SUMMIT FINANCIAL CORPORATION REPORTS
FIRST QUARTER NET INCOME UP 17%
GREENVILLE, SC -- Summit Financial Corporation (NASDAQ/Small Cap: SUMM) today reported net income of $1,159,000 for the first quarter of 2005, an increase of 17% from $987,000 for the first quarter of 2004. Net income per diluted share was $0.23 for the first three months of 2005, compared to $0.20 for the first three months of 2004. There were significant improvements in the profitability measurements for the first quarter of 2005 as compared to the prior year with return on assets increasing from 1.18% for 2004 to 1.44% for the current period and return on equity at 12.41% for the first quarter of 2005 compared to 12.00% for the prior year.
J. Randolph Potter, President and CEO, said, “We are pleased to report strong earnings for the first quarter of 2005. Our performance reflects the Company’s focus on managing interest rate risk and maintaining strong credit quality.”
The primary contributor to the increase in net income for the first quarter of 2005 was the 8% increase in net interest income, driven by a 50 basis point increase in net interest margin related primarily to the higher interest rate environment. Also contributing to the improvements in net income is the lower provision for loan losses resulting from the improvement in the overall quality of the loan portfolio and lower net originations in the first quarter of 2005 compared to 2004. Reductions in overhead expenses, primarily in merchant discount fees and consultant fees, were more than offset by lower other income related to reduced gain on sale of investment securities, and lower service charges and merchant discount income for the quarter ended March 31, 2005 as compared to the prior year.
At March 31, 2005, assets totaled $332.4 million, up from $320.9 million at December 31, 2004. Total deposits increased $15.1 million or 7% from December 31, 2004, primarily in the certificates of deposit categories. The increase in deposits funded loan growth of $5.3 million and maturities of FHLB advances totaling $4.7 million, and contributed to the increase in liquidity. Loans totaled $247.8 million as of the end of the first quarter of 2005, while advances from the FHLB were $45.4 million at March 31, 2005. Also contributing to the increase in liquidity was the reduction in investment securities of $4.1 million to total $55.7 million at March 31, 2005 as management positioned the balance sheet for rising interest rates.
The Company reported low net charge-offs of loans totaling $41,000, or 0.07% of average loans for the first quarter of 2005, compared to net recoveries of previously charged-off loans for the prior year period of ($52,000) or (0.09%) of average loans. Loans past due in excess of 90 days at March 31, 2005 decreased to $102,000 or 0.04% of gross loans from $156,000 at December 31, 2004. Total nonperforming assets at March 31, 2005 declined to $708,000 or 0.29% of gross loans plus OREO, compared to $904,000 or 0.37% at December 31, 2004. The allowance for loan losses was 1.50% and 1.51% at March 31, 2005 and December 31, 2004, respectively.
The Company ended the first quarter of 2005 with total equity of $37.9 million, a 10% increase from the prior year, and total risk-based capital of 15.2%. Book value per share was up 8% from the comparable period of 2004, to end the first quarter of 2005 at $8.37.
SUMMIT FINANCIAL CORPORATION AND SUBSIDIARIES |
FINANCIAL HIGHLIGHTS |
| ($ in thousands, except share data) (unaudited) |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | % Change | |
| | | | | | | | | | | | 1st Quarter | |
| | | | 3/31/2005 | | | 12/31/2004 | | | 3/31/2004 | | | 2005/2004 | |
Balance Sheet (at period end) | | | | | | | | | | | | | |
| Cash and due from banks | | $ | 9,112 | | $ | 6,548 | | $ | 8,290 | | | 10 | % |
| Interest-bearing bank balances | | | 2,538 | | | 147 | | | 3,381 | | | (25 | %) |
| Federal funds sold | | | 4,792 | | | 218 | | | 6,235 | | | (23 | %) |
| Investments available for sale | | | 55,706 | | | 59,838 | | | 70,477 | | | (21 | %) |
| Loans, net of unearned income | | | 247,770 | | | 242,460 | | | 240,193 | | | 3 | % |
| Less: allowance for loan losses | | | (3,711 | ) | | (3,649 | ) | | (3,699 | ) | | 0 | % |
| Net loans | | | 244,059 | | | 238,811 | | | 236,494 | | | 3 | % |
| Premises and equipment, net | | | 5,209 | | | 4,805 | | | 4,031 | | | 29 | % |
| Other assets | | | 10,944 | | | 10,571 | | | 10,060 | | | 9 | % |
| | | $ | 332,360 | | $ | 320,938 | | $ | 338,968 | | | (2 | %) |
| | | | | | | | | | | | | | |
| Noninterest-bearing deposits | | $ | 28,787 | | $ | 36,897 | | $ | 37,384 | | | (23 | %) |
| Interest-bearing deposits | | | 218,029 | | | 194,821 | | | 211,128 | | | 3 | % |
| Total deposits | | | 246,816 | | | 231,718 | | | 248,512 | | | (1 | %) |
| FHLB advances | | | 45,401 | | | 50,134 | | | 53,634 | | | (15 | %) |
| Other liabilities | | | 2,269 | | | 1,821 | | | 2,539 | | | (11 | %) |
| Total liabilities | | | 294,486 | | | 283,673 | | | 304,685 | | | (3 | %) |
| Shareholders' equity | | | 37,874 | | | 37,265 | | | 34,283 | | | 10 | % |
| | | $ | 332,360 | | $ | 320,938 | | $ | 338,968 | | | (2 | %) |
| | | | | | | | | | | | | | |
Capital Ratios (at period end) | | | | | | | | | | | | | |
| Total risk-based capital ratio | | | 15.22 | % | | 15.27 | % | | 14.30 | % | | 6 | % |
| Tier 1 risk-based capital ratio | | | 13.97 | % | | 14.02 | % | | 13.06 | % | | 7 | % |
| Leverage ratio | | | 11.78 | % | | 11.39 | % | | 10.02 | % | | 18 | % |
| | | | | | | | | | | | | | |
Selected Average Balances (year-to-date) | | | | | | | | | | | | | |
| Total assets | | $ | 325,766 | | $ | 326,519 | | $ | 336,109 | | | (3 | %) |
| Loans, net of unearned income | | | 244,783 | | | 232,301 | | | 235,934 | | | 4 | % |
| Investment securities | | | 57,210 | | | 68,467 | | | 79,248 | | | (28 | %) |
| Total earning assets | | | 308,280 | | | 310,053 | | | 320,040 | | | (4 | %) |
| Interest-bearing liabilities | | | 250,259 | | | 253,762 | | | 268,287 | | | (7 | %) |
| Total deposits | | | 237,084 | | | 238,848 | | | 246,571 | | | (4 | %) |
| Shareholders' equity | | | 37,884 | | | 34,651 | | | 33,111 | | | 14 | % |
| | | | | | | | | | | | | | |
Share Data (at period end) | | | | | | | | | | | | | |
| Book value per common share | | $ | 8.37 | | $ | 8.25 | | $ | 7.77 | | | 8 | % |
| Shares outstanding | | | 4,525,855 | | | 4,515,553 | | | 4,413,686 | | | 3 | % |
| | | | | | | | | | | | | | |
Stock performance (at period end) | | | | | | | | | | | | | |
| Closing market price | | $ | 21.71 | | $ | 21.35 | | $ | 18.41 | | | 18 | % |
| Shares traded - year to date | | | 267,364 | | | 246,198 | | | 50,170 | | | 433 | % |
| Price/book ratio | | | 2.59 | | | 2.59 | | | 2.37 | | | 9 | % |
| Price/earnings ratio (diluted earnings per share) | | | 23.6 | | | 23.7 | | | 23.0 | | | 3 | % |
| Market capitalization | | $ | 98,256 | | $ | 96,407 | | $ | 81,256 | | | 21 | % |
SUMMIT FINANCIAL CORPORATION AND SUBSIDIARIES |
FINANCIAL HIGHLIGHTS |
| ($ in thousands, except per share data) (unaudited) |
| | | | | | | | |
| | | For the Three Months Ended | | % | |
| | | | 3/31/2005 | | | 3/31/2004 | | | Change | |
Income Statement | | | | | | | | | | |
| Interest income | | $ | 4,817 | | $ | 4,443 | | | 8 | % |
| Interest expense | | | 1,308 | | | 1,179 | | | 11 | % |
| Net interest income | | | 3,509 | | | 3,264 | | | 8 | % |
| Provision for loan losses | | | 102 | | | 210 | | | (51 | %) |
| Net interest income after provision for loan losses | | | 3,407 | | | 3,054 | | | 12 | % |
| Noninterest income: | | | | | | | | | | |
| Service charges on deposit accounts | | | 96 | | | 133 | | | (28 | %) |
| Insurance sales commissions | | | 145 | | | 139 | | | 4 | % |
| Gain on sale of securities | | | - | | | 22 | | | (100 | %) |
| Other income | | | 210 | | | 326 | | | (36 | %) |
| Total noninterest income | | | 451 | | | 620 | | | (27 | %) |
| Noninterest expenses: | | | | | | | | | | |
| Salaries, wages and benefits | | | 1,400 | | | 1,361 | | | 3 | % |
| Occupancy | | | 187 | | | 174 | | | 7 | % |
| Furniture, fixtures and equipment | | | 152 | | | 158 | | | (4 | %) |
| Other operating expenses | | | 429 | | | 549 | | | (22 | %) |
| Total noninterest expenses | | | 2,168 | | | 2,242 | | | (3 | %) |
| Income before income taxes | | | 1,690 | | | 1,432 | | | 18 | % |
| Income tax expense | | | 531 | | | 445 | | | 19 | % |
| Net income | | $ | 1,159 | | $ | 987 | | | 17 | % |
| | | | | | | | | | | |
| Net income per common share: | | | | | | | | | | |
| Basic | | $ | 0.26 | | $ | 0.23 | | | 13 | % |
| Diluted | | | 0.23 | | | 0.20 | | | 15 | % |
| Average common shares outstanding: | | | | | | | | | | |
| Basic | | | 4,513,851 | | | 4,319,720 | | | 4 | % |
| Diluted | | | 5,000,213 | | | 4,857,367 | | | 3 | % |
| | | | | | | | | | | |
| | | | | | | | | | | |
Performance ratios | | | | | | | | | | |
| Return on average assets | | | 1.44 | % | | 1.18 | % | | 22 | % |
| Return on average equity | | | 12.41 | % | | 12.00 | % | | 3 | % |
| Net interest margin | | | 4.76 | % | | 4.26 | % | | 12 | % |
| Net charge-offs (recoveries) to average loans | | | 0.07 | % | | (0.09 | %) | | 178 | % |
Summit Financial Corporation,www.summit-bank.com, headquartered in Greenville, SC, is the parent holding company for Summit National Bank and Freedom Finance, Inc., a consumer finance company. Summit National Bank provides a full range of banking services designed to meet substantially all of the financial needs of its customers from its four full-service branches in the Upstate of South Carolina. Through its subsidiary, Summit Investment Services, Inc., Summit provides nondeposit investments and financial management services. Freedom Finance specializes in making small dollar installment loans to individuals from 11 branch locations throughout South Carolina.
Certain matters set forth in this news release may contain forward-looking statements that are provided to assist in the understanding of anticipated future financial performance. However, such performance involves risks and uncertainties that may cause actual results to differ materially from those in such statements. For discussion of certain factors that may cause such forward-looking statements to differ materially from the Company's actual results, see the Company's Annual Report on Form 10-K for the year ended December 31, 2004.
