MOOREFIELD, W.Va., April 24, 2008 (PRIME NEWSWIRE) -- Summit Financial Group, Inc. (the "Company" or "Summit") (Nasdaq:SMMF) today reported net income for first quarter 2008 of $3.8 million or $0.51 per diluted share. First quarter 2007 income from continuing operations was $2.9 million, or $0.41 per diluted share; this excludes income from substantially all business activities of Summit Mortgage, its residential mortgage loan origination unit, which ceased operations in January 2007. Net income for first quarter 2008 increased 30.3 percent and 24.4 percent per diluted share, respectively, from 2007 first quarter income from continuing operations. Excluding mark-to-market changes in fair value of interest rate swaps, pro forma first quarter net income was $3.4 million for 2008 compared with $2.8 million pro forma income from continuing operations for 2007. First quarter 2008 results reflect strong loan growth year over year, a stable net interest margin, and exceptional growth in noninterest income derived from Summit's insurance operations.
For the first quarter of 2008, the returns on average shareholders' equity and average assets in accordance with GAAP were 16.55 percent and 1.06 percent, respectively, compared with prior-year first quarter ratios of 14.35 percent and 0.94 percent, excluding discontinued operations.
Highlights of the first quarter include:
* Strong loan growth year-over-year and year-to-date 2008 * Stable net interest margin * Termination of agreement to acquire Reston, VA-based Greater Atlantic Financial Corp.
H. Charles Maddy, III, president and chief executive officer of Summit, commented, "Earnings growth continues to be strong, despite the growing weakness in the general economy, which is even affecting some of our more affluent communities. We still benefit from the resilient markets in which we operate. However, life is not as easy as it used to be, especially for bankers. Notwithstanding, we still enjoy robust profit growth derived primarily from the strength of our revenue stream. Net interest income is strong from a combination of margin stability and loan growth, although originations have been moderating since year-end. Fee income is a bright spot for us; we are well on the way to achieving the diversity and growth in noninterest income that is one of Summit's important strategic objectives. Our recently-acquired Kelly Agencies has generated approximately $1 million dollars of commission income per quarter, and we believe there are still many opportunities ahead for our insurance agency.
"Credit quality issues are taking up more of our time these days, but we believe we are still ahead of the curve. We began this cycle with a very clean portfolio, and now we have 1.1 percent of our portfolio classified as nonperforming. However, our markets are some of the fastest growing and most affluent in the country, and I am confident that these properties will be snapped up as soon as it is apparent that the bottom has arrived.
"We announced earlier this month that we exercised our right to terminate our agreement with Greater Atlantic Financial Corp. (Pink Sheets:GAFC). According to the agreement, either party could terminate if the acquisition wasn't closed by March 31, 2008. We have re-entered negotiations with Greater Atlantic toward structuring a new deal; however, it is too early to tell what the outcome may be."
Total revenue was $13.8 million for the first quarter of 2008, up 34.4 percent from first quarter 2007 revenue of $10.3 million. Net interest income for the current quarter was $10.9 million, up 18.9 percent from the year-ago quarter, from the combined impact of a 16.0 percent increase in average earning assets and a two basis point increase in the net interest margin, to 3.28 percent; year over year, Summit's quarterly net interest margin has ranged from 3.24 percent to 3.28 percent. Mr. Maddy commented, "Our net interest margin has remained within a narrow band over the past twelve months, benefiting from our balanced portfolio of earning assets. We are modestly liability-sensitive, which should continue to contribute to the stability of our net interest margin in the current rate environment."
Noninterest income, reported on a GAAP basis, was $2.9 million for the current first quarter compared with $1.1 million for the year-ago quarter, an increase of 169.7 percent. Excluding changes in fair value of interest rate swaps and the net cash settlement of interest on these swaps of $535,000 in the 2008 quarter and $42,000 in the 2007 quarter, and further excluding the approximate $1.1 million of insurance revenues contributed by the Kelly Agencies in the 2008 quarter, pro forma noninterest income on a comparable basis with the 2007 first quarter was $1.2 million, up $200,000 or 19.6 percent above pro forma noninterest income of $1.0 million for first quarter of 2007. Service fees for the 2008 quarter were $743,000, an increase of 20.4 percent over last year; apart from the aforementioned adjustments, service fees accounted for approximately 61 percent of pro forma 2008 noninterest income.
The provision for loan losses was $1.0 million this quarter, an increase of $250,000 or 33.3 percent above 2007 fourth quarter, and $610,000 above the first quarter of last year. The larger provision addresses the increasing weakness of Summit's asset quality over the course of the past twelve months. Net loan charge-offs were $594,000 for the current quarter, and nonperforming assets were $16.2 million, an increase of $3.8 million from the linked quarter.
For the first quarter of 2007, noninterest expense was $7.1 million, up 25.5 percent or $1.4 million from the first quarter of 2007. More relevant is a comparison with the linked quarter which includes operations of the Kelly Agencies, acquired in the third quarter of 2007; noninterest expense grew 2.6 percent or $179,000 from the fourth quarter of 2007. Salaries and employee benefits, the major expense category, were $4.4 million, up $305,000 or 7.5 percent (29.8 percent annualized) from the fourth quarter of 2007. The efficiency ratio was 52.11 percent for the first quarter of 2008, an improvement from 53.03 percent for the linked quarter and 53.50 percent for the first quarter of 2007 (both 2007 ratios from continuing operations).
Assets at March 31, 2008 were $1.5 billion, an increase of $210.6 million, or 16.8 percent, over the prior-year first quarter. Loans, net of unearned income, were $1.1 billion at period end, up $148.5 million or 15.9 percent year over year. Loan growth over the past twelve months was led by commercial real estate (CRE), residential real estate, and commercial loans, with growth of $68.5 million, $54.4 million, and $42.7 million, respectively. Loan growth slowed from year-end 2007, advancing only $27.1 million during the first quarter of 2008 or 10.2 percent (annualized). Strong commercial loan growth -- up $19.8 million or 85.4 percent annualized -- was offset by a $15.5 million reduction in Construction and Development (C&D) loans, down 27.6 percent annualized.
Although nonperforming assets have more than tripled over the past year, the level of troubled credits still remains within reasonable limits in the context of the current banking environment. At March 31, 2008, nonperforming assets were $16.2 million, or 1.11 percent of total assets, compared with $12.4 million, or 0.86 percent for the linked quarter and $4.5 million, or 0.36 percent, for the year-ago quarter. Of this total, $2.2 million in 2008 was foreclosed real estate or repossessed assets, $147,000 higher than fourth quarter 2007 and $2.2 million above the year-ago first quarter.
Nonperforming loans of $14.0 million were concentrated in three major categories: commercial real estate with $5.1 million of nonperforming loans, or 1.3 percent of the CRE portfolio, C&D with $3.7 million of nonperforming loans, or 1.8 percent of the C&D portfolio, and residential real estate has $4.2 million of nonperforming loans, or 1.3 percent of the residential real estate portfolio.
Mr. Maddy added, "We have solid real estate as collateral for the majority of our problem loans, and virtually all of these loans carry a personal guaranty of the borrower." For the current quarter, the Company had net charge-offs of $594,000, or an annualized 0.22 percent of average loans, compared with $285,000, or an annualized 0.11 percent for the linked quarter, and $119,000, or 0.05 percent annualized for the year earlier period. At March 31, 2008, loan loss reserves were 0.88 percent of loans outstanding.
Total deposits at March 31, 2008 were $836.9 million compared with $877.2 million at March 31, 2007, a decrease of $40.3 million or 4.6 percent. Brokered deposits declined by $69.0 million or 27.2 percent over the past year, to $184.8 million at March 31, 2008, while Summit's retail deposit portfolio increased by $28.7 million, or 4.6 percent, to $652.1 million. Retail deposits now account for 77.9 percent of total deposits, compared with 71.1 percent at March 31, 2007. Over the past twelve months, the cost of deposits has declined 15.1 percent, from 4.44 percent for first quarter 2007 to 3.77 percent for the current quarter, well in excess of the 8.2 percent decline in loan yields.
Shareholders' equity at March 31, 2008 was $92.0 million, an increase of 12.2 percent over the last twelve months. Common shares outstanding totaled 7,408,941 at quarter-end, compared with 7,084,980 at March 31, 2007. The increase includes the issuance of approximately 318,000 shares during the third quarter of 2007 for the acquisition of the Kelly Agencies.
ABOUT THE COMPANY
Summit Financial Group, Inc., a financial holding company with total assets of $1.5 billion, provides community banking and insurance services. Summit Community Bank, its wholly-owned community bank, operates fifteen banking offices located in the Shenandoah Valley and Northern regions of Virginia and the Eastern Panhandle and South Central regions of West Virginia. Summit also operates Summit Insurance Services, LLC.
The Summit Financial Group, Inc. logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=2990
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 earnings to exclude the effects of the non-cash changes in fair value of interest rate swaps included in its Statements of Income. Management believes presentations of financial measures excluding the impact of this item 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.
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 economy. We undertake no obligation to revise these statements following the date of this press release.
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Quarterly Performance Summary -- Q1 2008 vs Q1 2007
For the Quarter Ended
------------------------ Percent
Dollars in thousands 3/31/2008 3/31/2007 Change
---------------------------------------------------------------------
Condensed Statements of Income
Interest income
Loans, including fees $ 20,069 $ 18,712 7.3%
Securities 3,786 3,124 21.2%
Other 4 6 -33.3%
---------- ----------
Total interest income 23,859 21,842 9.2%
---------- ----------
Interest expense
Deposits 7,124 9,028 -21.1%
Borrowings 5,796 3,611 60.5%
---------- ----------
Total interest expense 12,920 12,639 2.2%
---------- ----------
Net interest income 10,939 9,203 18.9%
Provision for loan losses 1,000 390 156.4%
---------- ----------
Net interest income after
provision for loan losses 9,939 8,813 12.8%
---------- ----------
Noninterest income
Insurance commissions 1,327 206 544.2%
Service fee income 743 617 20.4%
Securities gains (losses) -- -- n/a
Net cash settlement on
interest rate swaps (170) (184) -7.6%
Change in fair value of
interest rate swaps 705 226 211.9%
Other income 243 191 27.2%
---------- ----------
Total noninterest income 2,848 1,056 169.7%
---------- ----------
Noninterest expense
Salaries and employee
benefits 4,395 3,226 36.2%
Net occupancy expense 476 418 13.9%
Equipment expense 534 446 19.7%
Professional fees 118 174 -32.2%
Other expenses 1,566 1,385 13.1%
---------- ----------
Total noninterest expense 7,089 5,649 25.5%
---------- ----------
Income from continuing
operations before income
taxes 5,698 4,220 35.0%
Income taxes 1,874 1,286 45.7%
---------- ----------
Income from continuing
operations 3,824 2,934 30.3%
---------- ----------
Discontinued operations
Exit costs and impairment
of long-lived assets -- 80 n/m
Operating income (loss) -- (372) n/m
---------- ----------
Income (loss) from
discontinued operations
before income taxes -- (292) n/m
Income taxes -- (97) n/m
---------- ----------
Income (loss) from
discontinued operations -- (195) n/m
---------- ----------
Net Income $ 3,824 $ 2,739 39.6%
---------- ----------
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Quarterly Performance Summary -- Q1 2008 vs Q1 2007
For the Quarter Ended
------------------------ Percent
3/31/2008 3/31/2007 Change
---------------------------------------------------------------------
Per Share Data
Earnings per share from
continuing operations
Basic $ 0.52 $ 0.41 26.8%
Diluted $ 0.51 $ 0.41 24.4%
Earnings per share from
discontinued operations
Basic $ -- $ (0.03) n/m
Diluted $ -- $ (0.03) n/m
Earnings per share
Basic $ 0.52 $ 0.39 33.3%
Diluted $ 0.51 $ 0.38 34.2%
Average shares outstanding
Basic 7,408,941 7,084,980 4.6%
Diluted 7,449,105 7,147,170 4.2%
Performance Ratios
Return on average equity 16.55% 13.40% 23.5%
Return on average equity -
continuing operations 16.55% 14.35% 15.3%
Return on average assets 1.06% 0.88% 20.5%
Return on average assets -
continuing operations 1.06% 0.94% 12.8%
Net interest margin 3.28% 3.26% 0.6%
Efficiency ratio -
continuing operations(A) 52.11% 53.50% -2.6%
NOTE: (A) - Computed on a tax equivalent basis excluding nonrecurring
income and expense items, amortization of intangibles, and changes
in fair value of derivatives.
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Five Quarter Performance Summary
For the Quarter Ended
Dollars in -------------------------------------------------
thousands 3/31/2008 12/31/2007 9/30/2007 6/30/2007 3/31/2007
---------------------------------------------------------------------
Condensed
Statements
of Income
Interest income
Loans, including
fees $20,069 $20,199 $19,921 $19,079 $18,712
Securities 3,786 3,590 3,446 3,263 3,124
Other 4 8 9 27 6
------- ------- ------- ------- -------
Total interest
income 23,859 23,797 23,376 22,369 21,842
------- ------- ------- ------- -------
Interest expense
Deposits 7,124 7,759 8,627 8,882 9,028
Borrowings 5,796 5,697 4,753 3,960 3,611
------- ------- ------- ------- -------
Total interest
expense 12,920 13,456 13,380 12,842 12,639
------- ------- ------- ------- -------
Net interest income 10,939 10,341 9,996 9,527 9,203
Provision for loan
losses 1,000 750 525 390 390
------- ------- ------- ------- -------
Net interest income
after provision
for loan losses 9,939 9,591 9,471 9,137 8,813
------- ------- ------- ------- -------
Noninterest income
Insurance
commissions 1,327 1,157 1,303 209 206
Service fee income 743 863 788 736 617
Securities gains
(losses) -- -- -- -- --
Net cash settlement
on interest rate
swaps (170) (183) (181) (179) (184)
Change in fair
value of interest
rate swaps 705 783 752 (273) 226
Other income 243 78 244 203 191
------- ------- ------- ------- -------
Total noninterest
income 2,848 2,698 2,906 696 1,056
------- ------- ------- ------- -------
Noninterest expense
Salaries and
employee benefits 4,395 4,090 4,054 3,238 3,226
Net occupancy
expense 476 466 466 408 418
Equipment expense 534 568 496 493 446
Professional fees 118 152 176 193 174
Other expenses 1,566 1,634 1,628 1,386 1,385
------- ------- ------- ------- -------
Total noninterest
expense 7,089 6,910 6,820 5,718 5,649
------- ------- ------- ------- -------
Income before income
taxes 5,698 5,379 5,557 4,115 4,220
Income taxes 1,874 1,511 1,802 1,135 1,286
------- ------- ------- ------- -------
Income from
continuing
operations 3,824 3,868 3,755 2,980 2,934
------- ------- ------- ------- -------
Discontinued
operations
Exit costs and
impairment of
long-lived assets -- (435) -- 43 80
Operating income
(loss) -- (9,549) (200) (227) (372)
------- ------- ------- ------- -------
Income (loss) from
discontinued
operations before
income taxes -- (9,984) (200) (184) (292)
Income taxes -- (3,347) (69) (66) (97)
------- ------- ------- ------- -------
Income (loss)
from discontinued
operations -- (6,637) (131) (118) (195)
------- ------- ------- ------- -------
Net Income $ 3,824 $(2,769) $ 3,624 $ 2,862 $ 2,739
------- ------- ------- ------- -------
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Five Quarter Performance Summary
For the Quarter Ended
-----------------------------------------------------
3/31/2008 12/31/2007 9/30/2007 6/30/2007 3/31/2007
---------------------------------------------------------------------
Per Share Data
Earnings per
share from
continuing
operations
Basic $ 0.52 $ 0.52 $ 0.51 $ 0.42 $ 0.41
Diluted $ 0.51 $ 0.52 $ 0.50 $ 0.42 $ 0.41
Earnings per
share from
discontinued
operations
Basic $ -- $ (0.89) $ (0.02) $ (0.02) $ (0.03)
Diluted $ -- $ (0.89) $ (0.02) $ (0.02) $ (0.03)
Earnings per
share
Basic $ 0.52 $ (0.37) $ 0.49 $ 0.40 $ 0.39
Diluted $ 0.51 $ (0.37) $ 0.48 $ 0.40 $ 0.38
Average
shares
outstanding
Basic 7,408,941 7,401,684 7,399,213 7,084,980 7,084,980
Diluted 7,449,105 7,450,049 7,458,515 7,148,241 7,147,170
Performance
Ratios
Return on
average
equity 16.55% -11.62% 16.13% 13.59% 13.40%
Return on
average
equity -
continuing
operations 16.55% 16.23% 16.71% 14.15% 14.35%
Return on
average
assets 1.06% -0.81% 1.11% 0.91% 0.88%
Return on
average
assets -
continuing
operations 1.06% 1.13% 1.15% 0.94% 0.94%
Net interest
margin 3.28% 3.24% 3.28% 3.28% 3.26%
Efficiency
ratio -
continuing
operations(A) 52.11% 53.03% 53.91% 51.46% 53.50%
NOTE: (A) - Computed on a tax equivalent basis excluding nonrecurring
income and expense items, amortization of intangibles, and changes in
fair value of derivatives.
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Selected Balance Sheet Data
Dollars in thousands, except per share amounts
For the Quarter Ended
----------------------------------------------------------
3/31/2008 12/31/2007 9/30/2007 6/30/2007 3/31/2007
---------------------------------------------------------------------
Assets $1,465,110 $1,435,536 $1,340,679 $1,280,428 $1,254,528
Securities 302,029 300,066 279,289 259,526 258,173
Loans, net 1,079,223 1,052,489 986,437 949,175 930,769
Intangible
assets 9,968 10,055 10,143 3,121 3,159
Retail
deposits 652,147 652,296 638,633 626,617 623,431
Brokered
time
deposits 184,797 176,391 189,966 223,771 253,794
Short-term
borrowings 93,950 172,055 124,699 100,901 79,886
Long-term
borrowings
and
subordinated
debentures 431,918 335,327 283,268 236,347 203,408
Shareholders'
equity 91,955 89,420 93,475 81,910 81,950
Book value
per share $ 12.41 $ 12.06 $ 12.63 $ 11.56 $ 11.57
Tangible
book value
per share $ 11.07 $ 10.70 $ 11.26 $ 11.12 $ 11.12
Tangible
equity /
Tangible
assets 5.6% 5.6% 6.3% 6.2% 6.3%
Tier 1
leverage
ratio 7.8% 7.3% 8.1% 7.9% 7.9%
SUMMIT FINANCIAL GROUP INC. (NASDAQ:SMMF)
Loan Composition
Dollars in thousands
3/31/2008 12/31/2007 9/30/2007 6/30/2007 3/31/2007
---------------------------------------------------------------------
Commercial $ 112,367 $ 92,599 $ 87,018 $ 81,292 $ 69,700
Commercial
real estate 398,049 384,478 352,396 354,833 329,561
Construc-
tion and
development 209,737 225,270 212,570 198,721 220,430
Residential
real estate 333,945 322,640 305,016 283,821 279,564
Consumer 30,206 31,956 33,254 33,937 33,845
Other 6,395 6,641 6,794 7,111 7,209
---------- ---------- ---------- ---------- ----------
Total
loans 1,090,699 1,063,584 997,048 959,715 940,309
Less
unearned
fees and
interest 1,878 1,903 1,884 1,772 1,757
---------- ---------- ---------- ---------- ----------
Total
loans
net of
unearned
fees and
interest 1,088,821 1,061,681 995,164 957,943 938,552
Less
allowance
for loan
losses 9,598 9,192 8,727 8,768 7,783
---------- ---------- ---------- ---------- ----------
Loans,
net $1,079,223 $1,052,489 $ 986,437 $ 949,175 $ 930,769
========== ========== ========== ========== ==========
SUMMIT FINANCIAL GROUP INC. (NASDAQ:SMMF)
Retail Deposit Composition
Dollars in thousands
3/31/2008 12/31/2007 9/30/2007 6/30/2007 3/31/2007
---------------------------------------------------------------------
Non
interest
bearing
checking $ 64,111 $ 65,727 $ 65,230 $ 64,373 $ 60,645
Interest
bearing
checking 201,820 222,825 230,491 230,509 230,634
Savings 53,426 40,845 39,596 41,910 44,713
Time
deposits 332,790 322,899 303,316 289,825 287,439
---------- ---------- ---------- ---------- ----------
Total
retail
deposits $ 652,147 $ 652,296 $ 638,633 $ 626,617 $ 623,431
========== ========== ========== ========== ==========
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Asset Quality Information
Dollars in thousands
For the Quarter Ended
----------------------------------------------------------
3/31/2008 12/31/2007 9/30/2007 6/30/2007 3/31/2007
---------------------------------------------------------------------
Gross loan
charge-
offs $ 646 $ 332 $ 599 $ 141 $ 206
Gross loan
recoveries (52) (47) (33) (45) (87)
---------- ---------- ---------- ---------- ----------
Net loan
charge-
offs $ 594 $ 285 $ 566 $ 96 $ 119
========== ========== ========== ========== ==========
Net loan
charge-offs
to average
loans
(annualized) 0.22% 0.11% 0.23% 0.04% 0.05%
Allowance
for loan
losses $ 9,598 $ 9,192 $ 8,727 $ 8,768 $ 7,783
Allowance
for loan
losses as a
percentage
of period
end loans 0.88% 0.86% 0.88% 0.91% 0.83%
Nonperforming
assets:
Nonper-
forming
loans $ 13,957 $ 10,333 $ 6,916 $ 7,307 $ 4,474
Foreclosed
properties
and other
repossessed
assets 2,205 2,058 815 851 43
---------- ---------- ---------- ---------- ----------
Total $ 16,162 $ 12,391 $ 7,731 $ 8,158 $ 4,517
========== ========== ========== ========== ==========
Nonperforming
loans to
period end
loans 1.28% 0.97% 0.69% 0.76% 0.48%
========== ========== ========== ========== ==========
Nonperforming
assets to
period end
assets 1.11% 0.86% 0.58% 0.64% 0.36%
========== ========== ========== ========== ==========
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Nonperforming Loans by Type
Dollars in thousands
For the Quarter Ended
----------------------------------------------------------
3/31/2008 12/31/2007 9/30/2007 6/30/2007 3/31/2007
---------------------------------------------------------------------
Commercial $ 695 $ 716 $ 712 $ 124 $ 48
Commercial
real estate 5,095 4,346 582 84 84
Construction
and
development 3,694 2,016 2,557 4,177 2,781
Residential
real estate 4,247 3,012 2,871 2,683 1,504
Consumer 226 243 194 239 57
---------- ---------- ---------- ---------- ----------
Total
nonper-
forming
loans $ 13,957 $ 10,333 $ 6,916 $ 7,307 $ 4,474
========== ========== ========== ========== ==========
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q1 2008 vs Q1 2007
Dollars in thousands
Q1 2008 Q1 2007
-------------------------- --------------------------
Average Earnings/ Yield/ Average Earnings/ Yield/
Balances Expense Rate Balances Expense Rate
----------------------------------------- --------------------------
ASSETS
Interest
earning
assets
Loans, net of
unearned
interest
Taxable $1,073,218 $19,949 7.48% $ 928,979 $18,665 8.15%
Tax-exempt 8,949 183 8.22% 8,917 173 7.87%
Securities
Taxable 251,767 3,196 5.11% 208,315 2,577 5.02%
Tax-exempt 50,426 879 7.01% 47,289 814 6.98%
Interest
bearing
deposits
other banks
and Federal
funds sold 456 3 2.65% 446 5 4.55%
---------- ------- ---- ---------- ------- ----
Total interest
earning assets 1,384,816 24,210 7.03% 1,193,946 22,234 7.55%
Noninterest
earning assets
Cash & due
from banks 12,613 13,099
Premises &
equipment 22,110 22,332
Other assets 35,585 26,993
Allowance for
loan losses (9,533) (8,135)
---------- ----------
Total
assets $1,445,591 $1,248,235
========== ==========
LIABILITIES AND
SHAREHOLDERS'
EQUITY
Liabilities
Interest bearing
liabilities
Interest
bearing
demand
deposits $ 207,661 $ 930 1.80% $ 221,924 $ 2,066 3.78%
Savings
deposits 46,551 195 1.68% 46,407 217 1.90%
Time deposits 506,036 5,999 4.77% 556,525 6,745 4.92%
Short-term
borrowings 108,898 919 3.39% 72,415 958 5.37%
Long-term
borrowings
and
subordinated
debentures 409,938 4,877 4.78% 196,005 2,653 5.49%
---------- ------- ---- ---------- ------- ----
1,279,084 12,920 4.06% 1,093,276 12,639 4.69%
Noninterest
bearing
liabilities
Demand
deposits 64,472 61,288
Other
liabilities 9,604 11,881
---------- ----------
Total
liabil-
ities 1,353,160 1,166,445
Shareholders'
equity 92,431 81,790
---------- ----------
Total
liabilities
and
shareholders'
equity $1,445,591 $1,248,235
========== ==========
NET INTEREST
EARNINGS $11,290 $ 9,595
======= =======
NET INTEREST
YIELD ON
EARNING ASSETS 3.28% 3.26%
==== ====
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Reconciliation of Non-GAAP Financial Measures to
GAAP Financial Measures
For the Quarter Ended
-------------------------
Dollars in thousands 3/31/2008 3/31/2007
----------------------------------------------------------------------
Income from continuing operations -
excluding changes in fair value of
interest rate swaps $3,380 $2,792
Changes in fair value of interest rate swaps 705 226
Applicable income tax effect (261) (84)
------ ------
444 142
------ ------
GAAP income from continuing operations $3,824 $2,934
====== ======