FOR RELEASE 6:00 AM ET, April 25, 2013
Contact: Robert S. Tissue, Sr. Vice President & CFO
Telephone: (304) 530-0552
Email: rtissue@summitfgi.com
SUMMIT FINANCIAL GROUP REPORTS FIRST QUARTER 2013 RESULTS
Q1 2013 Diluted EPS $0.19 compared to $0.18 in Q1 2012
MOOREFIELD, WV – April 25, 2013 (GLOBE NEWSWIRE) – Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ: SMMF) today reported first quarter 2013 net income applicable to common shares of $1.60 million, or $0.19 per diluted share, compared to $1.50 million, or $0.18 per diluted share, for the first quarter of 2012. Q1 2013 earnings compared to Q1 2012 were positively impacted by a $1.5 million decrease in combined provision for loan losses and write downs of foreclosed properties, which was partially negated by $1.1 million reduction in realized securities gains.
Excluding from first quarter 2013 nonrecurring items (on a pre-tax basis) consisting of realized securities gains of $42,000, losses on sales of assets of $40,000, charges for other-than-temporary impairment (“OTTI”) of securities of $54,000 and write-downs of foreclosed properties of $929,000, pro forma first quarter 2013 earnings were approximately $2.21 million, or $0.26 per diluted share. Excluding from first quarter 2012 nonrecurring realized securities gains of $1.2 million, losses on sales of assets of $77,000, OTTI of securities of $229,000, and write-downs of foreclosed properties of $1.9 million, pro forma earnings of $2.17 million would have resulted, or $0.25 per diluted share.
Highlights for Q1 2013 include:
| · | Achieved eighth consecutive quarter of positive quarterly earnings. |
| · | Nonperforming assets declined for the fifth consecutive quarter, reaching its lowest level since Q1 2011. |
| · | Net interest margin increased 4 basis points quarter over quarter and 3 basis points compared to Q1 2012. |
| · | Achieved $7.7 million of net growth in gross loans. |
| · | Recorded charges of $929,000 and $54,000, respectively, to write-down foreclosed properties and to recognize OTTI of securities, compared to $1.91 million and $229,000, respectively, in Q1 2012. |
| · | Noninterest expenses remained well-controlled, increasing less than 1% compared to Q1 2012. |
| · | Summit’s leverage capital ratio is at its highest level in seven years and its total risk-based capital ratio is at highest level in thirteen years. |
H. Charles Maddy III, President and Chief Executive Officer of Summit, commented, “Our continued progress towards: achieving improved earnings performance, reducing our portfolio of problem assets, and strengthening our capital levels proceeds as planned. Reducing our portfolio of problem assets remains top priority, and we are very pleased to have reduced nonperforming assets in each of the five most recent quarters. While our disposal of foreclosed properties is still not at the pace we would like, we are encouraged to observe improvement in local real estate market conditions during the quarter just ended. We anticipate earnings may continue to fluctuate from quarter-to-quarter in the near term as our foreclosed properties are re-appraised and written-down to estimated fair values on an ongoing basis.”
Results from Operations
Total revenue for first quarter 2013, consisting of net interest income and noninterest income, was $11.5 million compared to $11.7 million for the first quarter 2012. Total revenue excluding nonrecurring items (as enumerated above) was $12.5 million for first quarter 2013 compared to $12.8 million in the prior-year quarter.
For the first quarter of 2013, net interest income was $9.8 million, a decrease of 2.6 percent from the $10.0 million reported in the prior-year first quarter and decreased $138,000 compared to the linked quarter, reflecting reduced volumes of interest earning assets. The net interest margin for first quarter 2013 was 3.23 percent compared to 3.20 percent for the year-ago quarter, and 3.19 percent for the linked quarter, principally as result of maturing wholesale funds reissued at substantially lower rates which more than offset reductions in the yields on loans and securities.
Noninterest income, consisting primarily of insurance commissions from Summit's insurance agency subsidiary and service fee income from community banking activities, for first quarter 2013 was $1.78 million compared to $1.70 million for the comparable period of 2012. Excluding nonrecurring items (as enumerated above), noninterest income was $2.76 million for first quarter 2013, compared to $2.76 million reported for first quarter 2012.
The provision for loan losses was $1.5 million for the first quarter of 2013 compared to $2.5 million for the linked quarter and $2.0 million for the year-ago quarter.
Noninterest expense continues to be well-controlled. Total noninterest expense increased 0.7% to $7.59 million compared to $7.54 million for the prior-year first quarter. Our cost-saving initiatives continue and their impact remains beneficial.
Balance Sheet
At March 31, 2013, total assets were $1.39 billion, an increase of $3.1 million, or 0.2 percent since December 31, 2012. Total loans, net of unearned fees and allowance for loan losses, were $945.7 million at March 31, 2013, up $8.6 million, or 0.9 percent, from the $937.2 million reported at year-end 2012.
Commercial loans increased $1.0 million or 1.2 percent and commercial real estate (“CRE”) increased $10.1 million, or 2.3 percent. All other loan categories declined since year-end 2012. Residential real estate declined $965,000, or 0.3 percent, while construction and development (“C&D”) loans declined $1.0 million, or 1.3 percent.
At March 31, 2013, deposits were $1.07 billion, an increase of $39.2 million, or 3.8 percent, since year end 2012. During first quarter 2013, savings and time deposits grew by $4.5 million and $36.5 million, respectively, or 2.4 percent and 6.5 percent, respectively. Long-term borrowings and subordinated debentures declined by 16.6 percent since year end 2012, as the Company paid down $39.7 million in maturing borrowings, which was funded by issuance of long-term time deposits.
Asset Quality
As of March 31, 2013, nonperforming assets (“NPAs”), consisting of nonperforming loans, foreclosed properties, and repossessed assets, were $90.9 million, or 6.54 percent of assets. This compares to $94.0 million, or 6.77 percent of assets at the linked quarter, and $108.6 million, or 7.52 percent of assets, at first quarter 2012.
First quarter 2013 net loan charge-offs were $2.4 million, or 0.99 percent of average loans annualized; while adding $1.5 million to its allowance for loan losses. The allowance for loan losses stood at $17.0 million, or 1.77 percent of total loans at March 31, 2013, compared to 1.88 percent at year-end 2012.
Capital Adequacy
Shareholders’ equity was $110.0 million as of March 31, 2013 compared to $108.6 million December 31, 2012.
Summit's depository institution, Summit Community Bank, Inc. (the “Bank”), remains well in excess of regulatory requirements for a "well capitalized" institution at March 31, 2013. The Bank’s total risk-based capital ratio improved to 15.2 percent at March 31, 2013 compared to 15.0 percent at December 31, 2012, while its Tier 1 leverage capital ratio improved to 10.0 from the 9.8 percent reported at December 31, 2012. Total common shares outstanding as of March 31, 2013 were 7,437,472.
About the Company
Summit Financial Group, Inc. is a $1.39 billion financial holding company headquartered in Moorefield, West Virginia. Summit provides community banking services primarily in the Eastern Panhandle and South Central regions of West Virginia and the Northern and Shenandoah Valley regions of Virginia, through its bank subsidiary, Summit Community Bank, Inc., which operates fifteen banking locations. Summit also operates Summit Insurance Services, LLC in Moorefield, West Virginia and Leesburg, 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, gains/losses on sales of assets, and write-downs of foreclosed properties to estimated fair value included in its Statements of Income. Management deems 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 -- Q1 2013 vs Q1 2012 | | | | | |
| | | | | | | |
| | | | | |
| | For the Quarter Ended | | Percent | |
| Dollars in thousands | 3/31/2013 | | 3/31/2012 | | Change | |
| Condensed Statements of Income | | | | | | |
| Interest income | | | | | | |
| Loans, including fees | $ | 12,904 | | $ | 14,365 | | -10.2 | % |
| Securities | | 1,664 | | | 2,421 | | -31.3 | % |
| Other | | 1 | | | 11 | | -90.9 | % |
| Total interest income | | 14,569 | | | 16,797 | | -13.3 | % |
| Interest expense | | | | | | | | |
| Deposits | | 2,768 | | | 3,713 | | -25.5 | % |
| Borrowings | | 2,043 | | | 3,066 | | -33.4 | % |
| Total interest expense | | 4,811 | | | 6,779 | | -29.0 | % |
| Net interest income | | 9,758 | | | 10,018 | | -2.6 | % |
| Provision for loan losses | | 1,500 | | | 2,001 | | -25.0 | % |
| Net interest income after provision | | | | | | | | |
| for loan losses | | 8,258 | | | 8,017 | | 3.0 | % |
| | | | | | | | | |
| Noninterest income | | | | | | | | |
| Insurance commissions | | 1,184 | | | 1,158 | | 2.2 | % |
| Service fees related to deposit accounts | | 1,012 | | | 1,014 | | -0.2 | % |
| Realized securities gains | | 42 | | | 1,165 | | -96.4 | % |
| Gain (loss) on sale of assets | | (40 | ) | | (77 | ) | -48.1 | % |
| Other-than-temporary impairment of securities | | (54 | ) | | (229 | ) | -76.4 | % |
| Write-downs of foreclosed properties | | (929 | ) | | (1,912 | ) | -51.4 | % |
| Other income | | 564 | | | 584 | | -3.4 | % |
| Total noninterest income | | 1,779 | | | 1,703 | | 4.5 | % |
| Noninterest expense | | | | | | | | |
| Salaries and employee benefits | | 4,117 | | | 3,901 | | 5.5 | % |
| Net occupancy expense | | 457 | | | 479 | | -4.6 | % |
| Equipment expense | | 598 | | | 594 | | 0.7 | % |
| Professional fees | | 251 | | | 304 | | -17.4 | % |
| FDIC premiums | | 540 | | | 522 | | 3.4 | % |
| Foreclosed properties expense | | 279 | | | 374 | | -25.4 | % |
| Other expenses | | 1,351 | | | 1,365 | | -1.0 | % |
| Total noninterest expense | | 7,593 | | | 7,539 | | 0.7 | % |
| Income before income taxes | | 2,444 | | | 2,181 | | 12.1 | % |
| Income taxes | | 651 | | | 483 | | 34.8 | % |
| Net income | | 1,793 | | | 1,698 | | 5.6 | % |
| Preferred stock dividends | | 194 | | | 194 | | 0.0 | % |
| | | | | | | | | |
| Net income applicable to common shares | $ | 1,599 | | $ | 1,504 | | 6.3 | % |
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | |
| Quarterly Performance Summary -- Q1 2013 vs Q1 2012 | | | | | |
| | | | | |
| | For the Quarter Ended | | Percent | |
| | 3/31/2013 | | 3/31/2012 | | Change | |
| Per Share Data | | | | | | |
| Earnings per common share | | | | | | |
| Basic | $ | 0.22 | | $ | 0.20 | | 10.0 | % |
| Diluted | $ | 0.19 | | $ | 0.18 | | 5.6 | % |
| | | | | | | | | |
| Average shares outstanding | | | | | | | | |
| Basic | | 7,432,254 | | | 7,425,472 | | 0.1 | % |
| Diluted | | 9,613,886 | | | 9,600,017 | | 0.1 | % |
| | | | | | | | | |
| Performance Ratios | | | | | | | | |
| Return on average equity (A) | | 6.55 | % | | 6.49 | % | 0.9 | % |
| Return on average assets | | 0.52 | % | | 0.47 | % | 10.6 | % |
| Net interest margin | | 3.23 | % | | 3.20 | % | 0.9 | % |
| Efficiency ratio (B) | | 56.00 | % | | 53.71 | % | 4.3 | % |
NOTE (A) – Net income divided by total shareholders’ 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 | 3/31/2013 | | 12/31/2012 | | 9/30/2012 | | 6/30/2012 | | 3/31/2012 |
| Condensed Statements of Income | | | | | | | | | |
| Interest income | | | | | | | | | |
| Loans, including fees | $ | 12,904 | | $ | 13,512 | | $ | 13,648 | | $ | 14,041 | | $ | 14,365 |
| Securities | | 1,664 | | | 1,703 | | | 1,934 | | | 2,225 | | | 2,421 |
| Other | | 1 | | | 5 | | | 7 | | | 12 | | | 11 |
| Total interest income | | 14,569 | | | 15,220 | | | 15,589 | | | 16,278 | | | 16,797 |
| Interest expense | | | | | | | | | | | | | | |
| Deposits | | 2,768 | | | 3,017 | | | 3,067 | | | 3,360 | | | 3,713 |
| Borrowings | | 2,043 | | | 2,307 | | | 2,587 | | | 2,947 | | | 3,066 |
| Total interest expense | | 4,811 | | | 5,324 | | | 5,654 | | | 6,307 | | | 6,779 |
| Net interest income | | 9,758 | | | 9,896 | | | 9,935 | | | 9,971 | | | 10,018 |
| Provision for loan losses | | 1,500 | | | 2,498 | | | 2,000 | | | 2,001 | | | 2,001 |
| Net interest income after provision | | | | | | | | | | | | | | |
| for loan losses | | 8,258 | | | 7,398 | | | 7,935 | | | 7,970 | | | 8,017 |
| | | | | | | | | | | | | | | |
| Noninterest income | | | | | | | | | | | | | | |
| Insurance commissions | | 1,184 | | | 1,082 | | | 1,052 | | | 1,141 | | | 1,158 |
| Service fees related to deposit accounts | | 1,012 | | | 1,092 | | | 1,074 | | | 1,075 | | | 1,014 |
| Gain (loss) on sale of assets | | 42 | | | (94 | ) | | 16 | | | (523 | ) | | (77) |
| Realized securities gains (losses) | | (40 | ) | | 103 | | | 760 | | | 320 | | | 1,165 |
| Other-than-temporary impairment of securities | | (54 | ) | | (76 | ) | | (39 | ) | | (106 | ) | | (229) |
| Write-downs of foreclosed properties | | (929 | ) | | (748 | ) | | (2,571 | ) | | (1,631 | ) | | (1,912) |
| Other income | | 564 | | | 644 | | | 514 | | | 552 | | | 584 |
| Total noninterest income | | 1,779 | | | 2,003 | | | 806 | | | 828 | | | 1,703 |
| Noninterest expense | | | | | | | | | | | | | | |
| Salaries and employee benefits | | 4,117 | | | 3,799 | | | 3,940 | | | 3,892 | | | 3,901 |
| Net occupancy expense | | 457 | | | 495 | | | 476 | | | 490 | | | 479 |
| Equipment expense | | 598 | | | 576 | | | 576 | | | 603 | | | 594 |
| Professional fees | | 251 | | | 314 | | | 289 | | | 242 | | | 316 |
| FDIC premiums | | 540 | | | 535 | | | 510 | | | 500 | | | 522 |
| Foreclosed properties expense | | 279 | | | 269 | | | 356 | | | 233 | | | 362 |
| Other expenses | | 1,351 | | | 1,434 | | | 1,325 | | | 1,335 | | | 1,365 |
| Total noninterest expense | | 7,593 | | | 7,422 | | | 7,472 | | | 7,295 | | | 7,539 |
| Income before income taxes | | 2,444 | | | 1,979 | | | 1,269 | | | 1,503 | | | 2,181 |
| Income taxes | | 651 | | | (126 | ) | | 272 | | | 590 | | | 483 |
| Net income | | 1,793 | | | 2,105 | | | 997 | | | 913 | | | 1,698 |
| Preferred stock dividends | | 194 | | | 194 | | | 194 | | | 194 | | | 194 |
| Net income applicable to common shares | $ | 1,599 | | $ | 1,911 | | $ | 803 | | $ | 719 | | $ | 1,504 |
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | | |
| Five Quarter Performance Summary | | | | | | | | | |
| | | | | | | | |
| | For the Quarter Ended |
| | 3/31/2013 | | 12/31/2012 | | 9/30/2012 | | 6/30/2012 | | 3/31/2012 |
| Per Share Data | | | | | | | | | |
| Earnings per common share | | | | | | | | | |
| Basic | $ | 0.22 | | $ | 0.26 | | $ | 0.11 | | $ | 0.10 | | $ | 0.20 |
| Diluted | $ | 0.19 | | $ | 0.22 | | $ | 0.10 | | $ | 0.09 | | $ | 0.18 |
| | | | | | | | | | | | | | | |
| Average shares outstanding | | | | | | | | | | | | | | |
| Basic | | 7,432,254 | | | 7,425,472 | | | 7,425,472 | | | 7,425,472 | | | 7,425,472 |
| Diluted | | 9,613,886 | | | 9,601,435 | | | 9,601,278 | | | 8,927,802 | | | 9,600,017 |
| | | | | | | | | | | | | | | |
| Performance Ratios | | | | | | | | | | | | | | |
| Return on average equity (A) | | 6.55 | % | | 7.76 | % | | 3.71 | % | | 3.44 | % | | 6.49% |
| Return on average assets | | 0.52 | % | | 0.60 | % | | 0.28 | % | | 0.25 | % | | 0.47% |
| Net interest margin | | 3.23 | % | | 3.19 | % | | 3.17 | % | | 3.20 | % | | 3.20% |
| Efficiency ratio (B) | | 56.00 | % | | 54.00 | % | | 54.37 | % | | 53.13 | % | | 53.71% |
NOTE (A) – Net income divided by average total shareholders’ 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 | 3/31/2013 | | 12/31/2012 | | 9/30/2012 | | 6/30/2012 | | 3/31/2012 |
| | | | | | | | | | |
| Assets | | | | | | | | | |
| Cash and due from banks | $ | 3,906 | | $ | 3,833 | | $ | 3,752 | | $ | 4,266 | | $ | 4,059 |
| Interest bearing deposits other banks | | 7,915 | | | 10,969 | | | 13,441 | | | 14,288 | | | 26,855 |
| Securities | | 283,054 | | | 281,539 | | | 291,992 | | | 289,151 | | | 292,002 |
| Loans, net | | 945,741 | | | 937,168 | | | 940,933 | | | 948,294 | | | 957,797 |
| Property held for sale | | 54,625 | | | 56,172 | | | 56,033 | | | 60,069 | | | 61,584 |
| Premises and equipment, net | | 21,023 | | | 21,129 | | | 21,265 | | | 21,470 | | | 21,756 |
| Intangible assets | | 8,212 | | | 8,300 | | | 8,387 | | | 8,475 | | | 8,563 |
| Cash surrender value of life insurance policies | | 29,791 | | | 29,553 | | | 30,065 | | | 29,808 | | | 29,559 |
| Other assets | | 35,931 | | | 38,441 | | | 38,218 | | | 40,620 | | | 42,190 |
| Total assets | $ | 1,390,198 | | $ | 1,387,104 | | $ | 1,404,086 | | $ | 1,416,441 | | $ | 1,444,365 |
| | | | | | | | | | | | | | | |
| Liabilities and Shareholders' Equity | | | | | | | | | | | | | | |
| Deposits | $ | 1,066,318 | | $ | 1,027,125 | | $ | 1,027,307 | | $ | 1,001,669 | | $ | 1,011,139 |
| Short-term borrowings | | 5,960 | | | 3,958 | | | 20,957 | | | 10,957 | | | 15,956 |
| Long-term borrowings and | | | | | | | | | | | | | | |
| subordinated debentures | | 199,977 | | | 239,657 | | | 240,133 | | | 290,024 | | | 303,510 |
| Other liabilities | | 7,928 | | | 7,809 | | | 8,361 | | | 8,084 | | | 9,361 |
| Shareholders' equity | | 110,015 | | | 108,555 | | | 107,328 | | | 105,707 | | | 104,399 |
| Total liabilities and shareholders' equity | $ | 1,390,198 | | $ | 1,387,104 | | $ | 1,404,086 | | $ | 1,416,441 | | $ | 1,444,365 |
| | | | | | | | | | | | | | | |
| Book value per common share (A) | $ | 11.45 | | $ | 11.31 | | $ | 11.20 | | $ | 11.01 | | $ | 10.87 |
| Tangible book value per common share (A) | $ | 10.60 | | $ | 10.44 | | $ | 10.33 | | $ | 10.13 | | $ | 9.98 |
| Tangible equity / Tangible assets | | 7.4 | % | | 7.3 | % | | 7.1 | % | | 6.9 | % | | 6.7% |
NOTE (A) – Assumes conversion of convertible preferred stock
| SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF) | | | | | | | | |
| Regulatory Capital Ratios | | | | | | | | | |
| | | | | | | | | | |
| | 3/31/2013 | | 12/31/2012 | | 9/30/2012 | | 6/30/2012 | | 3/31/2012 |
| Summit Financial Group, Inc. | | | | | | | | | |
| Total Risk Based Capital | 14.1 | % | 14.0 | % | 13.8 | % | 13.6 | % | 13.3% |
| Tier 1 Risk Based Capital | 11.8 | % | 11.6 | % | 11.3 | % | 11.1 | % | 10.8% |
| Tier 1 Leverage Ratio | 8.4 | % | 8.3 | % | 8.0 | % | 7.9 | % | 7.8% |
| | | | | | | | | | |
| Summit Community Bank, Inc. | | | | | | | | | |
| Total Risk Based Capital | 15.2 | % | 15.0 | % | 14.6 | % | 14.3 | % | 14.0% |
| Tier 1 Risk Based Capital | 13.9 | % | 13.7 | % | 13.3 | % | 13.1 | % | 12.7% |
| Tier 1 Leverage Ratio | 10.0 | % | 9.8 | % | 9.5 | % | 9.3 | % | 9.1% |
| SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF) | | | | | | |
| Loan Composition | | | | | | | | | |
| | | | | | | | | | |
| Dollars in thousands | 3/31/2013 | | 12/31/2012 | | 9/30/2012 | | 6/30/2012 | | 3/31/2012 |
| | | | | | | | | | |
| Commercial | $ | 86,877 | | $ | 85,829 | | $ | 88,997 | | $ | 92,060 | | $ | 99,386 |
| Commercial real estate | | | | | | | | | | | | | | |
| Owner occupied | | 151,942 | | | 154,252 | | | 150,090 | | | 152,347 | | | 153,528 |
| Non-owner occupied | | 288,475 | | | 276,082 | | | 279,132 | | | 280,891 | | | 275,727 |
| Construction and development | | | | | | | | | | | | | | |
| Land and development | | 76,277 | | | 79,335 | | | 82,857 | | | 84,383 | | | 88,212 |
| Construction | | 5,782 | | | 3,772 | | | 2,087 | | | 1,793 | | | 2,148 |
| Residential real estate | | | | | | | | | | | | | | |
| Non-jumbo | | 213,965 | | | 216,714 | | | 215,584 | | | 217,321 | | | 219,485 |
| Jumbo | | 62,849 | | | 61,567 | | | 62,748 | | | 61,962 | | | 62,836 |
| Home equity | | 53,765 | | | 53,263 | | | 53,455 | | | 51,692 | | | 50,884 |
| Consumer | | 19,638 | | | 20,586 | | | 21,290 | | | 21,212 | | | 21,573 |
| Other | | 3,191 | | | 3,701 | | | 2,513 | | | 2,523 | | | 2,540 |
| Total loans, net of unearned fees | | 962,761 | | | 955,101 | | | 958,753 | | | 966,184 | | | 976,319 |
| Less allowance for loan losses | | 17,020 | | | 17,933 | | | 17,820 | | | 17,890 | | | 18,522 |
| Loans, net | $ | 945,741 | | $ | 937,168 | | $ | 940,933 | | $ | 948,294 | | $ | 957,797 |
| SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF) | | | | | | |
| Deposit Composition | | | | | | | | | |
| | | | | | | | | | |
| Dollars in thousands | 3/31/2013 | | 12/31/2012 | | 9/30/2012 | | 6/30/2012 | | 3/31/2012 |
| Non interest bearing checking | $ | 93,125 | | $ | 100,592 | | $ | 96,764 | | $ | 96,172 | | $ | 87,916 |
| Interest bearing checking | | 181,327 | | | 175,706 | | | 177,236 | | | 164,867 | | | 172,506 |
| Savings | | 197,587 | | | 193,039 | | | 197,610 | | | 204,509 | | | 212,402 |
| Time deposits | | 594,279 | | | 557,788 | | | 555,697 | | | 536,121 | | | 538,315 |
| Total deposits | $ | 1,066,318 | | $ | 1,027,125 | | $ | 1,027,307 | | $ | 1,001,669 | | $ | 1,011,139 |
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | | | | | | | | |
| Asset Quality Information | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | For the Quarter Ended |
| Dollars in thousands | 3/31/2013 | | | 12/31/2012 | | | 9/30/2012 | | | 6/30/2012 | | | 3/31/2012 |
| Gross loan charge-offs | $ | 2,497 | | | $ | 2,545 | | | $ | 2,142 | | | $ | 2,790 | | | $ | 1,340 |
| Gross loan recoveries | | (84 | ) | | | (160 | ) | | | (73 | ) | | | (156 | ) | | | (149) |
| Net loan charge-offs | $ | 2,413 | | | $ | 2,385 | | | $ | 2,069 | | | $ | 2,634 | | | $ | 1,191 |
| | | | | | | | | | | | | | | | | | | |
| Net loan charge-offs to average loans (annualized) | | 1.00 | % | | | 0.99 | % | | | 0.86 | % | | | 1.08 | % | | | 0.49% |
| Allowance for loan losses | $ | 17,020 | | | $ | 17,933 | | | $ | 17,820 | | | $ | 17,890 | | | $ | 18,523 |
| Allowance for loan losses as a percentage | | | | | | | | | | | | | | | | | | |
| of period end loans | | 1.77 | % | | | 1.88 | % | | | 1.86 | % | | | 1.85 | % | | | 1.89% |
| Nonperforming assets: | | | | | | | | | | | | | | | | | | |
| Nonperforming loans | | | | | | | | | | | | | | | | | | |
| Commercial | $ | 4,763 | | | $ | 5,002 | | | $ | 5,343 | | | $ | 6,476 | | | $ | 2,477 |
| Commercial real estate | | 1,525 | | | | 2,556 | | | | 2,803 | | | | 3,536 | | | | 4,282 |
| Commercial construction and development | | - | | | | - | | | | 428 | | | | 662 | | | | 799 |
| Residential construction and development | | 13,076 | | | | 13,641 | | | | 16,333 | | | | 16,735 | | | | 21,375 |
| Residential real estate | | 16,869 | | | | 16,522 | | | | 18,809 | | | | 18,550 | | | | 17,754 |
| Consumer | | 72 | | | | 55 | | | | 88 | | | | 78 | | | | 81 |
| Total nonperforming loans | | 36,305 | | | | 37,776 | | | | 43,804 | | | | 46,037 | | | | 46,768 |
| Foreclosed properties | | | | | | | | | | | | | | | | | | |
| Commercial | | - | | | | - | | | | - | | | | - | | | | - |
| Commercial real estate | | 11,779 | | | | 11,835 | | | | 11,802 | | | | 12,029 | | | | 14,703 |
| Commercial construction and development | | 16,670 | | | | 17,597 | | | | 17,683 | | | | 18,632 | | | | 17,377 |
| Residential construction and development | | 21,929 | | | | 23,074 | | | | 23,769 | | | | 26,014 | | | | 25,724 |
| Residential real estate | | 4,247 | | | | 3,666 | | | | 2,779 | | | | 3,393 | | | | 3,780 |
| Total foreclosed properties | | 54,625 | | | | 56,172 | | | | 56,033 | | | | 60,068 | | | | 61,584 |
| Other repossessed assets | | 19 | | | | 6 | | | | - | | | | - | | | | 266 |
| Total nonperforming assets | $ | 90,949 | | | $ | 93,954 | | | $ | 99,837 | | | $ | 106,105 | | | $ | 108,618 |
| | | | | | | | | | | | | | | | | | | |
| Nonperforming loans to period end loans | | 3.77 | % | | | 3.96 | % | | | 4.57 | % | | | 4.76 | % | | | 4.79% |
| Nonperforming assets to period end assets | | 6.54 | % | | | 6.77 | % | | | 7.11 | % | | | 7.49 | % | | | 7.52% |
| Loans Past Due 30-89 Days | | | | | | | | | |
| | For the Quarter Ended |
| In thousands | 3/31/2013 | | 12/31/2012 | | 9/30/2012 | | 6/30/2012 | | 3/31/2012 |
| | | | | | | | | | |
| Commercial | $ | 27 | | $ | 180 | | $ | 874 | | $ | 300 | | $ | 689 |
| Commercial real estate | | 2,161 | | | 437 | | | 1,264 | | | 1,787 | | | 2,776 |
| Construction and development | | 64 | | | - | | | 56 | | | 293 | | | 518 |
| Residential real estate | | 4,522 | | | 6,170 | | | 4,346 | | | 5,763 | | | 5,509 |
| Consumer | | 277 | | | 326 | | | 313 | | | 408 | | | 242 |
| Total | $ | 7,051 | | $ | 7,113 | | $ | 6,853 | | $ | 8,551 | | $ | 9,734 |
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | | | | | | |
| Average Balance Sheet, Interest Earnings & Expenses and Average Rates | | | | | | | | |
| Q1 2013 vs Q1 2012 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | Q1 2013 | | | | Q1 2012 |
| | 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 | $ | 960,509 | | $ | 12,833 | | 5.42 | % | | | $ | 973,862 | | $ | 14,279 | | 5.90% |
| Tax-exempt | | 5,965 | | | 106 | | 7.21 | % | | | | 7,248 | | | 130 | | 7.21% |
| Securities | | | | | | | | | | | | | | | | | |
| Taxable | | 216,306 | | | 1,030 | | 1.93 | % | | | | 234,973 | | | 1,699 | | 2.91% |
| Tax-exempt | | 79,147 | | | 961 | | 4.92 | % | | | | 71,559 | | | 1,092 | | 6.14% |
| Interest bearing deposits other banks | | | | | | | | | | | | | | | | | |
| and Federal funds sold | | 7,510 | | | 1 | | 0.05 | % | | | | 24,882 | | | 11 | | 0.18% |
| Total interest earning assets | | 1,269,437 | | | 14,931 | | 4.77 | % | | | | 1,312,524 | | | 17,211 | | 5.27% |
| | | | | | | | | | | | | | | | | | |
| Noninterest earning assets | | | | | | | | | | | | | | | | | |
| Cash & due from banks | | 4,240 | | | | | | | | | | 4,073 | | | | | |
| Premises & equipment | | 21,101 | | | | | | | | | | 21,978 | | | | | |
| Other assets | | 114,701 | | | | | | | | | | 122,188 | | | | | |
| Allowance for loan losses | | (17,572 | ) | | | | | | | | | (18,251 | ) | | | | |
| Total assets | $ | 1,391,907 | | | | | | | | | $ | 1,442,512 | | | | | |
| | | | | | | | | | | | | | | | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| Liabilities | | | | | | | | | | | | | | | | | |
| Interest bearing liabilities | | | | | | | | | | | | | | | | | |
| Interest bearing | | | | | | | | | | | | | | | | | |
| demand deposits | $ | 174,724 | | $ | 70 | | 0.16 | % | | | $ | 160,147 | | $ | 82 | | 0.21% |
| Savings deposits | | 195,556 | | | 309 | | 0.64 | % | | | | 211,783 | | | 381 | | 0.72% |
| Time deposits | | 574,545 | | | 2,388 | | 1.69 | % | | | | 550,689 | | | 3,250 | | 2.37% |
| Short-term borrowings | | 27,834 | | | 17 | | 0.25 | % | | | | 14,390 | | | 7 | | 0.20% |
| Long-term borrowings and | | | | | | | | | | | | | | | | | |
| subordinated debentures | | 209,255 | | | 2,027 | | 3.93 | % | | | | 305,027 | | | 3,059 | | 4.03% |
| Total interest bearing liabilities | | 1,181,914 | | | 4,811 | | 1.65 | % | | | | 1,242,036 | | | 6,779 | | 2.20% |
| | | | | | | | | | | | | | | | | | |
| Noninterest bearing liabilities | | | | | | | | | | | | | | | | | |
| Demand deposits | | 92,926 | | | | | | | | | | 87,000 | | | | | |
| Other liabilities | | 7,653 | | | | | | | | | | 8,850 | | | | | |
| Total liabilities | | 1,282,493 | | | | | | | | | | 1,337,886 | | | | | |
| | | | | | | | | | | | | | | | | | |
| Shareholders' equity - preferred | | 9,325 | | | | | | | | | | 9,326 | | | | | |
| Shareholders' equity - common | | 100,089 | | | | | | | | | | 95,300 | | | | | |
| Total liabilities and | | | | | | | | | | | | | | | | | |
| shareholders' equity | $ | 1,391,907 | | | | | | | | | $ | 1,442,512 | | | | | |
| | | | | | | | | | | | | | | | | | |
| NET INTEREST EARNINGS | | | | $ | 10,120 | | | | | | | | | $ | 10,432 | | |
| | | | | | | | | | | | | | | | | | |
| NET INTEREST MARGIN | | | | | | | 3.23 | % | | | | | | | | | 3.20% |
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | |
| Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures | | | | |
| | | | | | |
| | For the Quarter Ended |
| Dollars in thousands | 3/31/2013 | | 3/31/2012 | | 12/31/2012 |
| | | | | | |
| Net income applicable to common shares - excluding | | | | | |
| realized securities gains, gains/losses on sales of assets, | | | | | |
| other-than-temporary impairment of securities and | | | | | |
| write-downs of foreclosed properties | $ | 2,217 | | $ | 2,167 | | $ | 2,424 |
| | | | | | | | | |
| Realized securities gains | | 42 | | | 1,165 | | | 103 |
| Applicable income tax effect | | (16 | ) | | (431 | ) | | (38) |
| Gain (loss) on sale of assets | | (40 | ) | | (77 | ) | | (94) |
| Applicable income tax effect | | 15 | | | 28 | | | 35 |
| Other-than-temporary impairment of securities | | (54 | ) | | (229 | ) | | (76) |
| Applicable income tax effect | | 20 | | | 85 | | | 28 |
| Write-downs foreclosed properties | | (929 | ) | | (1,912 | ) | | (748) |
| Applicable income tax effect | | 344 | | | 707 | | | 277 |
| | | (618 | ) | | (663 | ) | | (513) |
| GAAP net income applicable to common shares | $ | 1,599 | | $ | 1,504 | | $ | 1,911 |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Diluted earnings per common share - excluding realized | | | | | | | | |
| securities gains, gains/losses on sales of assets, | | | | | | | | |
| other-than-temporary impairment of securities and | | | | | | | | |
| write-downs of foreclosed properties | $ | 0.26 | | $ | 0.25 | | $ | 0.28 |
| | | | | | | | | |
| Realized securities gains | | - | | | 0.12 | | | 0.01 |
| Applicable income tax effect | | - | | | (0.04 | ) | | - |
| Gain (loss) on sale of assets | | - | | | (0.01 | ) | | (0.01) |
| Applicable income tax effect | | - | | | - | | | - |
| Other-than-temporary impairment of securities | | (0.01 | ) | | (0.02 | ) | | (0.01) |
| Applicable income tax effect | | - | | | 0.01 | | | - |
| Write-downs of foreclosed properties | | (0.10 | ) | | (0.20 | ) | | (0.08) |
| Applicable income tax effect | | 0.04 | | | 0.07 | | | 0.03 |
| | | (0.07 | ) | | (0.07 | ) | | (0.06) |
| GAAP diluted earnings per common share | $ | 0.19 | | $ | 0.18 | | $ | 0.22 |
| SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | | |
| Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures | | |
| | | | | | | |
| | | For the Quarter Ended |
| Dollars in thousands | | 3/31/2013 | | 3/31/2012 | | 12/31/2012 |
| | | | | | | |
| Total revenue - excluding realized securities gains, | | | | | | |
| gains/losses on sales of assets, other-than-temporary | | | | | | |
| impairment of securities and write-downs of | | | | | | |
| foreclosed properties | | $ | 12,518 | | $ | 12,773 | | $ | 12,714 |
| | | | | | | | | | |
| Realized securities gains | | | 42 | | | 1,165 | | | 103 |
| Gain (loss) on sale of assets | | | (40 | ) | | (77 | ) | | (94) |
| Other-than-temporary impairment of securities | | | (54 | ) | | (229 | ) | | (76) |
| Write-downs of foreclosed properties | | | (929 | ) | | (1,912 | ) | | (748) |
| | | | (981 | ) | | (1,053 | ) | | (815) |
| GAAP total revenue | | $ | 11,537 | | $ | 11,720 | | $ | 11,899 |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| Total noninterest income - excluding realized securities | | | | | | | | | |
| gains, gains/losses on sales of assets, other-than- | | | | | | | | | |
| temporary impairment of securities and write-downs | | | | | | | | | |
| of foreclosed properties | | $ | 2,760 | | $ | 2,755 | | $ | 2,818 |
| | | | | | | | | | |
| Realized securities gains | | | 42 | | | 1,165 | | | 103 |
| Gain (loss) on sale of assets | | | (40 | ) | | (77 | ) | | (94) |
| Other-than-temporary impairment of securities | | | (54 | ) | | (229 | ) | | (76) |
| Write-downs of foreclosed properties | | | (929 | ) | | (1,912 | ) | | (748) |
| | | | (981 | ) | | (1,053 | ) | | (815) |
| GAAP total noninterest income | | $ | 1,779 | | $ | 1,702 | | $ | 2,003 |
