FOR RELEASE 6:00 AM EDT, August 6, 2010
Contact: Robert S. Tissue, Sr. Vice President & CFO
Telephone: (304) 530-0552
Email: rtissue@SummitFGI.com
SUMMIT FINANCIAL GROUP REPORTS 2010 SECOND QUARTER RESULTS
MOOREFIELD, WV – August 6, 2010 (GLOBE NEWSWIRE) – Summit Financial Group, Inc. ("Company" or "Summit") (NASDAQ: SMMF) today reported a second quarter net loss applicable to common shares of $2.95 million, or ($0.40) per diluted share, compared to a net loss of $3.45 million, or ($0.46) per diluted share for the second quarter of 2009. For the first six months of 2010, the Company recorded a net loss applicable to common shares of $2.91 million, or ($0.39) per diluted share, compared to a net loss of $1.69 million, or ($0.23) per diluted share for the first six-months of 2009.
H. Charles Maddy III, President and Chief Executive Officer of Summit, commented, “We remain disappointed by our operating results. However, there are some signs of improved real estate sales activity in our northern Virginia markets -- albeit valuations remain depressed. This past quarter, we sold $11 million of our problem assets, and we have another $11 million of nonperforming assets under contract which we expect to dispose of during the current quarter. We continue to aggressively manage our nonperforming assets through a combination of asset sales, loan work-outs and charge-offs.
“Our earnings continue to be reduced by higher provisions for loan losses, foregone interest income on nonperforming assets, and expenses associated with the administration and resolution of our problem asset portfolio. We have managed to offset much of the impact through improved efficiencies and a reduction in funding costs. Our portfolio of local deposits has grown significantly over the past year, allowing us to reduce our reliance on short-term borrowings in absolute dollar terms and as a percent of total deposits, enabling us to maintain a reasonably stable net interest margin over the past year.”
Results from Operations
Second quarter 2010 total revenue, consisting of net interest income and noninterest income, was $11.6 million compared to $8.8 million reported for the second quarter of 2009. Net interest income was $9.94 million, down 10.5 percent from the $11.1 million earned in the year-ago quarter; the decline resulted from the combined impact of a lower net interest margin, down eight basis points year over year to 2.92 percent, as well as a 7.7 percent decline in average earnings assets, to $1.41 billion.
Noninterest income for the second quarter of 2010 was $1.68 million compared to a negative $2.34 million for the second quarter of 2009. Excluding one-time net charges of $0.94 million for the 2010 second quarter related to a $2.2 million write-down of foreclosed property, partially offset by a $1.26 million gain on the sale of securities, and for the second quarter of 2009, excluding an other-than-temporary impairment (“OTTI”) charge of $4.8 million, second quarter 2010 noninterest income from operations was $2.6 million, up 8.0 percent from the prior-year second quarter noninterest income from operations of $2.4 million.
The provision for loan losses was $8.5 million for the second quarter of 2010, and $13.9 million for 2010 year-to-date; this compares with a 2009 second quarter provision of $5.5 million and $9.5 million for the 2009 six-month period. Summit continues to build its loan loss reserves in addition to recording an aggressive level of charge-offs: $10 million year-to-date. The loan loss reserve now stands at $20.8 million, or 1.91 percent of total loans, compared to 1.21 percent at June 30, 2009.
Second quarter 2010 noninterest expense was $7.7 million, a decrease of $1.0 million, or 12.1 percent, from the $8.7 million recorded in the second quarter of 2009, which included the impact of the FDIC special assessment of $735,000 in Q2 2009. Salaries and employee benefit expense, the largest component of noninterest expense, declined by $0.47 million, or 10.9 percent, from the year-ago quarter due to compensation freezes and staff reductions.
Balance Sheet
Total assets at June 30, 2010 were $1.52 billion, a decline of approximately $64 million, or four percent over the past year, and $17 million, or one percent, from the previous quarter. Total loans, net of unearned interest and fees, were $1.09 billion at June 30, 2010, down $94.1 million from June 30, 2009 and $44.5 million from the linked quarter. Over the past twelve months, all loan categories experienced declines, in particular, construction and development (“C&D”) loans declined by $40 million, or 22 percent, and commercial real estate (“CRE”) declined by $27 million, or six percent. The majority of decline in CRE loans took place in the most recent quarter -- $23.8 million -- while C&D loans declined consistently throughout the past four quarters. CRE remains Summit’s largest loan category, at $432 million, or 40 percent of total loans at June 30, 2010, followed by residential real estate loans, at $363 million, or 33 percent of the total. C&D loans declined from 13.2 percent of the total portfolio at June 30, 2010 to 15.5 percent at June 30, 2009.
Retail deposits were $781 million at June 30, 2010, up $75 million, or 10.6 percent, over the past twelve months; the majority of this growth occurred in the fourth quarter of 2009, as fourth quarter savings/money market (“Savings”) accounts increased by $72.7 million. Over the past four quarters, Savings accounts grew by $90.4 million, enabling Summit to reduce short-term FHLB advances by $102 million. At June 30, 2010, Savings accounted for 25 percent of retail deposits, or $196.2 million, compared with 15 percent for the year-ago quarter.
In addition to the $102 million decline in short-term FHLB advances, Summit reduced the balances of other borrowed funds by $43 million, including repayment of $8 million of brokered deposits (down 3.2 percent) and $35 million of long-term borrowings.
Asset Quality
At June 30, 2010, nonperforming assets (“NPAs”), consisting of nonperforming loans and repossessed assets, were $111.8 million, or 7.4 percent of total assets, compared to $106.4 million (6.9 percent of total assets) for the previous quarter and $82.1 million (5.2 percent of total assets) for June 30, 2009. Approximately 90 percent of Summit’s $111.8 million of NPAs consist of C&D (residential and commercial combined) and CRE problem credits: $69.8 million and $30.4 million, respectively, of total NPAs. This compares to C&D and CRE-related problem assets of $44.4 million and $27.8 million, respectively, for the year-ago quarter.
At June 30, 2010, nonperforming loans were $42.0 million, a decline of $13.5 million, or 24.4 percent, while foreclosed and repossessed assets (“OREO”) totaled $69.8 million, up $19.0 million, or 37.3 percent, from the linked quarter. Of the total $69.8 million of OREO at June 30, 2010, foreclosed CRE and C&D assets accounted for $15.0 million and $50.7 million, respectively.
Residential real estate and commercial (“C&I”) assets accounted for the remainder of the nonperforming asset portfolio. As of June 30, 2010, nonperforming residential real estate assets totaled $9.9 million, while C&I nonaccrual loans were $1.3 million.
At June 30, 2010, net loan charge-offs were $5.6 million, or 1.94 percent of average loans annualized, compared to $4.5 million (1.57 percent annualized) and $13.2 million (4.37 percent annualized) for March 31, 2010 and June 30, 2009, respectively. Since year-end 2009, Summit has charged-off $10.5 million of loans while growing the allowance for loan losses by $3.8 million. As of June 30, 2010, the allowance for loan losses stood at $20.8 million, or 1.91 percent of total loans, compared to 1.58 percent in the linked-quarter and 1.47 percent at 2009 year-end.
Capital Adequacy
Shareholders' equity at June 30, 2010 was $88.9 million compared to $83.8 million at June 30, 2009. Summit’s depository institution, Summit Community Bank, continues to exceed regulatory requirements for a "well capitalized" institution and is in compliance with all regulatory capital requirements; at June 30, 2010, its Total risk-based capital ratio was 12.02 percent, while its Tier 1 leverage capital ratio was 8.05 percent compared to 10.76% and 7.23%, respectively, at June 30, 2009. Total common shares outstanding as of June 30, 2010 were 7,425,472.
In conclusion, Mr. Maddy commented, "We are managing our business to conserve capital while we address a level of problem assets that remains stubbornly high. The hard lessons learned through this downturn should position us for higher performance in future quarters, and our results should reflect these improvements as the economy returns to a more normal state.”
About the Company
Summit Financial Group, Inc., a financial holding company with total assets of $1.5 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 GAAP performance measures to exclude the effects of realized and unrealized securities gains and losses, unrealized OREO writedowns, and FDIC special assessment 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 ar e 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 2010 vs Q2 2009 | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | |
| | | For the Quarter Ended | | | Percent | |
| Dollars in thousands | | 6/30/2010 | | | 6/30/2009 | | | Change | |
| Condensed Statements of Income | | | | | | | | | |
| Interest income | | | | | | | | | |
| Loans, including fees | | $ | 16,614 | | | $ | 18,050 | | | | -8.0 | % |
| Securities | | | 3,592 | | | | 4,710 | | | | -23.7 | % |
| Other | | | 2 | | | | 1 | | | NM | |
| Total interest income | | | 20,208 | | | | 22,761 | | | | -11.2 | % |
| Interest expense | | | | | | | | | | | | |
| Deposits | | | 5,378 | | | | 6,358 | | | | -15.4 | % |
| Borrowings | | | 4,894 | | | | 5,296 | | | | -7.6 | % |
| Total interest expense | | | 10,272 | | | | 11,654 | | | | -11.9 | % |
| Net interest income | | | 9,936 | | | | 11,107 | | | | -10.5 | % |
| Provision for loan losses | | | 8,500 | | | | 5,500 | | | | 54.5 | % |
| Net interest income after provision | | | | | | | | | | | | |
| for loan losses | | | 1,436 | | | | 5,607 | | | | -74.4 | % |
| Noninterest income | | | | | | | | | | | | |
| Insurance commissions | | | 1,223 | | | | 1,283 | | | | -4.7 | % |
| Service fee income | | | 828 | | | | 857 | | | | -3.4 | % |
| Realized securities gains (losses) | | | 1,256 | | | | 39 | | | NM | |
| Other-than-temporary impairment of securities | | | - | | | | (4,768 | ) | | NM | |
| Unrealized writedown OREO | | | (2,194 | ) | | | - | | | NM | |
| Other income | | | 568 | | | | 247 | | | | 130.0 | % |
| Total noninterest income | | | 1,681 | | | | (2,342 | ) | | | -171.8 | % |
| Noninterest expense | | | | | | | | | | | | |
| Salaries and employee benefits | | | 3,839 | | | | 4,308 | | | | -10.9 | % |
| Net occupancy expense | | | 509 | | | | 466 | | | | 9.2 | % |
| Equipment expense | | | 634 | | | | 527 | | | | 20.3 | % |
| Professional fees | | | 262 | | | | 403 | | | | -35.0 | % |
| FDIC premiums | | | 625 | | | | 1,245 | | | | -49.8 | % |
| Other expenses | | | 1,787 | | | | 1,760 | | | | 1.5 | % |
| Total noninterest expense | | | 7,656 | | | | 8,709 | | | | -12.1 | % |
| Income before income taxes | | | (4,539 | ) | | | (5,444 | ) | | | -16.6 | % |
| Income taxes | | | (1,661 | ) | | | (1,994 | ) | | | -16.7 | % |
| Net income (loss) | | | (2,878 | ) | | | (3,450 | ) | | | -16.6 | % |
| Preferred stock dividends | | | 74 | | | | - | | | NM | |
| | | | | | | | | | | | | |
| Net income (loss) applicable to common shares | | $ | (2,952 | ) | | $ | (3,450 | ) | | | -14.4 | % |
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | | | |
| Quarterly Performance Summary -- Q2 2010 vs Q2 2009 | | | | | | | |
| | | | | | | |
| | | For the Quarter Ended | | | Percent | |
| | | 6/30/2010 | | | 6/30/2009 | | | Change | |
| Per Share Data | | | | | | | | | |
| Earnings per share from continuing operations | | | | | | | | | |
| Basic | | $ | (0.40 | ) | | $ | (0.47 | ) | | | -14.9 | % |
| Diluted | | $ | (0.40 | ) | | $ | (0.46 | ) | | | -13.0 | % |
| | | | | | | | | | | | | |
| Average shares outstanding | | | | | | | | | | | | |
| Basic | | | 7,425,472 | | | | 7,419,974 | | | | 0.1 | % |
| Diluted | | | 7,425,472 | | | | 7,431,969 | | | | -0.1 | % |
| | | | | | | | | | | | | |
| Performance Ratios | | | | | | | | | | | | |
| Return on average equity (A) | | | -13.16 | % | | | -16.13 | % | | | -18.4 | % |
| Return on average assets | | | -0.75 | % | | | -0.86 | % | | | -12.8 | % |
| Net interest margin | | | 2.92 | % | | | 3.00 | % | | | -2.7 | % |
| Efficiency ratio (B) | | | 59.14 | % | | | 56.50 | % | | | 4.7 | % |
NOTE (A) – Net income divided by total shareholders equity less preferred equity.
NOTE (B) – 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 -- 2010 vs 2009 | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | For the Six Months Ended | | | Percent | |
| Dollars in thousands | | 6/30/2010 | | | 6/30/2009 | | | Change | |
| Condensed Statements of Income | | | | | | | | | |
| Interest income | | | | | | | | | |
| Loans, including fees | | $ | 33,654 | | | $ | 36,303 | | | | -7.3 | % |
| Securities | | | 7,185 | | | | 9,447 | | | | -23.9 | % |
| Other | | | 13 | | | | 1 | | | NM | |
| Total interest income | | | 40,852 | | | | 45,751 | | | | -10.7 | % |
| Interest expense | | | | | | | | | | | | |
| Deposits | | | 10,876 | | | | 12,979 | | | | -16.2 | % |
| Borrowings | | | 9,809 | | | | 10,330 | | | | -5.0 | % |
| Total interest expense | | | 20,685 | | | | 23,309 | | | | -11.3 | % |
| Net interest income | | | 20,167 | | | | 22,442 | | | | -10.1 | % |
| Provision for loan losses | | | 13,850 | | | | 9,500 | | | | 45.8 | % |
| Net interest income after provision | | | | | | | | | | | | |
| for loan losses | | | 6,317 | | | | 12,942 | | | | -51.2 | % |
| Noninterest income | | | | | | | | | | | | |
| Insurance commissions | | | 2,432 | | | | 2,627 | | | | -7.4 | % |
| Service fee income | | | 1,535 | | | | 1,593 | | | | -3.6 | % |
| Realized securities gains (losses) | | | 1,520 | | | | 295 | | | NM | |
| Other-than-temporary impairment of securities | | | (29 | ) | | | (4,983 | ) | | NM | |
| Unrealized writedown OREO | | | (2,194 | ) | | | - | | | NM | |
| Other income | | | 934 | | | | 567 | | | | 64.7 | % |
| Total noninterest income | | | 4,198 | | | | 99 | | | NM | |
| Noninterest expense | | | | | | | | | | | | |
| Salaries and employee benefits | | | 7,563 | | | | 8,587 | | | | -11.9 | % |
| Net occupancy expense | | | 1,031 | | | | 1,063 | | | | -3.0 | % |
| Equipment expense | | | 1,264 | | | | 1,095 | | | | 15.4 | % |
| Professional fees | | | 536 | | | | 737 | | | | -27.3 | % |
| FDIC premiums | | | 1,450 | | | | 1,628 | | | | -10.9 | % |
| Other expenses | | | 3,422 | | | | 3,350 | | | | 2.1 | % |
| Total noninterest expense | | | 15,266 | | | | 16,460 | | | | -7.3 | % |
| Income (loss) before income taxes | | | (4,751 | ) | | | (3,419 | ) | | | 39.0 | % |
| Income taxes | | | (1,993 | ) | | | (1,734 | ) | | | 14.9 | % |
| Net income (loss) | | | (2,758 | ) | | | (1,685 | ) | | | 63.7 | % |
| Preferred stock dividends | | | 148 | | | | - | | | NM | |
| | | | | | | | | | | | | |
| Net income (loss) applicable to common shares | | $ | (2,906 | ) | | $ | (1,685 | ) | | | 72.5 | % |
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | | | |
| Six Month Performance Summary -- 2010 vs 2009 | | | | | | | | | |
| | | | | | | |
| | | For the Six Months Ended | | | Percent | |
| | | 6/30/2010 | | | 6/30/2009 | | | Change | |
| Per Share Data | | | | | | | | | |
| Earnings per share | | | | | | | | | |
| Basic | | | (0.39 | ) | | | (0.23 | ) | | | 69.6 | % |
| Diluted | | | (0.39 | ) | | | (0.23 | ) | | | 69.6 | % |
| | | | | | | | | | | | | |
| Average shares outstanding | | | | | | | | | | | | |
| Basic | | | 7,425,472 | | | | 7,417,642 | | | | 0.1 | % |
| Diluted | | | 7,425,472 | | | | 7,433,494 | | | | -0.1 | % |
| | | | | | | | | | | | | |
| Performance Ratios | | | | | | | | | | | | |
| Return on average equity (A) | | | -6.29 | % | | | -3.89 | % | | | 61.7 | % |
| Return on average assets | | | -0.36 | % | | | -0.21 | % | | | 71.4 | % |
| Net interest margin | | | 2.96 | % | | | 3.02 | % | | | -2.0 | % |
| Efficiency ratio (B) | | | 58.45 | % | | | 55.56 | % | | | 5.2 | % |
NOTE (A) – Net income divided by total shareholders equity less preferred equity.
NOTE (B) – 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 | | 6/30/2010 | | | 3/31/2010 | | | 12/31/2009 | | | 9/30/2009 | | | 6/30/2009 | |
| Condensed Statements of Income | | | | | | | | | | | | | | | |
| Interest income | | | | | | | | | | | | | | | |
| Loans, including fees | | $ | 16,614 | | | $ | 17,040 | | | $ | 17,480 | | | $ | 18,061 | | | $ | 18,050 | |
| Securities | | | 3,592 | | | | 3,594 | | | | 3,882 | | | | 4,351 | | | | 4,710 | |
| Other | | | 2 | | | | 11 | | | | 6 | | | | 5 | | | | 1 | |
| Total interest income | | | 20,208 | | | | 20,645 | | | | 21,368 | | | | 22,417 | | | | 22,761 | |
| Interest expense | | | | | | | | | | | | | | | | | | | | |
| Deposits | | | 5,378 | | | | 5,498 | | | | 5,878 | | | | 6,094 | | | | 6,358 | |
| Borrowings | | | 4,894 | | | | 4,915 | | | | 5,286 | | | | 5,427 | | | | 5,296 | |
| Total interest expense | | | 10,272 | | | | 10,413 | | | | 11,164 | | | | 11,521 | | | | 11,654 | |
| Net interest income | | | 9,936 | | | | 10,232 | | | | 10,204 | | | | 10,896 | | | | 11,107 | |
| Provision for loan losses | | | 8,500 | | | | 5,350 | | | | 6,825 | | | | 4,000 | | | | 5,500 | |
| Net interest income after provision | | | | | | | | | | | | | | | | | | | | |
| for loan losses | | | 1,436 | | | | 4,882 | | | | 3,379 | | | | 6,896 | | | | 5,607 | |
| Noninterest income | | | | | | | | | | | | | | | | | | | | |
| Insurance commissions | | | 1,223 | | | | 1,209 | | | | 1,164 | | | | 1,254 | | | | 1,283 | |
| Service fee income | | | 828 | | | | 707 | | | | 878 | | | | 859 | | | | 857 | |
| Realized securities gains (losses) | | | 1,256 | | | | 264 | | | | 773 | | | | 428 | | | | 39 | |
| Other-than-temporary impairment of securities | | | - | | | | (29 | ) | | | (383 | ) | | | - | | | | (4,768 | ) |
| Unrealized writedown OREO | | | (2,194 | ) | | | - | | | | - | | | | - | | | | - | |
| Other income | | | 568 | | | | 365 | | | | 437 | | | | 291 | | | | 247 | |
| Total noninterest income | | | 1,681 | | | | 2,516 | | | | 2,869 | | | | 2,832 | | | | (2,342 | ) |
| Noninterest expense | | | | | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 3,839 | | | | 3,723 | | | | 3,459 | | | | 3,862 | | | | 4,308 | |
| Net occupancy expense | | | 509 | | | | 521 | | | | 484 | | | | 484 | | | | 466 | |
| Equipment expense | | | 634 | | | | 629 | | | | 529 | | | | 527 | | | | 527 | |
| Professional fees | | | 262 | | | | 274 | | | | 342 | | | | 330 | | | | 403 | |
| FDIC premiums | | | 625 | | | | 825 | | | | 935 | | | | 660 | | | | 1,245 | |
| Other expenses | | | 1,787 | | | | 1,638 | | | | 1,822 | | | | 2,004 | | | | 1,760 | |
| Total noninterest expense | | | 7,656 | | | | 7,610 | | | | 7,571 | | | | 7,867 | | | | 8,709 | |
| Income (loss) before income taxes | | | (4,539 | ) | | | (212 | ) | | | (1,323 | ) | | | 1,861 | | | | (5,444 | ) |
| Income taxes | | | (1,661 | ) | | | (332 | ) | | | (889 | ) | | | 458 | | | | (1,994 | ) |
| Net income (loss) | | | (2,878 | ) | | | 120 | | | | (434 | ) | | | 1,403 | | | | (3,450 | ) |
| Preferred stock dividends | | | 74 | | | | 74 | | | | 74 | | | | - | | | | - | |
| Net income (loss) applicable to common shares | | $ | (2,952 | ) | | $ | 46 | | | $ | (508 | ) | | $ | 1,403 | | | $ | (3,450 | ) |
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | | | | | | | | | | | |
| Five Quarter Performance Summary | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | For the Quarter Ended | |
| | | 6/30/2010 | | | 3/31/2010 | | | 12/31/2009 | | | 9/30/2009 | | | 6/30/2009 | |
| Per Share Data | | | | | | | | | | | | | | | |
| Earnings per share | | | | | | | | | | | | | | | |
| Basic | | $ | (0.40 | ) | | $ | 0.01 | | | $ | (0.07 | ) | | $ | 0.19 | | | $ | (0.47 | ) |
| Diluted | | $ | (0.40 | ) | | $ | 0.01 | | | $ | (0.07 | ) | | $ | 0.19 | | | $ | (0.46 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Average shares outstanding | | | | | | | | | | | | | | | | | | | | |
| Basic | | | 7,425,472 | | | | 7,425,472 | | | | 7,425,472 | | | | 7,425,472 | | | | 7,419,974 | |
| Diluted | | | 7,425,472 | | | | 7,425,472 | | | | 7,425,472 | | | | 7,432,584 | | | | 7,431,969 | |
| | | | | | | | | | | | | | | | | | | | | |
| Performance Ratios | | | | | | | | | | | | | | | | | | | | |
| Return on average equity (A) | | | -13.16 | % | | | 0.20 | % | | | -2.21 | % | | | 6.49 | % | | | -16.13 | % |
| Return on average assets | | | -0.75 | % | | | 0.01 | % | | | -0.13 | % | | | 0.35 | % | | | -0.86 | % |
| Net interest margin | | | 2.92 | % | | | 3.00 | % | | | 2.83 | % | | | 2.99 | % | | | 3.00 | % |
| Efficiency ratio - (B) | | | 59.14 | % | | | 57.78 | % | | | 57.33 | % | | | 56.27 | % | | | 56.50 | % |
NOTE (A) – Net income divided by total shareholders equity less preferred equity.
NOTE (B) – Computed on a tax equivalent basis excluding nonrecurring income and expense items and amortization of intangibles.
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | | | | | | | | | |
| Selected Balance Sheet Data | | | | | | | | | | | | | | | |
| | | For the Quarter Ended | |
| Dollars in thousands, except per share amounts | | 6/30/2010 | | | 3/31/2010 | | | 12/31/2009 | | | 9/30/2009 | | | 6/30/2009 | |
| Assets | | | | | | | | | | | | | | | |
| Cash and due from banks | | $ | 4,190 | | | $ | 5,163 | | | $ | 6,813 | | | $ | 4,415 | | | $ | 4,281 | |
| Interest bearing deposits other banks | | | 24,810 | | | | 9,032 | | | | 34,247 | | | | 6,195 | | | | 10,505 | |
| Securities | | | 258,971 | | | | 262,566 | | | | 271,654 | | | | 285,156 | | | | 289,267 | |
| Loans, net | | | 1,065,118 | | | | 1,112,526 | | | | 1,137,336 | | | | 1,156,432 | | | | 1,165,653 | |
| Property held for sale | | | 69,478 | | | | 50,562 | | | | 40,293 | | | | 31,193 | | | | 20,435 | |
| Intangible assets | | | 9,178 | | | | 9,265 | | | | 9,353 | | | | 9,441 | | | | 9,529 | |
| Other assets | | | 87,861 | | | | 87,382 | | | | 84,929 | | | | 84,961 | | | | 84,240 | |
| Total assets | | $ | 1,519,606 | | | $ | 1,536,496 | | | $ | 1,584,625 | | | $ | 1,577,793 | | | $ | 1,583,910 | |
| | | | | | | | | | | | | | | | | | | | | |
| Liabilities and Shareholders' Equity | | | | | | | | | | | | | | | | | | | | |
| Retail deposits | | $ | 780,809 | | | $ | 776,251 | | | $ | 775,524 | | | $ | 702,785 | | | $ | 705,953 | |
| Brokered time deposits | | | 240,329 | | | | 234,785 | | | | 241,814 | | | | 267,237 | | | | 248,271 | |
| Short-term borrowings | | | 2,739 | | | | 27,456 | | | | 49,739 | | | | 73,733 | | | | 104,718 | |
| Long-term borrowings and | | | | | | | | | | | | | | | | | | | | |
| subordinated debentures | | | 397,564 | | | | 397,724 | | | | 417,881 | | | | 433,037 | | | | 432,391 | |
| Other liabilities | | | 9,311 | | | | 9,746 | | | | 9,007 | | | | 9,064 | | | | 8,824 | |
| Shareholders' equity | | | 88,854 | | | | 90,534 | | | | 90,660 | | | | 91,937 | | | | 83,753 | |
| Total liabilities and shareholders' equity | | $ | 1,519,606 | | | $ | 1,536,496 | | | $ | 1,584,625 | | | $ | 1,577,793 | | | $ | 1,583,910 | |
| | | | | | | | | | | | | | | | | | | | | |
| Book value per common share (A) | | $ | 10.97 | | | $ | 11.18 | | | $ | 11.19 | | | $ | 11.35 | | | $ | 11.28 | |
| Tangible book value per common share (A) | | $ | 9.84 | | | $ | 10.03 | | | $ | 10.04 | | | $ | 10.18 | | | $ | 10.00 | |
| Tangible equity / Tangible assets | | | 5.3 | % | | | 5.3 | % | | | 5.2 | % | | | 5.3 | % | | | 4.7 | % |
NOTE: (A) – Assumes conversion of convertible preferred stock
| SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF) | | | | | | | | | | | | | |
| Loan Composition | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Dollars in thousands | | 6/30/2010 | | | 3/31/2010 | | | 12/31/2009 | | | 9/30/2009 | | | 6/30/2009 | |
| Commercial | | $ | 117,334 | | | $ | 121,514 | | | $ | 122,508 | | | $ | 125,743 | | | $ | 126,661 | |
| Commercial real estate | | | 432,321 | | | | 456,120 | | | | 465,037 | | | | 457,669 | | | | 459,671 | |
| Construction and development | | | 143,907 | | | | 151,281 | | | | 162,080 | | | | 176,783 | | | | 183,733 | |
| Residential real estate | | | 362,649 | | | | 370,713 | | | | 372,867 | | | | 376,440 | | | | 376,019 | |
| Consumer | | | 25,968 | | | | 26,974 | | | | 28,203 | | | | 29,555 | | | | 30,179 | |
| Other | | | 5,540 | | | | 5,685 | | | | 5,652 | | | | 6,087 | | | | 5,760 | |
| Total loans | | | 1,087,719 | | | | 1,132,287 | | | | 1,156,347 | | | | 1,172,277 | | | | 1,182,023 | |
| Less unearned fees and interest | | | 1,833 | | | | 1,918 | | | | 2,011 | | | | 1,997 | | | | 2,065 | |
| Total loans net of unearned fees and interest | | | 1,085,886 | | | | 1,130,369 | | | | 1,154,336 | | | | 1,170,280 | | | | 1,179,958 | |
| Less allowance for loan losses | | | 20,768 | | | | 17,843 | | | | 17,000 | | | | 13,848 | | | | 14,305 | |
| Loans, net | | $ | 1,065,118 | | | $ | 1,112,526 | | | $ | 1,137,336 | | | $ | 1,156,432 | | | $ | 1,165,653 | |
| SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF) | | | | | | | | | | |
| Retail Deposit Composition | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Dollars in thousands | | 6/30/2010 | | | 3/31/2010 | | | 12/31/2009 | | | 9/30/2009 | | | 6/30/2009 | |
| Non interest bearing checking | | $ | 73,519 | | | $ | 71,100 | | | $ | 74,119 | | | $ | 68,929 | | | $ | 69,878 | |
| Interest bearing checking | | | 142,771 | | | | 148,657 | | | | 148,587 | | | | 154,683 | | | | 152,498 | |
| Savings | | | 196,224 | | | | 198,303 | | | | 188,419 | | | | 115,767 | | | | 105,828 | |
| Time deposits | | | 368,295 | | | | 358,191 | | | | 364,399 | | | | 363,406 | | | | 377,749 | |
| Total retail deposits | | $ | 780,809 | | | $ | 776,251 | | | $ | 775,524 | | | $ | 702,785 | | | $ | 705,953 | |
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | | | | | | | | | |
| Asset Quality Information | | | | | | | | | | | | | | | |
| | | For the Quarter Ended | |
| Dollars in thousands | | 6/30/2010 | | | 3/31/2010 | | | 12/31/2009 | | | 9/30/2009 | | | 6/30/2009 | |
| | | | | | | | | | | | | | | | |
| Gross loan charge-offs | | $ | 5,907 | | | $ | 4,606 | | | $ | 3,864 | | | $ | 4,586 | | | $ | 13,288 | |
| Gross loan recoveries | | | (332 | ) | | | (99 | ) | | | (192 | ) | | | (127 | ) | | | (98 | ) |
| Net loan charge-offs | | $ | 5,575 | | | $ | 4,507 | | | $ | 3,672 | | | $ | 4,459 | | | $ | 13,190 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net loan charge-offs to average loans (annualized) | | | 1.94 | % | | | 1.57 | % | | | 1.25 | % | | | 1.51 | % | | | 4.37 | % |
| Allowance for loan losses | | $ | 20,768 | | | $ | 17,843 | | | $ | 17,000 | | | $ | 13,848 | | | $ | 14,305 | |
| Allowance for loan losses as a percentage | | | | | | | | | | | | | | | | | | | | |
| of period end loans | | | 1.91 | % | | | 1.58 | % | | | 1.47 | % | | | 1.18 | % | | | 1.21 | % |
| Nonperforming assets: | | | | | | | | | | | | | | | | | | | | |
| Nonperforming loans | | | | | | | | | | | | | | | | | | | | |
| Commercial | | $ | 1,347 | | | $ | 511 | | | $ | 431 | | | $ | 431 | | | $ | 680 | |
| Commercial real estate | | | 15,387 | | | | 33,907 | | | | 35,217 | | | | 22,684 | | | | 23,287 | |
| Commercial construction and development | | | 812 | | | | 9,668 | | | | 11,553 | | | | 10,354 | | | | 11,156 | |
| Residential construction and development | | | 18,307 | | | | 7,018 | | | | 14,775 | | | | 16,730 | | | | 18,352 | |
| Residential real estate | | | 6,125 | | | | 4,220 | | | | 4,563 | | | | 8,578 | | | | 8,116 | |
| Consumer | | | 23 | | | | 209 | | | | 403 | | | | 75 | | | | 107 | |
| Total nonperforming loans | | | 42,001 | | | | 55,533 | | | | 66,942 | | | | 58,852 | | | | 61,698 | |
| Foreclosed properties | | | | | | | | | | | | | | | | | | | | |
| Commercial real estate | | | 15,011 | | | | 5,086 | | | | 4,788 | | | | 4,873 | | | | 4,561 | |
| Commercial construction and development | | | 16,213 | | | | 4,814 | | | | 2,028 | | | | 1,903 | | | | 903 | |
| Residential construction and development | | | 34,506 | | | | 36,447 | | | | 30,230 | | | | 23,375 | | | | 14,001 | |
| Residential real estate | | | 3,748 | | | | 4,215 | | | | 3,247 | | | | 1,042 | | | | 970 | |
| Total foreclosed properties | | | 69,478 | | | | 50,562 | | | | 40,293 | | | | 31,193 | | | | 20,435 | |
| Other repossessed assets | | | 333 | | | | 291 | | | | 269 | | | | 1 | | | | 11 | |
| Total nonperforming assets | | $ | 111,812 | | | $ | 106,386 | | | $ | 107,504 | | | $ | 90,046 | | | $ | 82,144 | |
| | | | | | | | | | | | | | | | | | | | | |
| Nonperforming loans to period end loans | | | 3.86 | % | | | 4.90 | % | | | 5.79 | % | | | 5.02 | % | | | 5.22 | % |
| Nonperforming assets to period end assets | | | 7.36 | % | | | 6.92 | % | | | 6.78 | % | | | 5.71 | % | | | 5.19 | % |
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | |
| Average Balance Sheet, Interest Earnings & Expenses and Average Rates | | | | |
| Q2 2010 vs Q2 2009 | | | | | | | |
| | Q2 2010 | | Q2 2009 |
| | 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 | $1,116,980 | $16,533 | 5.94% | | $1,198,606 | $17,936 | 6.00% |
| Tax-exempt | 6,070 | 123 | 8.13% | | 8,312 | 171 | 8.25% |
| Securities | | | | | | | |
| Taxable | 247,404 | 3,226 | 5.23% | | 273,515 | 4,194 | 6.15% |
| Tax-exempt | 41,156 | 685 | 6.75% | | 46,466 | 782 | 6.75% |
| Interest bearing deposits other banks | | | | | | | |
| and Federal funds sold | 1,075 | 2 | 0.75% | | 3,454 | 1 | 0.12% |
| Total interest earning assets | 1,412,685 | 20,569 | 5.84% | | 1,530,353 | 23,084 | 6.05% |
| | | | | | | | |
| Noninterest earning assets | | | | | | | |
| Cash & due from banks | 13,454 | | | | 20,355 | | |
| Premises & equipment | 23,926 | | | | 23,649 | | |
| Other assets | 99,812 | | | | 51,378 | | |
| Allowance for loan losses | (19,003) | | | | (23,151) | | |
| Total assets | $1,530,874 | | | | $1,602,584 | | |
| | | | | | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | |
| | | | | | | | |
| Liabilities | | | | | | | |
| Interest bearing liabilities | | | | | | | |
| Interest bearing | | | | | | | |
| demand deposits | $145,966 | $157 | 0.43% | | $156,957 | $196 | 0.50% |
| Savings deposits | 196,653 | 637 | 1.30% | | 100,967 | 430 | 1.71% |
| Time deposits | 601,629 | 4,585 | 3.06% | | 630,290 | 5,732 | 3.65% |
| Short-term borrowings | 16,231 | 20 | 0.49% | | 107,922 | 146 | 0.54% |
| Long-term borrowings and | | | | | | | |
| subordinated debentures | 397,640 | 4,874 | 4.92% | | 431,828 | 5,150 | 4.78% |
| | 1,358,119 | 10,273 | 3.03% | | 1,427,964 | 11,654 | 3.27% |
| Noninterest bearing liabilities | | | | | | | |
| Demand deposits | 71,934 | | | | 81,022 | | |
| Other liabilities | 9,855 | | | | 8,039 | | |
| Total liabilities | 1,439,908 | | | | 1,517,025 | | |
| | | | | | | | |
| Shareholders' equity - preferred | 3,519 | | | | - | | |
| Shareholders' equity - common | 87,447 | | | | 85,559 | | |
| Total liabilities and | | | | | | | |
| shareholders' equity | $1,530,874 | | | | $1,602,584 | | |
| | | | | | | | |
| NET INTEREST EARNINGS | | $10,296 | | | | $11,430 | |
| | | | | | | | |
| NET INTEREST YIELD ON EARNING ASSETS | | 2.92% | | | | 3.00% |
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | |
| Average Balance Sheet, Interest Earnings & Expenses and Average Rates | | | | |
| YTD 2010 vs YTD 2009 | | | | | | | |
| | |
| | YTD 2010 | | YTD 2009 |
| | 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 | $1,131,013 | $33,491 | 5.97% | | $1,200,625 | $36,083 | 6.06% |
| Tax-exempt | 6,376 | 247 | 7.81% | | 8,134 | 333 | 8.26% |
| Securities | | | | | | | |
| Taxable | 249,937 | 6,554 | 5.29% | | 285,779 | 8,418 | 5.94% |
| Tax-exempt | 41,475 | 1,374 | 6.68% | | 46,254 | 1,559 | 6.80% |
| Interest bearing deposits other banks | | | | | | | |
| and Federal funds sold | 708 | 13 | 3.70% | | 1,882 | 1 | 0.11% |
| Total interest earning assets | 1,429,509 | 41,679 | 5.88% | | 1,542,674 | 46,394 | 6.06% |
| | | | | | | | |
| Noninterest earning assets | | | | | | | |
| Cash & due from banks | 14,543 | | | | 18,873 | | |
| Premises & equipment | 24,034 | | | | 23,188 | | |
| Other assets | 92,337 | | | | 48,919 | | |
| Allowance for loan losses | (18,641) | | | | (21,270) | | |
| Total assets | $1,541,782 | | | | $1,612,384 | | |
| | | | | | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | |
| | | | | | | | |
| Liabilities | | | | | | | |
| Interest bearing liabilities | | | | | | | |
| Interest bearing | | | | | | | |
| demand deposits | $146,331 | $330 | 0.45% | | $155,456 | $392 | 0.51% |
| Savings deposits | 195,746 | 1,328 | 1.37% | | 88,103 | 770 | 1.76% |
| Time deposits | 598,749 | 9,218 | 3.10% | | 638,556 | 11,817 | 3.73% |
| Short-term borrowings | 30,519 | 78 | 0.52% | | 129,928 | 358 | 0.56% |
| Long-term borrowings and | | | | | | | |
| subordinated debentures | 399,155 | 9,732 | 4.92% | | 427,819 | 9,973 | 4.70% |
| | 1,370,500 | 20,686 | 3.04% | | 1,439,862 | 23,310 | 3.26% |
| Noninterest bearing liabilities | | | | | | | |
| Demand deposits | 71,255 | | | | 77,775 | | |
| Other liabilities | 8,865 | | | | 8,028 | | |
| Total liabilities | 1,450,620 | | | | 1,525,665 | | |
| | | | | | | | |
| Shareholders' equity - preferred | 3,519 | | | | | | |
| Shareholders' equity - common | 87,643 | | | | 86,719 | | |
| Total liabilities and | | | | | | | |
| shareholders' equity | $1,541,782 | | | | $1,612,384 | | |
| | | | | | | | |
| NET INTEREST EARNINGS | | $20,993 | | | | $23,084 | |
| | | | | | | | |
| NET INTEREST YIELD ON EARNING ASSETS | | 2.96% | | | | 3.02% |
| 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 | | 6/30/2010 | | | 6/30/2009 | | | 6/30/2010 | | | 6/30/2009 | |
| | | | | | | | | | | | | |
| Net income - excluding realized securities gains, other-than- | | | | | | | | | | |
| temporary impairment of securities, unrealized OREO | | | | | | | | | | |
| writedown, and FDIC special assessment | | $ | (2,361 | ) | | $ | (8 | ) | | $ | (2,464 | ) | | $ | 1,731 | |
| | | | | | | | | | | | | | | | | |
| Realized securities gains | | | 1,256 | | | | 39 | | | | 1,520 | | | | 295 | |
| Applicable income tax effect | | | (465 | ) | | | (14 | ) | | | (562 | ) | | | (109 | ) |
| Other-than-temporary impairment of securities | | | - | | | | (4,768 | ) | | | (29 | ) | | | (4,983 | ) |
| Applicable income tax effect | | | - | | | | 1,764 | | | | 11 | | | | 1,844 | |
| Unrealized OREO writedown | | | (2,194 | ) | | | - | | | | (2,194 | ) | | | - | |
| Applicable income tax effect | | | 812 | | | | - | | | | 812 | | | | - | |
| FDIC special assessment | | | - | | | | (735 | ) | | | - | | | | (735 | ) |
| Applicable income tax effect | | | - | | | | 272 | | | | - | | | | 272 | |
| | | | (591 | ) | | | (3,442 | ) | | | (442 | ) | | | (3,416 | ) |
| GAAP net income | | $ | (2,952 | ) | | $ | (3,450 | ) | | $ | (2,906 | ) | | $ | (1,685 | ) |
| | | | | | | | | | | | | | | | | |
| Diluted earnings per share - excluding realized securities gains | | | | | | | | | | | | | |
| other-than-temporary impairment of securities, unrealized | | | | | | | | | | | | | |
| OREO writedown, and FDIC special assessment | | $ | (0.32 | ) | | $ | 0.01 | | | $ | (0.33 | ) | | $ | 0.22 | |
| | | | | | | | | | | | | | | | | |
| Realized securities gains | | | 0.17 | | | | (0.01 | ) | | | 0.20 | | | | 0.04 | |
| Applicable income tax effect | | | (0.06 | ) | | | - | | | | (0.07 | ) | | | (0.01 | ) |
| Other-than-temporary impairment of securities | | | - | | | | (0.64 | ) | | | - | | | | (0.67 | ) |
| Applicable income tax effect | | | - | | | | 0.24 | | | | - | | | | 0.25 | |
| Unrealized OREO writedown | | | (0.30 | ) | | | - | | | | (0.30 | ) | | | - | |
| Applicable income tax effect | | | 0.11 | | | | - | | | | 0.11 | | | | - | |
| FDIC special assessment | | | - | | | | (0.10 | ) | | | - | | | | (0.10 | ) |
| Applicable income tax effect | | | - | | | | 0.04 | | | | - | | | | 0.04 | |
| | | | (0.08 | ) | | | (0.47 | ) | | | (0.06 | ) | | | (0.45 | ) |
| GAAP diluted earnings per share | | $ | (0.40 | ) | | $ | (0.46 | ) | | $ | (0.39 | ) | | $ | (0.23 | ) |
| | | | | | | | | | | | | | | | | |
| Total revenue - excluding realized securities gains, | | | | | | | | | | | | | | | | |
| other-than-temporary impairment of securities and | | | | | | | | | | | | | | | | |
| unrealized OREO writedown | | $ | 12,555 | | | $ | 13,494 | | | $ | 25,068 | | | $ | 27,229 | |
| | | | | | | | | | | | | | | | | |
| Realized securities gains | | | 1,256 | | | | 39 | | | | 1,520 | | | | 295 | |
| Other-than-temporary impairment of securities | | | - | | | | (4,768 | ) | | | (29 | ) | | | (4,983 | ) |
| Unrealized OREO writedown | | | (2,194 | ) | | | - | | | | (2,194 | ) | | | - | |
| | | | (938 | ) | | | (4,729 | ) | | | (703 | ) | | | (4,688 | ) |
| GAAP total revenue | | $ | 11,617 | | | $ | 8,765 | | | $ | 24,365 | | | $ | 22,541 | |
| | | | | | | | | | | | | | | | | |
| Total noninterest income - excluding realized securities | | | | | | | | | | | | | |
| gains, other-than-temporary impairment of securities | | | | | | | | | | | | | |
| and unrealized OREO writedown | | $ | 2,619 | | | $ | 2,387 | | | $ | 4,901 | | | $ | 4,787 | |
| | | | | | | | | | | | | | | | | |
| Realized securities gains | | | 1,256 | | | | 39 | | | | 1,520 | | | | 295 | |
| Other-than-temporary impairment of securities | | | - | | | | (4,768 | ) | | | (29 | ) | | | (4,983 | ) |
| Unrealized OREO writedown | | | (2,194 | ) | | | - | | | | (2,194 | ) | | | - | |
| | | | (938 | ) | | | (4,729 | ) | | | (703 | ) | | | (4,688 | ) |
| GAAP total noninterest income | | $ | 1,681 | | | $ | (2,342 | ) | | $ | 4,198 | | | $ | 99 | |
