Exhibit 99
Summit Financial Group Reports First Quarter EPS of $0.34
MOOREFIELD, W.Va.--(BUSINESS WIRE)--April 20, 2005--Summit
Financial Group, Inc. (NASDAQ:SMMF) today reported first quarter 2005
net income of $2.4 million, or $0.34 per diluted share, compared with
$2.5 million or $0.35 per diluted share for the first quarter of 2004.
First quarter 2005 earnings were virtually unchanged from the
prior-year quarter; a higher level of revenues, both from community
banking and mortgage banking activities, was offset by higher expenses
incurred in each business line. For the first quarter of 2005, the
returns on average shareholders' equity and average assets were 14.53
percent 1.08 percent, respectively, compared with prior-year period
ratios of 16.77 percent and 1.23 percent.
H. Charles Maddy, III, President and Chief Executive Officer
commented, "We continue to build our infrastructure in new markets and
new business lines. We have focused our community banking expansion
efforts toward markets with good commercial loan opportunities, and we
recently opened our fifth branch in Virginia, while our sixth branch
is due to open in early June. During this past year, we experienced
commercial loan growth of 25 percent. Strong loan growth, however, has
been mitigated by higher costs associated with expansion activities,
including staffing and funding. In the December-January timeframe, we
added three seasoned lenders who will become increasingly productive
over the remainder of the year.
"Our mortgage business continues to evolve at an acceptable rate.
Originations are strongly ahead of last year's first quarter, but this
is still a seasonal business, and the fourth and first quarter of each
year are typically slower than the remaining two quarters. We are
seeing a gradual strengthening since the beginning of the year, and
anticipate that momentum will continue to build as we enter the second
quarter of this year.
"We began trading on the Nasdaq SmallCap Market on January 31,
2005. Although financial stocks have not performed well as a group
this year, we believe that in the long run our listing will enhance
the visibility and trading volume of Summit Financial Group."
FIRST QUARTER 2005 CONSOLIDATED RESULTS
Revenue for the first quarter of 2005, consisting of net interest
income plus non-interest income, was $13.8 million, an increase of
19.7 percent over the first quarter of 2004. Net interest income
increased 8.4 percent to $7.2 million, reflecting 12.2 percent growth
in average earning assets partially offset by an 8 basis point drop in
the net interest margin to 3.59 percent. Non-interest income for the
first quarter of 2005 was $6.7 million compared with $4.9 million for
the prior-year period, an increase of 34.9 percent. This increase
primarily reflects the operations of the Company's mortgage banking
unit, Summit Mortgage, (formerly known as Summit Financial, LLC) and
is discussed below.
Non-interest expense for the first quarter of 2005 was $10.1
million, a 28.3 percent increase over the $7.8 million reported for
the first quarter of 2004. Salaries and employee benefits represented
the largest portion of expense growth and increased 23.2 percent. The
efficiency ratio was 70.26 percent for the first quarter of 2005
compared with 65.83 percent for the prior-year period. The efficiency
ratio for the Company's Community Banking Segment, shown below, is a
more accurate indicator of its performance compared with other
community banks.
Asset quality remains strong. Charge-offs were $87,000 for the
first quarter of 2005, equivalent to an annualized 0.05 percent of
average loans. Nonperforming assets were 0.20 percent of assets at
March 31, 2005, down from 0.29 percent at March 31, 2004. At
period-end, loan loss reserves were 0.84 percent of loans.
Assets at March 31, 2005 were $907.3 million, an increase of 12.1
percent over the last twelve months. The increase was driven by
portfolio loan growth of $91.6 million, up 17.0 percent to $629.2
million; commercial real estate loans, up 26.0 percent, and
residential mortgage loans, up 11.6 percent, were the largest
contributors to this growth. Deposits increased $7.0 million, or 1.3
percent, to $537.4 million. To support its strong loan growth, the
Company increased short term borrowings by $87.2 million, to $129.7
million.
Shareholders' equity at period end was $66.4 million, an increase
of 9.4 percent over the last twelve months. Common shares outstanding
totaled 7,039,840 at March 31, 2005.
FIRST QUARTER 2005 OPERATING SEGMENT RESULTS
Community Banking Financial Performance
Net income for the first quarter of 2005 was $2.4 million,
relatively unchanged from the prior-year first quarter. Total revenue
increased 9.9% to $7.9 million, while non-interest expense increased
16.8 percent to $4.2 million due to staff additions and the
recently-opened Harrisonburg, Virginia branch. The Community Banking
segment's efficiency ratio was 52.90 percent compared with 50.44
percent for the prior-year first quarter.
Mortgage Banking Financial Performance
The Company's mortgage banking unit, Summit Mortgage, commenced
operations during the third quarter of 2003. This segment originates
first mortgages in the Company's community banking markets and debt
consolidation second mortgage loans for borrowers nationwide. Loan
originations in the first quarter of 2005 were $68.2 million, up 51.9
percent from prior-year period levels; loan sales were $66.8 million,
up 61.4 percent from the 2004 first quarter.
Revenue for the first quarter of 2005 totaled $5.9 million, an
increase of 33.9 percent over the prior-year period, while
non-interest expense increased 37.8 percent to $5.6 million. Net
income for the first quarter of 2005 was $226,000 compared with
$243,000 for the prior-year first quarter. Profitability in the most
recent quarter was impacted by the continued change in the mix of
loans originated. During first quarter 2005, 18.0% of the total dollar
amount of loan originations were first mortgage loans as compared to
9.9% during the first quarter of 2004. Sales of first mortgage loans
typically result in smaller margins than sales of second mortgage
loans.
ABOUT THE COMPANY
Summit Financial Group, Inc., a financial holding company with
total assets of $907.3 million, operates thirteen banking locations
through its two wholly-owned community banks: Summit Community Bank,
headquartered in Moorefield, West Virginia; and Shenandoah Valley
National Bank in Winchester, Virginia. Summit also operates Summit
Mortgage, a residential mortgage loan originator located in Herndon,
Virginia.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements as defined
by federal securities laws. These statements may address issues that
involve significant risks, uncertainties, estimates and assumptions
made by management. Actual results could differ materially from
current projections. Please refer to Summit's filings with the
Securities and Exchange Commission for a summary of important factors
that could affect Summit's forward-looking statements. Summit
undertakes no obligation to revise these statements following the date
of this press release.
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Quarterly Performance Summary -- Q1 2005 vs Q1 2004
For the Quarter Ended
Dollars in thousands, except per ----------------------- Percent
share amounts 3/31/2005 3/31/2004 Change
- ----------------------------------------------------------------------
Condensed Statements of Income
Interest income
Loans, including fees $ 10,010 $ 8,314 20.4%
Securities 2,258 2,527 -10.6%
Other 25 32 -21.9%
---------- ----------
Total interest income 12,293 10,873 13.1%
---------- ----------
Interest expense
Deposits 2,517 2,414 4.3%
Borrowings 2,621 1,857 41.1%
---------- ----------
Total interest expense 5,138 4,271 20.3%
---------- ----------
Net interest income 7,155 6,602 8.4%
Provision for loan losses 330 233 41.6%
---------- ----------
Net interest income after
provision for loan losses 6,825 6,369 7.2%
---------- ----------
Noninterest income
Service fee income 547 509 7.5%
Mortgage origination revenue 5,856 4,319 35.6%
Securities gains (losses) - 20 -100.0%
Other income 264 94 180.9%
---------- ----------
Total noninterest income 6,667 4,942 34.9%
---------- ----------
Noninterest expense
Salaries and employee benefits 4,542 3,686 23.2%
Net occupancy expense 429 304 41.1%
Equipment expense 493 429 14.9%
Postage expense 1,567 1,353 15.8%
Advertising 1,325 962 37.7%
Other expenses 1,699 1,105 53.8%
---------- ----------
Total noninterest expense 10,055 7,839 28.3%
---------- ----------
Income before income taxes 3,437 3,472 -1.0%
Income taxes 1,026 1,021 0.5%
---------- ----------
Net income $ 2,411 $ 2,451 -1.6%
========== ==========
Per Share Data
Basic earnings $ 0.34 $ 0.35 -2.9%
Diluted earnings $ 0.34 $ 0.35 -2.9%
Average shares outstanding
Basic 7,039,784 7,020,126 0.3%
Diluted 7,171,099 7,084,970 1.2%
Performance Ratios
Return on average equity 14.53% 16.77% -13.4%
Return on average assets 1.08% 1.23% -12.2%
Net yield on earning assets -
taxable equivalent 3.59% 3.67% -2.2%
Efficiency ratio consolidated(A) 70.26% 65.83% 6.7%
Efficiency ratio excluding
mortgage banking(A) 52.90% 50.44% 4.9%
NOTE: (A) - Computed on a tax equivalent basis excluding nonrecurring
income and expense items and amortization of intangibles.
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Five Quarter Performance Summary
For the Quarter Ended
------------------------------------------
Dollars in thousands, except per share amounts
3/31/2005 12/31/2004 9/30/2004 6/30/2004 3/31/2004
--------- ---------- --------- --------- ---------
Condensed Statements of Income
Interest income
Loans, including
fees $ 10,010 $ 9,814 $ 9,334 $ 8,744 $ 8,314
Securities 2,258 2,294 2,267 2,316 2,527
Other 25 30 33 32 32
--------- ---------- --------- --------- ---------
Total interest
income 12,293 12,138 11,634 11,092 10,873
--------- ---------- --------- --------- ---------
Interest expense
Deposits 2,516 2,456 2,451 2,390 2,414
Borrowings 2,622 2,366 2,122 1,904 1,857
-------- --------- -------- -------- --------
Total interest
expense 5,138 4,822 4,573 4,294 4,271
-------- --------- -------- -------- --------
Net interest
income 7,155 7,316 7,061 6,798 6,602
Provision for
loan losses 330 292 293 233 233
-------- --------- -------- -------- --------
Net interest
income after
provision for
loan losses 6,825 7,024 6,768 6,565 6,369
-------- --------- -------- -------- --------
Noninterest income
Service fee
income 547 592 575 562 509
Mortgage
origination
revenue 5,856 5,423 7,732 6,614 4,319
Securities
gains (losses) - 32 (35) 17 20
Other income 264 287 273 239 94
-------- --------- -------- -------- --------
Total noninterest
income 6,667 6,334 8,545 7,432 4,942
-------- --------- -------- -------- --------
Noninterest expense
Salaries and
employee
benefits 4,542 4,607 5,055 4,740 3,686
Net occupancy
expense 429 404 408 386 304
Equipment
expense 493 473 433 441 429
Postage
expense 1,567 1,361 1,703 1,435 1,353
Advertising 1,325 1,231 1,229 1,304 962
Other expenses 1,699 1,939 1,939 1,862 1,105
-------- --------- -------- -------- --------
Total
noninterest
expense 10,055 10,015 10,767 10,168 7,839
-------- --------- -------- -------- --------
Income before
income taxes 3,437 3,343 4,546 3,829 3,472
Income taxes 1,026 986 1,420 1,155 1,021
-------- --------- -------- -------- --------
Net income$ 2,411 $ 2,357 $ 3,126 $ 2,674 $ 2,451
======== ========= ======== ======== ========
Per Share Data
Basic
earnings $ 0.34 $ 0.34 $ 0.44 $ 0.38 $ 0.35
Diluted
earnings $ 0.34 $ 0.33 $ 0.43 $ 0.38 $ 0.35
Average shares
outstanding
Basic 7,039,784 7,032,512 7,026,173 7,021,567 7,020,126
Diluted 7,171,099 7,149,981 7,174,852 7,108,161 7,084,970
Performance Ratios
Return on average
equity 14.53% 14.33% 20.06% 17.96% 16.77%
Return on average
assets 1.08% 1.07% 1.46% 1.29% 1.23%
Net yield on
earning assets
- taxable
equivalent 3.59% 3.69% 3.65% 3.64% 3.67%
Efficiency
ratio
consolidated(A) 70.26% 70.50% 67.11% 69.61% 65.83%
Efficiency
ratio excluding
mortgage
banking(A) 52.90% 52.70% 51.68% 53.61% 50.44%
NOTE: (A) - Computed on a tax equivalent basis excluding nonrecurring
income and expense items and amortization of intangibles.
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Segment Information
For the Quarter Ended March 31, 2005
Parent
Community Mortgage and
Dollars in thousands Banking Banking Other Eliminations Total
- ----------------------------------------------------------------------
Condensed Statements of Income
Interest income $ 12,204 $ 302 $ 7 $ (220)$ 12,293
Interest expense 4,971 218 169 (220) 5,138
-------- ------- ------- -------- --------
Net interest income 7,233 84 (162) - 7,155
Provision for loan
losses 330 - - - 330
-------- ------- ------- -------- --------
Net interest income
after provision for
loan losses 6,903 84 (162) - 6,825
-------- ------- ------- -------- --------
Noninterest income 689 5,856 1,298 (1,176) 6,667
Noninterest expense 4,198 5,597 1,436 (1,176) 10,055
-------- ------- ------- -------- --------
Income before income
taxes 3,394 343 (300) - 3,437
Income taxes 1,029 117 (120) - 1,026
-------- ------- ------- -------- --------
Net income $ 2,365 $ 226 $ (180) $ - $ 2,411
======== ======= ======= ======== ========
Intersegment revenue
(expense) $ (906) $ (263)$ 1,169 $ - $ -
======== ======= ======= ======== ========
Average assets $867,224 $19,386 $78,885 $(73,334)$892,161
======== ======= ======= ======== ========
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Segment Information
For the Quarter Ended March 31, 2004
Parent
Community Mortgage and
Dollars in thousands Banking Banking Other Eliminations Total
- ----------------------------------------------------------------------
Condensed Statements of Income
Interest income $ 10,755 $ 207 $ 3 $ (92)$ 10,873
Interest expense 4,169 89 105 (92) 4,271
-------- ------ ------- -------- --------
Net interest income 6,586 118 (102) - 6,602
Provision for loan
losses 233 - - - 233
-------- ------ ------- -------- --------
Net interest income
after provision for
loan losses 6,353 118 (102) - 6,369
-------- ------ ------- -------- --------
Noninterest income 624 4,318 888 (888) 4,942
Noninterest expense 3,600 4,062 1,065 (888) 7,839
-------- ------ ------- -------- --------
Income before income
taxes 3,377 374 (279) - 3,472
Income taxes 999 130 (108) - 1,021
-------- ------ ------- -------- --------
Net income $ 2,378 $ 244 $ (171) $ - $ 2,451
======== ====== ======= ======== ========
Intersegment revenue
(expense) $ (759) $ (129)$ 888 $ - $ -
======== ====== ======= ======== ========
Average assets $790,721 $9,417 $68,282 $(71,397)$797,023
======== ====== ======= ======== ========
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Selected Balance Sheet Data
For the Quarter Ended
---------------------------------------------------
Dollars in, thousands, except per share amounts
3/31/2005 12/31/2004 9/30/2004 6/30/2004 3/31/2004
- ----------------------------------------------------------------------
Assets $907,264 $889,489 $862,246 $849,555 $809,216
Securities 209,223 211,362 209,702 213,644 215,732
Loans held for
sale, net 15,766 14,274 12,097 15,607 9,596
Loans, net 623,863 602,728 586,201 559,869 532,855
Intangible
assets 3,461 3,499 3,537 3,574 3,612
Deposits 537,412 524,614 535,822 536,589 530,372
Short-term
borrowings 129,697 120,629 77,518 71,350 42,547
Long-term
borrowings and
subordinated
debentures 165,384 172,201 178,334 176,248 169,608
Shareholders'
equity 66,400 65,708 65,289 58,975 60,674
Book value per
share $9.43 $9.33 $9.29 $8.40 $8.64
SUMMIT FINANCIAL GROUP INC. (NASDAQ:SMMF)
Loan Composition
Dollars in
thousands 3/31/2005 12/31/2004 9/30/2004 6/30/2004 3/31/2004
- ----------------------------------------------------------------------
Commercial $56,394 $53,226 $49,630 $49,294 $47,178
Commercial real
estate 296,911 279,631 271,097 250,562 235,565
Residential
construction 3,806 3,916 3,351 2,665 2,698
Residential
mortgage 226,866 223,689 218,118 212,371 203,225
Consumer 37,066 38,948 40,559 41,787 41,060
Other 9,458 9,605 9,784 9,316 8,968
---------------------------------------------------
Total loans 630,501 609,015 592,539 565,995 538,694
Less unearned fees
and interest 1,322 1,214 1,200 1,173 1,118
---------------------------------------------------
Total loans net of
unearned fees and
interest 629,179 607,801 591,339 564,822 537,576
Less allowance for
loan losses 5,316 5,073 5,138 4,953 4,721
---------------------------------------------------
Loans, net $623,863 $602,728 $586,201 $559,869 $532,855
===================================================
SUMMIT FINANCIAL GROUP INC. (NASDAQ:SMMF)
Mortgage Banking Segment Loan Activity
For the Quarter Ended
---------------------------------------------
Dollars in
thousands 3/31/2005 12/31/2004 9/30/2004 6/30/2004 3/31/2004
- ------------ ---------- ----------- ---------- ---------- ----------
Loans originated
Amount $ 68,929 $ 65,983 $ 75,791 $ 74,333 $ 44,935
Number 1,308 1,182 1,532 1,461 931
Loans sold
Amount $ 66,761 $ 62,043 $ 79,927 $ 68,013 $ 41,376
Number 1,295 1,148 1,610 1,364 861
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Asset Quality Information
For the Quarter Ended
------------------------------------------
Dollars in
thousands 3/31/2005 12/31/2004 9/30/2004 6/30/2004 3/31/2004
- ------------- ---------- ----------- ---------- ---------- ----------
Net loan charge-
off's $ 87 $ 357 $ 107 $ 1 $ 192
Net loan charge-
off's to average
loans (annualized) 0.05% 0.25% 0.08% 0.00% 0.15%
Allowance for loan
losses $ 5,316 $ 5,073 $ 5,138 $ 4,953 $ 4,721
Allowance for loan
losses as a
percentage of
period end loans 0.84% 0.83% 0.87% 0.88% 0.88%
Nonperforming assets:
Nonperforming
loans $ 836 $ 672 $ 1,465 $ 1,577 $ 1,448
Foreclosed properties
and other repossessed
assets 608 646 809 482 489
Nonaccrual
securities 334 349 363 384 389
-------- --------- -------- -------- --------
Total $ 1,778 $ 1,667 $ 2,637 $ 2,443 $ 2,326
======== ========= ======== ======== ========
Nonperforming
loans to period
end loans 0.13% 0.11% 0.25% 0.28% 0.27%
======== ========= ======== ======== ========
Nonperforming
assets to period
end assets 0.20% 0.19% 0.31% 0.29% 0.29%
======== ========= ======== ======== ========
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q1 2005 vs Q1 2004
Q1 2005 Q1 2004
------------------------- -------------------------
Dollars Average Earnings/ Yield/ Average Earnings/ Yield/
in thousands Balances Expense Rate Balances Expense Rate
- ------------------------------------------- -------------------------
ASSETS
Interest earning assets
Loans, net of unearned
interest
Taxable $623,652 $ 9,902 6.44% $522,007 $ 8,217 6.30%
Tax-exempt 9,108 164 7.30% 7,630 147 7.71%
Securities
Taxable 162,314 1,729 4.32% 172,397 1,975 4.58%
Tax-exempt 47,876 793 6.72% 48,288 825 6.83%
Interest bearing
deposits other banks
and Federal
funds sold 2,717 26 3.88% 3,572 32 3.58%
-------- ------- ----- -------- ------- -----
Total interest
earning assets 845,667 12,614 6.05% 753,894 11,196 5.94%
Noninterest earning
assets
Cash & due from
banks 14,513 9,965
Premises &
equipment 20,740 18,777
Other assets 16,442 19,161
Allowance for loan
losses (5,201) (4,774)
-------- --------
Total assets $892,161 $797,023
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits $127,994 $ 425 1.35% $115,233 $ 253 0.88%
Savings deposits 50,727 79 0.63% 48,053 56 0.47%
Time deposits 298,514 2,013 2.73% 301,375 2,105 2.79%
Short-term
borrowings 116,898 754 2.62% 54,183 172 1.27%
Long-term borrowings
and subordinated
debentures 170,203 1,867 4.45% 165,465 1,685 4.07%
-------- ------- ----- -------- ------- -----
764,336 5,138 2.73% 684,309 4,271 2.50%
Noninterest bearing
liabilities
Demand deposits 56,130 48,394
Other liabilities 5,316 5,847
-------- --------
Total liabilities 825,782 738,550
Shareholders' equity 66,379 58,473
-------- --------
Total liabilities
and shareholders'
equity $892,161 $797,023
======== ========
NET INTEREST EARNINGS $ 7,476 $ 6,925
======= =======
NET INTEREST YIELD ON EARNING
ASSETS 3.59% 3.67%
===== =====
CONTACT: Summit Financial Group, Inc.
Robert S. Tissue, 304-530-0552
rtissue@SummitFGI.com