MOOREFIELD, W.V., July 31, 2009 (GLOBE NEWSWIRE) -- Summit Financial Group, Inc. ("Company" or "Summit") (Nasdaq:SMMF) today reported a second quarter 2009 net loss of $3.5 million, or ($0.46) per diluted share, compared with net income of $2.6 million, or $0.35 per diluted share, for the second quarter of 2008. Second quarter 2009 results were impacted by an increased loan loss provision, the special FDIC assessment of $735,000 pretax ($463,000 after-tax, or $0.06 per diluted share), and an other-than-temporary impairment ("OTTI") charge of $4.8 million ($3.0 million after-tax, or $0.40 per diluted share) relating to the write-downs of residential mortgage-backed securities.
Excluding from second quarter 2009 the one-time OTTI charge of $4.8 million and the FDIC special assessment of $735,000, and from second quarter 2008 an OTTI charge of $1.5 million ($971,000 million after-tax, or $0.13 per diluted share) resulting from the write-down of Fannie Mae and Freddie Mac preferred stock, pro forma second quarter 2009 earnings were approximately $17,000, or $0.00 per diluted share, compared to pro forma earnings of $3.6 million, or $0.48 per diluted share, for the year-ago period.
For the six months ended June 30, 2009, the Company recorded a net loss of $1.7 million, or ($0.23) per diluted share, compared with net income of $6.4 million, or $0.86 per diluted share, for the comparable 2008 six-month period. Excluding from the first six months of 2009 net one-time pre-tax charges of $5.7 million ($3.6 million after-tax), and from the 2008 six-month period net one-time pre-tax charges of $836,000 ($527,000 after-tax), pro forma 2009 earnings were $1.9 million, or $0.25 per diluted share, a decline of 72.0 percent from pro forma earnings of $6.9 million, or $0.93 per diluted share, for the 2008 six month period.
One-time pretax charges in the first half of 2009 include the FDIC special assessment of $735,000, OTTI write-down charges of $4.8 million on residential mortgage-backed securities and $215,000 relating to an equity investment, and for the first six months of 2008, an OTTI write-down of $1.5 million on Freddie Mac and Fannie Mae preferred stock and changes in the fair-value of interest rate swaps of $705,000 ($444,000 after-tax).
H. Charles Maddy III, President and Chief Executive Officer of Summit Financial Group, Inc., commented, "We continue to work through our portfolio of problem assets as thoroughly and efficiently as we possibly can. It is our job one. We made substantial progress this quarter improving our credit profile, particularly with regard to our construction and development portfolio. Our foreclosed real estate is quite a bit higher than last quarter - a trend which will continue as we work through and out of our problem loans.
"Meanwhile, we believe the overall level of our nonperforming assets during this economic downturn has peaked, and we are beginning to see some modest improvement in housing and other economic trends within our markets, particularly in Virginia. Our core banking business remains healthy and stable. Revenue and expenses have not deteriorated for lack of attention, and we are successfully adjusting to the higher level of expenses associated with our own credit issues. Our deposit gathering initiatives have been extremely successful, helping to support our net interest margin despite our high levels of nonaccruing loans.
"Accordingly, we anticipate a return to profitability in third quarter 2009, and our earnings will range between $0.22 and $0.25 per diluted share."
Highlights of the second quarter include:
* Core banking operations continue to perform at historically sound
levels, with net interest income, fee income and controllable
expenses well-managed and virtually unchanged from year-ago
results.
* Net interest margin remains virtually unchanged at approximately
3.00 percent for the past three quarters, with the variance which
occurred in the third quarter 2008 attributable to adjustments
for interest reversals on loans reclassified as nonaccruing.
* Loans have remained stable over the past five quarters; reductions
in construction and development loans were offset by growth of
commercial real estate loans.
* The deposit mix continues to improve, with higher levels of
savings accounts and local time deposits replacing brokered
deposits and FHLB borrowings.
* Net charge-offs and real estate foreclosed upon during second
quarter 2009 totaled approximately $26 million, substantially
reducing the level of problem loans held in portfolio.
* Capital remains in excess of regulatory guidelines for a "well-
capitalized" institution, and we are evaluating options for
raising additional capital.
Results from Operations
Total revenue, consisting of net interest income and noninterest income, was $8.8 million for the second quarter of 2009, compared to $12.5 million for the year-ago period. Excluding the OTTI charges of $4.8 million and $1.5 million in the second quarters of 2009 and 2008, respectively, operating revenue was $13.5 million for the current quarter, compared to $14.0 million for the year-prior quarter. Net interest income was $11.1 million, a 2.4 percent decrease from the $11.4 million reported in the year-ago quarter; an 8.5 percent increase in average earning assets was offset by a 33 basis point, or 9.9 percent, decline in the net interest margin, to 3.00 percent for the second quarter of 2009.
For the second quarter of 2009, noninterest income, reported on a GAAP basis, was a negative $2.3 million compared to $1.1 million for the year-ago period. Excluding from the second quarter OTTI charges of $4.8 million in 2009 and a $1.5 million in 2008, noninterest income from operations was $2.4 million in the 2009 quarter compared to $2.7 million for 2008.
The provision for loan losses continues to be the primary factor impacting operating earnings. The Company recorded a $5.5 million provision in the second quarter of 2009, and for the six-month period, the provision was $9.5 million; this compares to second quarter and six-month 2008 provisions of $1.75 million and $2.75 million, respectively. The Company aggressively recognized total gross charge-offs of $13.8 million this past quarter. As of June 30, 2009, the allowance for loan losses stands at $14.3 million, or approximately 1.21 percent of total loans compared to 1.82 percent of total loans for the first quarter of 2009.
Noninterest expense was $8.7 million for the second quarter of 2009, an increase of $1.6 million, or 21.8 percent, from the 2008 second quarter. Controllable expenses, including salaries, employee benefits, occupancy and equipment expense, were virtually unchanged compared to the year-ago quarter. By contrast, FDIC assessment premiums and costs associated with credit administration and credit quality, including associated legal costs, continue to increase quarterly. FDIC insurance premiums increased by $1.1 million over the prior-year second quarter, including the one-time special assessment of $735,000 reported this quarter.
Balance Sheet and Asset Quality
Assets at June 30, 2009 were $1.6 billion, up $57.9 million, or 3.8 percent, since second quarter 2008, while total loans increased $35.2 million, or 3.1 percent, over the same 12-month period. However, loan growth has been systematically reduced since year-end 2008, declining $29.1 million, or 2.4 percent over the past six months. Commercial real estate ("CRE") has been the only loan category to grow over the past six months, up $7.4 million or 1.6 percent.
Summit's loan portfolio is composed primarily of CRE and 1-4 family residential mortgages which represent 38.9 and 31.8 percent, respectively, of total loans. Non real estate-related commercial loans account for 10.7 percent of loans, while construction & development ("C&D") loans account for 15.5 percent, down from 17.8 percent at December 31, 2008.
Nonperforming loans were $61.7 million at June 30, 2009, or 5.22 percent of total loans, compared with $79.6 million, or 6.58 percent, for the linked-quarter, and $15.6 million, or 1.37 percent, for the year-ago quarter. Mr. Maddy stated that much of the improvement was derived from a combination of charge-offs and transfer of properties to OREO this past quarter. In total, gross loans of $13.3 million were charged off this quarter, of which $12.0 million consisted of C&D loans. Also, a net additional $12.6 million of property was transferred to OREO, increasing Summit's portfolio of foreclosed real estate to $20.4 million in total. "As we discussed last quarter," Maddy continued, "we worked out a plan for each major project and acted decisively to either charge it off, or take control of the workout process. This has substantially reduced our balance sheet exposure to construction lending." During the past quarter, performing C&D loans declined by $12.4 million, or 7.5 percent, to $166.7 million, and nonperforming C&D loans declined by $16.5 million. $29.5 million of C&D loans remain classified as nonperforming.
In addition to C&D loans, the next largest component is commercial real estate, with $23.3 million of loans on nonaccrual status which relates principally to a single relationship. Otherwise, the commercial real estate portfolio, for the most part, has been performing well.
As of June 30, 2009, loans in the 30-89 day delinquent category totaled $13.4 million, down from $20.6 million for the linked quarter and $39.6 million for the year-ago quarter. "The good news this quarter relates to recent delinquencies, which declined substantially from the first quarter of 2009," Mr. Maddy continued. "Most importantly, virtually no C&D loans are on that list." In aggregate, C&D and residential real estate accounted for $9.1 million of the decline.
Nonperforming assets, including foreclosed properties and nonaccruing loans, totaled $82.1 million for the current quarter, or 5.19 percent of total assets, compared with 5.47 percent for the first quarter of 2009, and 1.19 percent of assets for the year-ago quarter.
The Company recorded net loan charge-offs of $13.2 million for the current quarter, or 4.37 percent (annualized) of average loans, compared with a $1.1 million recovery in the linked-quarter and $1.0 million of net charge-offs, or 0.36 percent of average loans (annualized), in the year-ago period. Following the extensive charge-offs and additional $5.5 million provision taken in the second quarter, the allowance for loan losses stands at $14.3 million, or 1.21 percent of total loans, down from 1.82 percent at first quarter-end and up from 0.91 percent for the year-ago quarter.
Total deposits at June 30, 2009 were $954.2 million, a decline of $11.6 million, or 1.2 percent, from $965.8 million at year-end 2008; by comparison, retail deposits increased by $36.7 million, or 5.5 percent, to $706.0 million within the same timeframe. Retail deposits now account for 74.0 percent of total deposits compared with 69.3 percent only six months ago. Growth in retail deposits was driven by exceptional growth of savings accounts, up $44.1 million over the past six months. Mr. Maddy commented that such outstanding savings account growth resulted from a combination of favorable factors, included a highly successful campaign to market the Summit Advantage checking and savings products, a less favorable environment for equity investments, and the expanded FDIC deposit guaranty program."
Capital Adequacy
Shareholders' equity at June 30, 2009 was $83.8 million, compared to $83.6 million and $91.5 million, respectively, for the linked and year-ago quarters. Capital ratios remain in excess of regulatory requirements for "well-capitalized" for both Summit and its banking subsidiary, Summit Community Bank. As of second quarter-end 2009, common shares outstanding totaled 7,425,472. Mr. Maddy concluded by adding that Summit continues to evaluate capital raising alternatives to provide additional strength and safety, and provide for future growth.
About the Company
Summit Financial Group, Inc., a financial holding company with total assets of $1.6 billion, operates fifteen banking locations through its wholly-owned community bank, Summit Community Bank, headquartered in Moorefield, West Virginia. Summit also operates Summit Insurance Services, LLC headquartered in Moorefield, West Virginia.
The Summit Financial Group, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=2990
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 several GAAP performance measures to exclude the effects of other-than-temporary impairment charge on securities, the FDIC's special assessment and 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 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 -- Q2 2009 vs Q2 2008
For the Quarter Ended
-------------------- Percent
Dollars in thousands 6/30/2009 6/30/2008 Change
---------------------------------------------------------------------
Condensed Statements of Income
Interest income
Loans, including fees $ 18,050 $ 19,576 -7.8%
Securities 4,710 3,761 25.2%
Other 1 3 -66.7%
--------- ---------
Total interest income 22,761 23,340 -2.5%
--------- ---------
Interest expense
Deposits 6,358 6,435 -1.2%
Borrowings 5,296 5,530 -4.2%
--------- ---------
Total interest expense 11,654 11,965 -2.6%
--------- ---------
Net interest income 11,107 11,375 -2.4%
Provision for loan losses 5,500 1,750 214.3%
--------- ---------
Net interest income after provision
for loan losses 5,607 9,625 -41.7%
--------- ---------
Noninterest income
Insurance commissions 1,283 1,275 0.6%
Service fee income 857 824 4.0%
Realized securities gains (losses) 39 -- n/a
Other-than-temporary impairment
of securities (4,768) (1,541) 209.4%
Other income 247 570 -56.7%
--------- ---------
Total noninterest income (2,342) 1,128 -307.6%
--------- ---------
Noninterest expense
Salaries and employee benefits 4,308 4,187 2.9%
Net occupancy expense 466 443 5.2%
Equipment expense 527 533 -1.1%
Professional fees 403 182 121.4%
FDIC premiums 1,245 180 591.7%
Other expenses 1,760 1,624 8.4%
--------- ---------
Total noninterest expense 8,709 7,149 21.8%
--------- ---------
Income (loss) before income taxes (5,444) 3,604 -251.1%
Income taxes (1,994) 1,010 -297.4%
--------- ---------
Net income (loss) $ (3,450) $ 2,594 -233.0%
--------- ---------
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Quarterly Performance Summary -- Q2 2009 vs Q2 2008
For the Quarter Ended
--------------------- Percent
6/30/2009 6/30/2008 Change
---------------------------------------------------------------------
Per Share Data
Earnings per share from continuing
operations
Basic $ (0.47) $ 0.35 -234.3%
Diluted $ (0.46) $ 0.35 -231.4%
Average shares outstanding
Basic 7,419,974 7,410,217 0.1%
Diluted 7,431,969 7,448,170 -0.2%
Performance Ratios
Return on average equity -16.13% 11.16% -244.5%
Return on average assets -0.86% 0.70% -222.9%
Net interest margin 3.00% 3.33% -9.9%
Efficiency ratio - continuing
operations (A) 56.50% 49.87% 13.3%
NOTE: (A) - Computed on a tax equivalent basis excluding nonrecurring
income and expense items and amortization of intangibles.
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Six Month Performance Summary -- 2009 vs 2008
For the Six Months Ended
------------------------ Percent
Dollars in thousands 6/30/2009 6/30/2008 Change
---------------------------------------------------------------------
Condensed Statements of Income
Interest income
Loans, including fees $ 36,303 $ 39,645 -8.4%
Securities 9,447 7,548 25.2%
Other 1 6 -83.3%
--------- ---------
Total interest income 45,751 47,199 -3.1%
--------- ---------
Interest expense
Deposits 12,979 13,559 -4.3%
Borrowings 10,330 11,327 -8.8%
--------- ---------
Total interest expense 23,309 24,886 -6.3%
--------- ---------
Net interest income 22,442 22,313 0.6%
Provision for loan losses 9,500 2,750 245.5%
--------- ---------
Net interest income after provision
for loan losses 12,942 19,563 -33.8%
--------- ---------
Noninterest income
Insurance commissions 2,627 2,602 1.0%
Service fee income 1,593 1,567 1.7%
Net cash settlement on interest
rate swaps -- (170) -100.0%
Change in fair value of interest
rate swaps -- 705 -100.0%
Realized securities gains (losses) 295 -- n/a
Other-than-temporary impairment
of securities (4,983) (1,541) 223.4%
Other income 567 813 -30.3%
--------- ---------
Total noninterest income 99 3,976 -97.5%
--------- ---------
Noninterest expense
Salaries and employee benefits 8,587 8,581 0.1%
Net occupancy expense 1,063 919 15.7%
Equipment expense 1,095 1,068 2.5%
Professional fees 737 300 145.7%
FDIC premiums 1,628 354 359.9%
Other expenses 3,350 3,015 11.1%
--------- ---------
Total noninterest expense 16,460 14,237 15.6%
--------- ---------
Income (loss) before income taxes (3,419) 9,302 -136.8%
Income taxes (1,734) 2,884 -160.1%
--------- ---------
Net income (loss) $ (1,685) $ 6,418 -126.3%
--------- ---------
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Six Month Performance Summary -- 2009 vs 2008
For the Six Months Ended
------------------------ Percent
6/30/2009 6/30/2008 Change
---------------------------------------------------------------------
Per Share Data
Earnings per share
Basic (0.23) 0.87 -126.4%
Diluted (0.23) 0.86 -126.7%
Average shares outstanding
Basic 7,417,642 7,409,579 0.1%
Diluted 7,433,494 7,448,974 -0.2%
Performance Ratios
Return on average equity -3.89% 13.80% -128.2%
Return on average assets -0.21% 0.88% -123.9%
Net interest margin 3.02% 3.31% -8.8%
Efficiency ratio (A) 55.56% 50.96% 9.0%
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
----------------------------------------------
6/30/ 3/31/ 12/31/ 9/30/ 6/30/
Dollars in thousands 2009 2009 2008 2008 2008
---------------------------------------------------------------------
Condensed Statements
of Income
Interest income
Loans, including fees $18,050 $18,254 $19,343 $18,527 $19,576
Securities 4,710 4,737 4,305 4,108 3,761
Other 1 -- 1 2 3
Total interest
------- ------- ------- ------- -------
income 22,761 22,991 23,649 22,637 23,340
------- ------- ------- ------- -------
Interest expense
Deposits 6,358 6,620 7,081 6,704 6,435
Borrowings 5,296 5,035 5,190 5,549 5,530
------- ------- ------- ------- -------
Total interest
expense 11,654 11,655 12,271 12,253 11,965
------- ------- ------- ------- -------
Net interest income 11,107 11,336 11,378 10,384 11,375
Provision for loan
losses 5,500 4,000 750 12,000 1,750
------- ------- ------- ------- -------
Net interest income
after provision
for loan losses 5,607 7,336 10,628 (1,616) 9,625
------- ------- ------- ------- -------
Noninterest income
Insurance
commissions 1,283 1,344 1,200 1,337 1,275
Service fee income 857 736 851 828 824
Realized securities
gains (losses) 39 256 -- -- --
Other-than-temporary
impairment
of securities (4,768) (215) (1,024) (4,495) (1,541)
Other income 247 319 40 155 570
------- ------- ------- ------- -------
Total noninterest
income (2,342) 2,440 1,067 (2,175) 1,128
------- ------- ------- ------- -------
Noninterest expense
Salaries and employee
benefits 4,308 4,279 4,047 4,113 4,187
Net occupancy
expense 466 597 463 489 443
Equipment expense 527 568 567 538 533
Professional fees 403 334 250 173 182
FDIC premiums 1,245 383 210 180 120
Other expenses 1,760 1,590 2,324 1,792 1,684
------- ------- ------- ------- -------
Total noninterest
expense 8,709 7,751 7,861 7,285 7,149
------- ------- ------- ------- -------
Income (loss) before
income taxes (5,444) 2,025 3,834 (11,076) 3,604
Income taxes (1,994) 260 277 (3,402) 1,010
------- ------- ------- ------- -------
Net income (loss) $(3,450) $ 1,765 $ 3,557 $(7,674) $ 2,594
------- ------- ------- ------- -------
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Five Quarter Performance Summary
For the Quarter Ended
------------------------------------------------------
6/30/2009 3/31/2009 12/31/2008 9/30/2008 6/30/2008
---------------------------------------------------------------------
Per Share Data
Earnings per
share
Basic $(0.47) $0.24 $0.48 $(1.04) $0.35
Diluted $(0.46) $0.24 $0.48 $(1.03) $0.35
Average
shares
outstanding
Basic 7,419,974 7,415,310 7,411,577 7,410,791 7,410,217
Diluted 7,431,969 7,435,510 7,434,643 7,445,242 7,448,170
Performance
Ratios
Return on
average
equity -16.13% 7.94% 17.08% -34.71% 11.16%
Return on
average
assets -0.86% 0.43% 0.89% -1.99% 0.70%
Net
interest
margin 3.00% 3.04% 3.04% 2.89% 3.33%
Efficiency
ratio -
continuing
operations(A) 56.50% 54.63% 51.14% 54.52% 49.87%
(A) - Computed on a tax equivalent basis excluding nonrecurring
income and expense items and amortization of intangibles.
Selected Balance Sheet Data
Dollars in thousands,
except per share amounts
For the Quarter Ended
-------------------------------------------------------------
6/30/2009 3/31/2009 12/31/2008 9/30/2008 6/30/2008
----------------------------------------------------------------------
Assets $1,583,910 $1,598,968 $1,627,066 $1,567,325 $1,525,978
Securit-
ies 289,267 295,706 350,622 327,648 307,232
Loans,
net 1,165,653 1,186,042 1,192,157 1,145,606 1,130,483
Intangible
assets 9,529 9,617 9,704 9,792 9,880
Retail
deposits 705,953 699,065 669,261 663,569 634,007
Brokered
time
deposits 248,271 256,293 296,589 281,655 223,742
Short-term
borrow-
ings 104,718 120,480 153,100 98,316 147,900
Long-term
borrowings
and
subordinated
debentures 432,391 430,687 412,337 434,016 419,775
Shareholders'
equity 83,753 83,604 87,244 80,510 91,466
Book value
per share $ 11.28 $ 11.27 $ 11.77 $ 10.86 $ 12.34
Tangible
book value
per
share $ 10.00 $ 9.98 $ 10.46 $ 9.54 $ 11.01
Tangible
equity/
Tangible
assets 4.7% 4.7% 4.8% 4.5% 5.4%
Tier 1
leverage
ratio 6.1% 6.2% 6.2% 6.2% 7.0%
SUMMIT FINANCIAL GROUP INC. (NASDAQ:SMMF)
Loan Composition
Dollars in thousands
For the Quarter Ended
-------------------------------------------------------------
6/30/2009 3/31/2009 12/31/2008 9/30/2008 6/30/2008
----------------------------------------------------------------------
Commer-
cial $ 126,661 $ 128,707 $ 130,106 $ 115,106 $ 112,793
Commercial
real
estate 459,671 452,987 452,264 423,982 415,187
Construction
and
develop-
ment 183,733 211,849 215,465 225,582 217,623
Residential
real
estate 376,019 380,351 376,026 366,989 361,009
Consumer 30,179 30,201 31,519 31,433 30,361
Other 5,760 6,133 6,061 6,240 6,206
--------- --------- --------- --------- ---------
Total
loans 1,182,023 1,210,228 1,211,441 1,169,332 1,143,179
Less
unearned
fees
and
interest 2,065 2,190 2,351 2,293 2,347
--------- --------- --------- --------- ---------
Total
loans
net of
unearned
fees and
interest 1,179,958 1,208,038 1,209,090 1,167,039 1,140,832
Less
allowance
for loan
losses 14,305 21,996 16,933 21,433 10,349
---------- ---------- ---------- ---------- ---------
Loans,
net $1,165,653 $1,186,042 $1,192,157 $1,145,606 $1,130,483
========== ========== ========== ========== ==========
SUMMIT FINANCIAL GROUP INC. (NASDAQ:SMMF)
Retail Deposit Composition
Dollars in thousands
For the Quarter Ended
-------------------------------------------------------------
6/30/2009 3/31/2009 12/31/2008 9/30/2008 6/30/2008
----------------------------------------------------------------------
Non
interest
bearing
checking $ 69,878 $ 70,483 $ 69,808 $ 70,353 $ 68,912
Interest
bearing
checking 152,498 155,157 156,990 182,383 194,255
Savings 105,828 94,294 61,688 58,678 60,245
Time
deposits 377,749 379,131 380,775 352,155 310,595
--------- --------- --------- --------- ---------
Total
retail
depo-
sits $ 705,953 $ 699,065 $ 669,261 $ 663,569 $ 634,007
========== ========== ========== ========== ==========
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Asset Quality Information
For the Quarter Ended
Dollars in --------------------------------------------------------
thousands 6/30/2009 3/31/2009 12/31/2008 9/30/2008 6/30/2008
----------------------------------------------------------------------
Gross loan
charge-offs $13,288 $ 522 $ 5,351 $ 969 $ 1,079
Gross loan
recoveries (98) (1,585) (102) (52) (80)
------- ------- ------- ------- -------
Net loan
charge-offs $13,190 $(1,063) $ 5,249 $ 917 $ 999
------- ------- ------- ------- -------
Net loan
charge-offs
to
average loans
(annualized) 4.37% (0.35)% 1.75% 0.32% 0.36%
Allowance for
loan
losses $14,305 $21,996 $16,933 $21,433 $10,349
Allowance for
loan losses
as a
percentage
of period end
loans 1.21% 1.82% 1.40% 1.87% 0.91%
Nonperforming
assets:
Nonperforming
loans $61,698 $79,583 $47,969 $59,845 $15,614
Foreclosed
properties
and other
repossessed
assets 20,446 7,824 8,113 2,284 2,546
------- ------- ------- ------- -------
Total $82,144 $87,407 $56,082 $62,129 $18,160
Nonperforming
loans to
period end
loans 5.22% 6.58% 3.97% 5.13% 1.37%
Nonperforming
assets to
period
end assets 5.19% 5.47% 3.45% 3.96% 1.19%
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Nonperforming Loans
For the Quarter Ended
Dollars in --------------------------------------------------------
thousands 6/30/2009 3/31/2009 12/31/2008 9/30/2008 6/30/2008
----------------------------------------------------------------------
Commercial $ 680 $ 637 $ 199 $ 140 $ 81
Commercial
real
estate 23,287 25,788 24,323 27,347 3,184
Construction
and
development 29,508 45,194 18,382 29,127 6,460
Residential
real
estate 8,116 7,933 4,986 2,799 5,521
Consumer 107 31 79 432 368
------- ------- ------- ------- -------
Total $61,698 $79,583 $47,969 $59,845 $15,614
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Loans Past Due 30-89 Days
For the Quarter Ended
Dollars in --------------------------------------------------------
thousands 6/30/2009 3/31/2009 12/31/2008 9/30/2008 6/30/2008
----------------------------------------------------------------------
Commercial $ 1,368 $ 144 $ 114 $ 706 $ 1,089
Commercial
real
estate 4,320 3,985 195 1,407 24,606
Construction
and
development 920 5,559 2,722 1,996 9,919
Residential
real
estate 5,802 10,291 5,009 8,537 2,962
Consumer 946 646 824 1,140 979
------- ------- ------- ------- -------
Total $13,356 $20,625 $ 8,864 $13,786 $39,555
------- ------- ------- ------- -------
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Average Balance Sheet, Interest Earnings & Expenses
and Average Rates
Q2 2009 vs Q2 2008
Q2 2009 Q2 2008
-------------------------- -------------------------
Dollars in Average Earnings/ Yield/ Average Earnings/ Yield/
thousands Balances Expense Rate Balances Expense Rate
---------------------------------------------------------------------
ASSETS
Interest earning
assets
Loans, net
of unearned
interest
Taxable $1,198,606 $17,936 6.00% $1,103,871 $19,462 7.07%
Tax-exempt 8,312 171 8.25% 8,630 173 8.04%
Securities
Taxable 273,515 4,194 6.15% 249,082 3,161 5.09%
Tax-exempt 46,466 782 6.75% 51,881 895 6.92%
Interest
bearing
deposits
other banks
and Federal
funds sold 3,454 1 0.12% 419 2 1.91%
---------- ------- ---- ---------- ------- ----
Total interest
earning
assets 1,530,353 23,084 6.05% 1,413,883 23,693 6.72%
Noninterest
earning assets
Cash & due
from banks 20,355 20,670
Premises
& equipment 23,649 22,016
Other assets 51,378 36,650
Allowance for
loan losses (23,151) (10,043)
---------- ----------
Total
assets $1,602,584 $1,483,176
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing
liabilities
Interest
bearing
demand
deposits $ 156,957 $ 196 0.50% $ 199,754 $ 618 1.24%
Savings
deposits 100,967 430 1.71% 56,548 212 1.50%
Time
deposits 630,290 5,732 3.65% 517,711 5,605 4.34%
Short-term
borrowings 107,922 146 0.54% 101,913 571 2.25%
Long-term
borrowings
and
subordinated
debentures 431,828 5,150 4.78% 426,656 4,959 4.66%
---------- ------- ---- ---------- ------- ----
1,427,964 11,654 3.27% 1,302,582 11,965 3.68%
Noninterest
bearing
liabilities
Demand
deposits 81,022 79,933
Other
liabilities 8,039 7,650
---------- ----------
Total
liabili-
ties 1,517,025 1,390,165
Shareholders'
equity 85,559 93,011
---------- ----------
Total
liabilities
and
share-
holders'
equity $1,602,584 $1,483,176
---------- ----------
NET
INTEREST
EARNINGS $11,430 $11,728
------- -------
NET
INTEREST
YIELD ON
EARNING
ASSETS 3.00% 3.33%
---- ----
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Average Balance Sheet, Interest Earnings &
Expenses and Average Rates
YTD 2009 vs YTD 2008
For the Six Months For the Six Months
Ended June 30 Ended June 30,
------------------------------------------------------
2009 2008
------------------------------------------------------
Dollars in Average Earnings/ Yield/ Average Earnings/ Yield/
thousands Balances Expense Rate Balances Expense Rate
-------------------------- -------------------------
ASSETS
Interest earning
assets
Loans, net of
unearned
interest
Taxable $1,200,625 $36,083 6.06% $1,088,544 $39,410 7.28%
Tax-exempt 8,134 333 8.26% 8,790 356 8.14%
Securities
Taxable 285,779 8,418 5.94% 250,414 6,358 5.11%
Tax-exempt 46,254 1,559 6.80% 51,153 1,774 6.97%
Interest
bearing
deposits
other
banks and
Federal
funds
sold 1,882 1 0.11% 441 6 2.74%
---------- ------- ---- ---------- ------- ----
Total
interest
earning
assets 1,542,674 46,394 6.06% 1,399,342 47,904 6.88%
Non interest
earning assets
Cash & due
from banks 18,873 16,691
Premises &
equipment 23,188 22,062
Other assets 48,919 36,426
Allowance
for loan
losses (21,270) (9,785)
---------- ----------
Total
assets $1,612,384 $1,464,736
---------- ----------
LIABILITIES AND SHARE HOLDERS' EQUITY
Liabilities
Interest
bearing
liabilities
Interest
bearing
demand
deposits $ 155,456 $ 392 0.51% $ 203,707 $ 1,548 1.53%
Savings
deposits 88,103 770 1.76% 51,549 407 1.59%
Time
deposits 638,556 11,817 3.73% 511,873 11,604 4.56%
Short-term
borrowings 129,928 358 0.56% 105,405 1,490 2.84%
Long-term
borrowings
and
subordinated
deben-
tures 427,819 9,973 4.70% 418,353 9,837 4.73%
---------- ------- ---- ---------- ------- ----
1,439,862 23,310 3.26% 1,290,887 24,886 3.88%
Noninterest
bearing
liabilities
Demand
deposits 77,775 72,203
Other
liabil-
ities 8,028 8,629
---------- ----------
Total
liabil-
ities 1,525,665 1,371,719
Shareholders'
equity 86,719 93,017
---------- ----------
Total
liabilities
and share-
holders'
equity $1,612,384 $ 1,464,736
---------- ----------
NET
INTEREST
EARNINGS $23,084 $23,018
------- -------
NET
INTEREST
YIELD ON
EARNING
ASSETS 3.02% 3.31%
---- ----
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)
Reconciliation of Non-GAAP Financial
Measures to GAAP Financial Measures
For the For the
Quarter Ended Six Months Ended
Dollars in -----------------------------------------------
thousands 6/30/2009 6/30/2008 6/30/2009 6/30/2008
----------------------------------------------------------------------
Net income - excluding
other-than-temporary
impairment of
securities, FDIC
special assessment
and change in fair
value of interest
rate swaps $ 17 $ 3,565 $ 1,917 $ 6,945
Other-than-temporary
impairment of
securities (4,768) (1,541) (4,983) (1,541)
Applicable income
tax effect 1,764 570 1,844 570
FDIC special
assessment (735) -- (735) --
Applicable income
tax effect 272 -- 272 --
Change in fair value
of interest rate
swaps -- -- -- 705
Applicable income
tax effect -- -- -- (261)
-------- -------- -------- --------
(3,467) (971) (3,602) (527)
-------- -------- -------- --------
GAAP net income $ (3,450) $ 2,594 $ (1,685) $ 6,418
======== ======== ======== ========
Diluted earnings per
share - excluding
other-than-temporary
impairment of
securities, FDIC
special assessment
and change in fair
value of interest
rate swaps $ -- $ 0.48 $ 0.25 $ 0.93
Other-than-temporary
impairment of
securities (0.64) (0.21) (0.67) (0.21)
Applicable income
tax effect 0.24 0.08 0.25 0.08
FDIC special
assessment (0.10) -- (0.10) --
Applicable income tax
effect 0.04 -- 0.04 --
Change in fair value
of interest rate
swaps -- -- -- 0.09
Applicable income tax
effect -- -- -- (0.03)
-------- -------- -------- --------
(0.46) (0.13) (0.48) (0.07)
-------- -------- -------- --------
GAAP diluted earnings
per share $ (0.46) $ 0.35 $ (0.23) $ 0.86
======== ======== ======== ========
Total revenue -
excluding other-than-
temporary impairment
of securities and
change in fair value
of interest rate
swaps $ 13,533 $ 14,044 $ 27,524 $ 27,125
Other-than-temporary
impairment of
securities (4,768) (1,541) (4,983) (1,541)
Change in fair value
of interest rate
swaps -- -- -- 705
-------- -------- -------- --------
(4,768) (1,541) (4,983) (836)
-------- -------- -------- --------
GAAP total revenue $ 8,765 $ 12,503 $ 22,541 $ 26,289
======== ======== ======== ========
Total noninterest
income - excluding
other-than-temporary
impairment of
securities and change
in fair value of
interest rate swaps $ 2,426 $ 2,669 $ 5,082 $ 4,812
Other-than-temporary
impairment of
securities (4,768) (1,541) (4,983) (1,541)
Change in fair value
of interest rate
swaps -- -- -- 705
-------- -------- -------- --------
(4,768) (1,541) (4,983) (836)
-------- -------- -------- --------
GAAP total noninterest
income $ (2,342) $ 1,128 $ 99 $ 3,976
======== ======== ======== ========