||
Net loan charge-offs to average loans (annualized) | 4.37 | % | -0.35 | % | 1.75 | % | 0.32 | % | 0.36 | % | ||||||||||
Allowance for loan losses | $ | 14,305 | $ | 21,996 | $ | 16,933 | $ | 21,433 | $ | 10,349 | ||||||||||
Allowance for loan losses as a percentage | ||||||||||||||||||||
of period end loans | 1.21 | % | 1.82 | % | 1.40 | % | 1.87 | % | 0.91 | % | ||||||||||
Nonperforming assets: | ||||||||||||||||||||
Nonperforming loans | $ | 61,698 | $ | 79,583 | $ | 47,969 | $ | 59,845 | $ | 15,614 | ||||||||||
Foreclosed properties and | ||||||||||||||||||||
other repossessed assets | 20,446 | 7,824 | 8,113 | 2,284 | 2,546 | |||||||||||||||
Total | $ | 82,144 | $ | 87,407 | $ | 56,082 | $ | 62,129 | $ | 18,160 | ||||||||||
Nonperforming loans to period end loans | 5.22 | % | 6.58 | % | 3.97 | % | 5.13 | % | 1.37 | % | ||||||||||
Nonperforming assets to period end assets | 5.19 | % | 5.47 | % | 3.45 | % | 3.96 | % | 1.19 | % |
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | ||||||||||||||||||||
Nonperforming Loans | ||||||||||||||||||||
For the Quarter Ended | ||||||||||||||||||||
Dollars in thousands | 6/30/2009 | 3/31/2009 | 12/31/2008 | 9/30/2008 | 6/30/2008 | |||||||||||||||
Commercial | $ | 680 | $ | 637 | $ | 199 | $ | 140 | $ | 81 | ||||||||||
Commercial real estate | 23,287 | 25,788 | 24,323 | 27,347 | 3,184 | |||||||||||||||
Construction and development | 29,508 | 45,194 | 18,382 | 29,127 | 6,460 | |||||||||||||||
Residential real estate | 8,116 | 7,933 | 4,986 | 2,799 | 5,521 | |||||||||||||||
Consumer | 107 | 31 | 79 | 432 | 368 | |||||||||||||||
Total | $ | 61,698 | $ | 79,583 | $ | 47,969 | $ | 59,845 | $ | 15,614 |
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | ||||||||||||||||||||
Loans Past Due 30-89 Days | ||||||||||||||||||||
For the Quarter Ended | ||||||||||||||||||||
Dollars in thousands | 6/30/2009 | 3/31/2009 | 12/31/2008 | 9/30/2008 | 6/30/2008 | |||||||||||||||
Commercial | $ | 1,368 | $ | 144 | $ | 114 | $ | 706 | $ | 1,089 | ||||||||||
Commercial real estate | 4,320 | 3,985 | 195 | 1,407 | 24,606 | |||||||||||||||
Construction and development | 920 | 5,559 | 2,722 | 1,996 | 9,919 | |||||||||||||||
Residential real estate | 5,802 | 10,291 | 5,009 | 8,537 | 2,962 | |||||||||||||||
Consumer | 946 | 646 | 824 | 1,140 | 979 | |||||||||||||||
Total | $ | 13,356 | $ | 20,625 | $ | 8,864 | $ | 13,786 | $ | 39,555 |
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | |||||||||||
Average Balance Sheet, Interest Earnings & Expenses and Average Rates | |||||||||||
Q2 2009 vs Q2 2008 | |||||||||||
Q2 2009 | Q2 2008 | ||||||||||
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 | $1,198,606 | $17,936 | 6.00% | $1,103,871 | $19,462 | 7.07% | |||||
Tax-exempt | 8,312 | 171 | 8.25% | 8,630 | 173 | 8.04% | |||||
Securities | |||||||||||
Taxable | 273,515 | 4,194 | 6.15% | 249,082 | 3,161 | 5.09% | |||||
Tax-exempt | 46,466 | 782 | 6.75% | 51,881 | 895 | 6.92% | |||||
Interest bearing deposits other banks | |||||||||||
and Federal funds sold | 3,454 | 1 | 0.12% | 419 | 2 | 1.91% | |||||
Total interest earning assets | 1,530,353 | 23,084 | 6.05% | 1,413,883 | 23,693 | 6.72% | |||||
Noninterest earning assets | |||||||||||
Cash & due from banks | 20,355 | 20,670 | |||||||||
Premises & equipment | 23,649 | 22,016 | |||||||||
Other assets | 51,378 | 36,650 | |||||||||
Allowance for loan losses | (23,151) | (10,043) | |||||||||
Total assets | $1,602,584 | $1,483,176 | |||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||
Liabilities | |||||||||||
Interest bearing liabilities | |||||||||||
Interest bearing | |||||||||||
demand deposits | $156,957 | $196 | 0.50% | $199,754 | $618 | 1.24% | |||||
Savings deposits | 100,967 | 430 | 1.71% | 56,548 | 212 | 1.50% | |||||
Time deposits | 630,290 | 5,732 | 3.65% | 517,711 | 5,605 | 4.34% | |||||
Short-term borrowings | 107,922 | 146 | 0.54% | 101,913 | 571 | 2.25% | |||||
Long-term borrowings and | |||||||||||
subordinated debentures | 431,828 | 5,150 | 4.78% | 426,656 | 4,959 | 4.66% | |||||
1,427,964 | 11,654 | 3.27% | 1,302,582 | 11,965 | 3.68% | ||||||
Noninterest bearing liabilities | |||||||||||
Demand deposits | 81,022 | 79,933 | |||||||||
Other liabilities | 8,039 | 7,650 | |||||||||
Total liabilities | 1,517,025 | 1,390,165 | |||||||||
Shareholders' equity | 85,559 | 93,011 | |||||||||
Total liabilities and | |||||||||||
shareholders' equity | $1,602,584 | $1,483,176 | |||||||||
NET INTEREST EARNINGS | $11,430 | $11,728 | |||||||||
NET INTEREST YIELD ON EARNING ASSETS | 3.00% | 3.33% |
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | |||||||||||
Average Balance Sheet, Interest Earnings & Expenses and Average Rates | |||||||||||
YTD 2009 vs YTD 2008 | |||||||||||
For the Six Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||
2009 | 2008 | ||||||||||
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 | $1,200,625 | $36,083 | 6.06% | $1,088,544 | $39,410 | 7.28% | |||||
Tax-exempt | 8,134 | 333 | 8.26% | 8,790 | 356 | 8.14% | |||||
Securities | |||||||||||
Taxable | 285,779 | 8,418 | 5.94% | 250,414 | 6,358 | 5.11% | |||||
Tax-exempt | 46,254 | 1,559 | 6.80% | 51,153 | 1,774 | 6.97% | |||||
Interest bearing deposits other banks | |||||||||||
and Federal funds sold | 1,882 | 1 | 0.11% | 441 | 6 | 2.74% | |||||
Total interest earning assets | 1,542,674 | 46,394 | 6.06% | 1,399,342 | 47,904 | 6.88% | |||||
Noninterest earning assets | |||||||||||
Cash & due from banks | 18,873 | 16,691 | |||||||||
Premises & equipment | 23,188 | 22,062 | |||||||||
Other assets | 48,919 | 36,426 | |||||||||
Allowance for loan losses | (21,270) | (9,785) | |||||||||
Total assets | $1,612,384 | $1,464,736 | |||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||
Liabilities | |||||||||||
Interest bearing liabilities | |||||||||||
Interest bearing | |||||||||||
demand deposits | $155,456 | $392 | 0.51% | $203,707 | $1,548 | 1.53% | |||||
Savings deposits | 88,103 | 770 | 1.76% | 51,549 | 407 | 1.59% | |||||
Time deposits | 638,556 | 11,817 | 3.73% | 511,873 | 11,604 | 4.56% | |||||
Short-term borrowings | 129,928 | 358 | 0.56% | 105,405 | 1,490 | 2.84% | |||||
Long-term borrowings and | |||||||||||
subordinated debentures | 427,819 | 9,973 | 4.70% | 418,353 | 9,837 | 4.73% | |||||
1,439,862 | 23,310 | 3.26% | 1,290,887 | 24,886 | 3.88% | ||||||
Noninterest bearing liabilities | |||||||||||
Demand deposits | 77,775 | 72,203 | |||||||||
Other liabilities | 8,028 | 8,629 | |||||||||
Total liabilities | 1,525,665 | 1,371,719 | |||||||||
Shareholders' equity | 86,719 | 93,017 | |||||||||
Total liabilities and | |||||||||||
shareholders' equity | $1,612,384 | $1,464,736 | |||||||||
NET INTEREST EARNINGS | $23,084 | $23,018 | |||||||||
NET INTEREST YIELD ON EARNING ASSETS | 3.02% | 3.31% |
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | ||||||||||||||||
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures | ||||||||||||||||
For the Quarter Ended | For the Six Months Ended | |||||||||||||||
Dollars in thousands | 6/30/2009 | 6/30/2008 | 6/30/2009 | 6/30/2008 | ||||||||||||
Net income - excluding other-than-temporary | ||||||||||||||||
impairment of securities, FDIC special assessment | ||||||||||||||||
and change in fair value of interest rate swaps | $ | 17 | $ | 3,565 | $ | 1,917 | $ | 6,945 | ||||||||
Other-than-temporary impairment of securities | (4,768 | ) | (1,541 | ) | (4,983 | ) | (1,541 | ) | ||||||||
Applicable income tax effect | 1,764 | 570 | 1,844 | 570 | ||||||||||||
FDIC special assessment | (735 | ) | - | (735 | ) | - | ||||||||||
Applicable income tax effect | 272 | - | 272 | - | ||||||||||||
Change in fair value of interest rate swaps | - | - | - | 705 | ||||||||||||
Applicable income tax effect | - | - | - | (261 | ) | |||||||||||
(3,467 | ) | (971 | ) | (3,602 | ) | (527 | ) | |||||||||
GAAP net income | $ | (3,450 | ) | $ | 2,594 | $ | (1,685 | ) | $ | 6,418 | ||||||
Diluted earnings per share - excluding other-than- | ||||||||||||||||
temporary impairment of securities, FDIC special | ||||||||||||||||
assessment and change in fair value of | ||||||||||||||||
interest rate swaps | $ | - | $ | 0.48 | $ | 0.25 | $ | 0.93 | ||||||||
Other-than-temporary impairment of securities | (0.64 | ) | (0.21 | ) | (0.67 | ) | (0.21 | ) | ||||||||
Applicable income tax effect | 0.24 | 0.08 | 0.25 | 0.08 | ||||||||||||
FDIC special assessment | (0.10 | ) | - | (0.10 | ) | - | ||||||||||
Applicable income tax effect | 0.04 | - | 0.04 | - | ||||||||||||
Change in fair value of interest rate swaps | - | - | - | 0.09 | ||||||||||||
Applicable income tax effect | - | - | - | (0.03 | ) | |||||||||||
(0.46 | ) | (0.13 | ) | (0.48 | ) | (0.07 | ) | |||||||||
GAAP diluted earnings per share | $ | (0.46 | ) | $ | 0.35 | $ | (0.23 | ) | $ | 0.86 | ||||||
Total revenue - excluding other-than-temporary | ||||||||||||||||
impairment of securities and change in fair value | ||||||||||||||||
of interest rate swaps | $ | 13,533 | $ | 14,044 | $ | 27,524 | $ | 27,125 | ||||||||
Other-than-temporary impairment of securities | (4,768 | ) | (1,541 | ) | (4,983 | ) | (1,541 | ) | ||||||||
Change in fair value of interest rate swaps | - | - | - | 705 | ||||||||||||
(4,768 | ) | (1,541 | ) | (4,983 | ) | (836 | ) | |||||||||
GAAP total revenue | $ | 8,765 | $ | 12,503 | $ | 22,541 | $ | 26,289 | ||||||||
Total noninterest income - excluding other-than- | ||||||||||||||||
temporary impairment of securities and change in | ||||||||||||||||
fair value of interest rate swaps | $ | 2,426 | $ | 2,669 | $ | 5,082 | $ | 4,812 | ||||||||
Other-than-temporary impairment of securities | (4,768 | ) | (1,541 | ) | (4,983 | ) | (1,541 | ) | ||||||||
Change in fair value of interest rate swaps | - | - | - | 705 | ||||||||||||
(4,768 | ) | (1,541 | ) | (4,983 | ) | (836 | ) | |||||||||
GAAP total noninterest income | $ | (2,342 | ) | $ | 1,128 | $ | 99 | $ | 3,976 |