EXHIBIT 99.1
NEWS RELEASE
DATE: April 22, 2003
RELEASE DATE: Immediate
SUMMIT FINANCIAL CORPORATION REPORTS
18% INCREASE IN EARNINGS
GREENVILLE, SC -- Summit Financial Corporation (NASDAQ/Small Cap: SUMM)
today reported net income of $909,000 for the first quarter of 2003, an 18%
increase from $773,000 for the first quarter of 2002. Net income per diluted
share was $0.20 for the first three months of 2003, compared to $0.18 for the
first three months of 2002. For the first quarter of 2003, the Company reported
increases in both return on average assets and return on average equity to 1.20%
and 12.58%, respectively. Contributors to increased earnings for the first
quarter of 2003 were the 10% growth in average earning assets, the 15% reduction
in interest expense due to lower cost of funds, the 12% increase in noninterest
income which was primarily related to gains on sales of investment securities,
and the 2% reduction in overhead expenses.
J. Randolph Potter, President and CEO, said, "Despite the continued uncertainty
of the economy, Summit is off to a tremendous start for the first quarter of
2003. We have continued to reduce our cost of funds and have controlled
overhead expenses. These factors, combined with our focus on other sources of
noninterest income, have proven effective in improving the Company's
profitability."
At March 31, 2003, assets totaled $323.2 million, a 13% increase from $287.0
million at March 31, 2002. Investment securities and loans accounted for a
majority of the asset growth with increases of 52% and 5%, respectively, over
the comparable period. Investment securities and loans ended the first quarter
of 2003 at $71.0 million and $219.4 million, respectively. Asset growth was
funded by the 9% increase in deposits, primarily in the time deposit category,
and the 35% increase in Federal Home Loan Bank ("FHLB") borrowings. Deposits
totaled $249.2 million at March 31, 2003, while FHLB borrowings were $41.7
million.
At March 31, 2003, loans past due in excess of 90 days were $171,000 or
0.08% of consolidated outstanding loans. The Company reported net recoveries of
previously charged-off loans of $2,000, compared to net charge-offs for the
first three months of 2002 of $67,000 or 0.13% (annualized) of average loans.
Total nonaccrual loans at March 31, 2003 were $604,000, or 0.28% of gross loans,
and there were no impaired loans at quarter end. The consolidated allowance for
loan losses was 1.62% at March 31, 2003. Mr. Potter commented, "Our ongoing
attention to early detection of weak credits, strong underwriting criteria, and
collection of potential problem loans has resulted in low levels of net
charge-offs."
The Company ended the first quarter of 2003 with equity of $29.7 million
and a total risk-based capital in excess of 13%. Book value per share was up
17% from the comparable quarter of 2002, to end the first quarter of 2003 at
$7.33. The stock market continues to respond favorably to Summit's performance
with a market price at March 31, 2003 of $15.61, or 213x book value.
SUMMIT FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS
(dollars in thousands, except per share data)
(Unaudited)
FOR THE QUARTER ENDED
MARCH 31, PERCENT
INCOME STATEMENT DATA 2003 2002 CHANGE
- --------------------------------------------- ----------- ----------- --------
Net interest income . . . . . . . . . . . . . $ 2,961 $ 2,854 4%
Provision for loan losses . . . . . . . . . . 173 125 38%
Noninterest income. . . . . . . . . . . . . . 761 682 12%
Noninterest expenses. . . . . . . . . . . . . 2,223 2,273 (2%)
Provision for income taxes. . . . . . . . . . 417 365 14%
Net income. . . . . . . . . . . . . . . . . . 909 773 18%
Per share data (1):
Basic net income . . . . . . . . . . . . . $ 0.23 $ 0.19 21%
Diluted net income . . . . . . . . . . . . $ 0.20 $ 0.18 11%
Book value . . . . . . . . . . . . . . . . $ 7.33 $ 6.25 17%
Average diluted shares
outstanding. . . . . . . . . . . . . . . . . 4,554,000 4,409,000 3%
MARCH 31, PERCENT
BALANCE SHEET DATA. . . . . . . . . . . . . . 2003 2002 CHANGE
- --------------------------------------------- ----------- ----------- --------
Total assets. . . . . . . . . . . . . . . . . $ 323,222 $ 286,965 13%
Total earning assets. . . . . . . . . . . . . 306,126 272,684 12%
Gross loans . . . . . . . . . . . . . . . . . 219,424 209,294 5%
Allowance for loan losses . . . . . . . . . . 3,545 2,994 18%
Investment securities . . . . . . . . . . . . 70,952 46,755 52%
Total deposits. . . . . . . . . . . . . . . . 249,243 228,060 9%
Total interest-bearing liabilities. . . . . . 255,346 228,923 12%
Shareholders' equity. . . . . . . . . . . . . 29,738 24,928 19%
MARCH 31, PERCENT
SELECTED RATIOS . . . . . . . . . . . . . . . 2003 2002 CHANGE
- --------------------------------------------- ----------- ----------- --------
Return on average assets. . . . . . . . . . . 1.20% 1.12% 7%
Return on average equity. . . . . . . . . . . 12.58% 12.57% 0%
Net interest margin . . . . . . . . . . . . . 4.23% 4.52% (6%)
Tier 1 risk-based capital ratio . . . . . . . 12.15% 11.26% 8%
Total risk-based capital ratio. . . . . . . . 13.41% 12.51% 7%
Leverage ratio. . . . . . . . . . . . . . . . 9.49% 9.02% 5%
Net (recoveries) charge-offs to average loans (0.00%) 0.13% (100%)
Allowance for loan losses to
gross loans . . . . . . . . . . . . . . . . 1.62% 1.43% 13%
<FN>
(1) Restated to reflect all 5% stock dividends.
SUMMIT FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
(Unaudited)
March 31, March 31,
2003 2002
----------- -----------
ASSETS
Cash and due from banks. . . . . . . . . . . . $ 11,332 $ 7,609
Interest-bearing bank balances . . . . . . . . 4,584 4,292
Federal funds sold . . . . . . . . . . . . . . 8,543 10,260
Investments available for sale . . . . . . . . 70,952 46,755
Loans, net of unearned income and allowance
for loan losses . . . . . . . . . . . . . . 215,879 206,300
Premises and equipment, net. . . . . . . . . . 4,151 4,339
Other assets . . . . . . . . . . . . . . . . . 7,781 7,410
----------- -----------
$ 323,222 $ 286,965
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand. . . . . . . . . . . . . . . . . . . . $ 35,597 $ 30,537
Interest-bearing demand . . . . . . . . . . . 25,941 21,636
Savings and money market. . . . . . . . . . . 70,814 80,739
Time deposits, $100,000 and over. . . . . . . 58,092 48,778
Other time deposits . . . . . . . . . . . . . 58,799 46,370
----------- -----------
249,243 228,060
Federal funds purchased and other
short-term borrowings . . . . . . . . . . . . - 500
FHLB advances. . . . . . . . . . . . . . . . . 41,700 30,900
Other liabilities. . . . . . . . . . . . . . . 2,541 2,577
----------- -----------
Total liabilities . . . . . . . . . . . . 293,484 262,037
----------- -----------
Shareholders' equity:
Common stock, $1.00 par value;
20,000,000 shares authorized; issued and
outstanding 4,055,257 and 3,796,395 shares 4,055 3,796
Additional paid-in capital . . . . . . . . . 21,482 18,425
Retained earnings. . . . . . . . . . . . . . 3,771 3,152
Accumulated other comprehensive
income (loss), net . . . . . . . . . . . . . 479 (294)
Nonvested restricted stock . . . . . . . . . (49) (151)
----------- -----------
Total shareholders' equity. . . . . . . . 29,738 24,928
----------- -----------
$ 323,222 $ 286,965
=========== ===========
SUMMIT FINANCIAL CORPORATION
CONSOLIDATED INCOME STATEMENTS
(dollars in thousands, except per share data)
(Unaudited)
FOR THE QUARTER ENDED
MARCH 31,
2003 2002
------ ------
INTEREST INCOME:
Interest on loans . . . . . . . . . . . $3,572 $3,768
Interest on investment securities . . . 697 636
Other interest income . . . . . . . . . 60 61
------ ------
4,329 4,465
------ ------
INTEREST EXPENSE:
Interest on deposits. . . . . . . . . . 951 1,210
Other interest expense. . . . . . . . . 417 401
------ ------
1,368 1,611
------ ------
Net interest income . . . . . . . . 2,961 2,854
PROVISION FOR LOAN LOSSES. . . . . . . . 173 125
------ ------
Net interest income after provision 2,788 2,729
------ ------
NONINTEREST INCOME:
Service charges on deposit accounts . . 137 127
Credit card fees and income . . . . . . 95 112
Insurance sales commissions . . . . . . 98 219
Gain on sale of securities. . . . . . . 174 16
Other income. . . . . . . . . . . . . . 257 208
------ ------
761 682
------ ------
NONINTEREST EXPENSE:
Salaries, wages and benefits. . . . . . 1,314 1,367
Occupancy . . . . . . . . . . . . . . . 169 160
Furniture, fixtures and equipment . . . 160 182
Other operating expenses. . . . . . . . 580 564
------ ------
2,223 2,273
------ ------
Income before income taxes . . . . . . . 1,326 1,138
Provision for income taxes . . . . . . . 417 365
------ ------
NET INCOME . . . . . . . . . . . . . . . $ 909 $ 773
====== ======
NET INCOME PER COMMON SHARE:
BASIC. . . . . . . . . . . . . . . . . $ 0.23 $ 0.19
====== ======
DILUTED. . . . . . . . . . . . . . . . $ 0.20 $ 0.18
====== ======
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, 2002.
CONTACTS:
J. Randolph Potter, President & CEO, (864) 240-5886
Blaise B. Bettendorf, Chief Financial Officer, (864) 240-5890