MOOREFIELD, W.Va., Feb. 01, 2021 (GLOBE NEWSWIRE) — Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ: SMMF) today reported fourth quarter 2020 net income of $10.3 million, or $0.79 per diluted share, both representing a quarterly record. In comparison, earnings for third quarter 2020 were $9.62 million, or $0.74 per diluted share, and for fourth quarter 2019 were $8.15 million, or $0.65 per diluted share.

For the full year 2020, Summit recorded net income of $31.3 million, or $2.41 per diluted share, compared with $31.9 million, or $2.53 per diluted share, for 2019, representing a decrease of 1.7 percent or 4.7 percent per diluted share. The principal factor negatively impacting our earnings this past year was the $13.0 million increase in our provision for credit losses ($9.84 million after taxes, or $0.76 per diluted share) compared to 2019. Recently adopted loan loss accounting rules now require us to record all estimated future losses in our loan portfolio, and this contributed significantly to our credit loss provision for 2020 as we recorded our estimate of loan losses expected to result from the COVID-19 pandemic.

Summit completed its acquisition of WinFirst Financial Corp. (“WFC”) and its subsidiary, WinFirst Bank, headquartered in Winchester, Kentucky on December 14, 2020; accordingly, WFC’s results of operations are included in Summit’s consolidated results of operations from the date of acquisition. At consummation, WFC had total assets of $143.4 million, loans of $123.8 million, and deposits of $103.6 million.

H. Charles Maddy, III, President and Chief Executive Officer commented, “I am very pleased to report Summit concluded a challenging year by achieving both record quarterly earnings and net revenues in fourth quarter of 2020. I am particularly gratified by our continued strong core operating performance, highlighted by strong growth in net interest income, all while maintaining a stable net interest margin and well-controlled noninterest expenses. These results validate not only our core growth strategies, but our ability to remain disciplined in trying times. This is also a tribute to our management and employees who have worked tirelessly the past year to put forth consistent, high levels of client service despite the many challenges. Looking ahead, I am inspired by our gaining momentum towards the goal to be a consistently growing, high-performing community banking institution. We are both fundamentally and financially strong as we face the challenges of 2021 and beyond.”

Highlights for Q4 2020

  • Net interest income increased 23.3 percent (annualized) compared to Q3 2020 and increased 32.2 percent year over year, primarily due to loan growth and lower funding costs.
  • Net interest margin in Q4 2020 increased 12 basis points to 3.76 percent as compared to the linked quarter, as yield on interest earning assets increased 4 basis points while the cost of deposits and other funding declined 11 basis points, as well as our diligence and disciplined approach toward asset/liability management.
  • Excluding mortgage warehouse lines of credit and acquired WFC loans, loan balances increased $29.8 million during the quarter, despite PPP loan pay downs totaling $22.6 million in Q4 2020.
  • Recorded provision for credit losses of $3.00 million (of which $2.0 million is attributable to acquired WFC loans) in Q4 2020 compared to $3.25 million in Q3 2020 and $500,000 in Q4 2019; our increased credit provisions in 2020 are principally due to the estimated potential future economic impact of the COVID-19 crisis.
  • Efficiency ratio was 49.38 percent compared to 48.95 percent in the linked quarter and 52.25 percent for Q4 2019.
  • Net foreclosed properties expenses increased to $676,000 in Q4 2020 compared to $607,000 in Q3 2020 as net losses on sales of foreclosed properties in Q4 2020 totaled $489,000 compared to $44,000 net gains in Q3 2020 and write downs of foreclosed properties to estimated fair values totaled $64,000 in Q4 2020 compared to $555,000 in Q3 2020. During Q4 2019, such write downs totaled $497,000 and realized net gains were $312,000.
  • Realized $912,000 securities gains in Q4 2020 compared to $1.52 million in the linked quarter and $403,000 in Q4 2019.
  • Nonperforming assets as a percentage of total assets increased to 1.16 percent compared to 0.94 percent for the linked quarter and 1.28 percent at year end 2019.
  • Completed acquisition of WinFirst Financial Corp. (“WFC”) and its wholly-owned subsidiary, WinFirst Bank, headquartered in Winchester, Kentucky.

Merger & Acquisition Activity

On December 14, 2020, Summit’s bank subsidiary, Summit Community Bank completed its acquisition of WinFirst Corp. and its subsidiary WinFirst Bank, headquartered in Winchester, Kentucky. At consummation, WinFirst had total assets of $143.4 million, loans of $123.8 million and deposits of $103.6 million.

Further, on April 24, 2020, Summit Community Bank completed its acquisition of four branch banking offices located in the Eastern Panhandle of West Virginia from MVB Bank, Inc., a bank subsidiary of MVB Financial Corp. Summit assumed approximately $195.0 million in deposits and acquired approximately $35.3 million in loans in conjunction with this purchase. Also, Summit completed its acquisition of Cornerstone Financial Services, Inc. (“Cornerstone”) and its subsidiary, Cornerstone Bank, headquartered in West Union, West Virginia on January 1, 2020. At consummation, Cornerstone had total assets of $195.0 million, loans of $39.8 million, and deposits of $173.0 million.

Accordingly, the results of operations of WinFirst, Cornerstone and acquired MVB Bank branches are included in Summit’s consolidated results of operations from the dates of acquisition, and therefore Summit’s 2020 results reflect increased levels of average balances, income and expenses compared to comparable prior year periods.

Results from Operations

Total revenue for fourth quarter 2020, consisting of net interest income and noninterest income, increased 32.0 percent to $32.0 million, which included $912,000 in realized securities gains, compared to $24.2 million for fourth quarter 2019. For full year 2020, total revenue was $115.6 million compared to $96.3 million for 2019, representing a 20.0 percent increase primarily as result of higher net interest income.

For the fourth quarter of 2020, net interest income was $26.2 million, an increase of 32.2 percent from the $19.8 million reported in the prior-year fourth quarter and a 5.8 percent increase compared to the linked quarter. The net interest margin for fourth quarter 2020 was 3.76 percent compared to 3.64 percent for the linked quarter and 3.63 percent for the year-ago quarter. Excluding the impact of accretion and amortization of fair value acquisition accounting adjustments, Summit’s net interest margin would have been 3.70 percent for Q4 2020, 3.59 percent for Q3 2020 and 3.60 percent for Q4 2019.

Noninterest income, consisting primarily of service fee income from community banking activities and trust and wealth management fees, for fourth quarter 2020 was $5.78 million compared to $6.21 million for the linked quarter and $4.40 million for the comparable period of 2019, which included realized securities gains of $912,000 in Q4 2020, $1.52 million in the linked quarter and $403,000 in Q4 2019. Excluding realized securities gains, noninterest income was $4.87 million for fourth quarter 2020 and $4.00 million for fourth quarter 2019. Mortgage origination revenue increased to $1.16 million for Q4 2020 compared to $379,000 in Q4 2019 due to higher volumes of secondary market loans driven primarily by historically low interest rates. Also included in Q3 2020 noninterest income is one-time income approximating $475,000 earned in conjunction with the recent investment in $9.3 million of annuities.

We recorded a $3.0 million provision for credit losses during fourth quarter 2020 compared to $3.25 million for the linked quarter and $500,000 in Q4 2019. As result of the adoption of CECL, the provision for credit losses now represents an estimate of the full amount of expected credit losses relative to loans, whereas under the pre-CECL incurred loss accounting method, the provision was only an estimate of probable existing loan losses.

Q4 2020 total noninterest expense increased 26.2 percent to $16.6 million compared to $13.2 million for the prior-year fourth quarter. This year-over-year increase resulted primarily due to the acquisition of Cornerstone and MVB Bank branches during early 2020. Additionally, other significant factors contributing to the changes in total noninterest expense period over period are as follows: higher FDIC premiums, as we fully utilized in prior periods our FDIC’s Small Bank Assessment Credits, decreased write downs of foreclosed properties to estimated fair values totaling $64,000 in Q4 2020 compared to $555,000 in Q3 2020 and $497,000 in Q4 2019, net losses on sales of foreclosed properties in Q4 2020 of $489,000 compared to net gains during Q3 2020 of $44,000 and Q4 2019 of $312,000 and deferred director compensation expense totaling $612,000 in Q4 2020, compared to $325,000 in Q3 2020 and $281,000 in Q4 2019.

Balance Sheet

At December 31, 2020, total assets were $3.11 billion, an increase of $702.9 million, or 29.2 percent since December 31, 2019. Total loans, net of unearned fees and allowance for loan losses, were $2.38 billion at December 31, 2020, up $479.5 million, or 25.2 percent, from the $1.90 billion reported at year-end 2019. Loans, excluding mortgage warehouse lines of credit and acquired WFC loans, increased $29.8 million during the quarter, or 5.9 percent (annualized). Loans, excluding mortgage warehouse lines of credit, PPP loans and acquired Cornerstone, MVB and WFC loans, have increased $100.4 million, or 5.6 percent since year-end 2019.

At December 31, 2020, core deposits were $2.46 billion, an increase of $774.5 million, or 46.0 percent, since year end 2019. During 2020, checking deposits increased $484.1 million or 54.3 percent, core time deposits grew by $87.3 million or 23.4 percent and savings deposits increased $203.1 million or 48.6 percent. Excluding acquired deposits (of Cornerstone, MVB branches and WFC), core deposits have increased $302.9 million, or 18.0 percent, since year end 2019.

Shareholders’ equity was $281.6 million as of December 31, 2020 compared to $247.8 million at December 31, 2019. In conjunction with the acquisition of Cornerstone on January 1, 2020, Summit issued 570,000 shares of common stock valued at $15.4 million to the former Cornerstone shareholders.

Tangible book value per common share increased to $17.50 as of December 31, 2020 compared to $17.31 at September 30, 2020, although it decreased from $18.11 at December 31, 2019 as result of the somewhat dilutive impacts of the Cornerstone, MVB Branches and WinFirst acquisitions. Summit had 12,942,004 outstanding common shares at Q4 2020 quarter end compared to 12,408,542 at year end 2019.

As announced in Q1 2020, the Board of Directors authorized the open market repurchase of up to 750,000 shares of the issued and outstanding shares of Summit’s common stock. The timing and quantity of stock purchases under this repurchase plan are at the discretion of management. During Q4 2020, no shares of our common stock were repurchased under the Plan.

Asset Quality

We incurred net loan charge-offs of $239,000 in fourth quarter 2020 (0.04 percent of average loans annualized), compared to third quarter 2020 net loan charge-offs of $1.01 million, which included an $880,000 charge-off of a commercial real estate relationship which had previously been fully reserved and exhibited weakness prior to the COVID-19 pandemic while $2.34 million and $3.20 million were added to the allowance for loan credit losses through the provision for credit losses during Q4 2020 and Q3 2020, respectively. The allowance for loan credit losses stood at 1.34 percent of total loans as of December 31, 2020, compared to 0.68 percent at year-end 2019.

Similarly, during Q4 2020 and Q3 2020, we also added $665,000 and $48,000, respectively, to the allowance for credit losses on unfunded loan commitments through the provision for credit losses.

As of December 31, 2020, nonperforming assets (“NPAs”), consisting of nonperforming loans, foreclosed properties and repossessed assets, totaled $35.9 million, or 1.16 percent of assets primarily due to a loan relationship detrimentally impacted by the COVID-19 pandemic totaling $9.68 million that was placed on nonaccrual status. This compares to NPAs of $27.8 million, or 0.94 percent of assets at the linked quarter-end and $30.8 million, or 1.28 percent of assets at the end of 2019.

The following tables summarize the aggregate balances of loans the Company has modified as result of the COVID-19 pandemic as of December 31, 2020 and September 30, 2020 classified by types of loans and impacted borrowers.

    Loan Balances Modified Due to COVID-19 as of 12/31/2020
Dollars in thousands Total Loan
Balance as of
12/31/2020
 Loans Modified
to Interest Only
Payments
Loans Modified
to Payment
Deferral
Total Loans
Modified
Percentage
of Loans
Modified
Hospitality Industry $ 121,502   $ 40,513   $ 12,930   $ 53,443   44.0 %
Non-Owner Occupied Retail Stores   135,405     7,223     447     7,670   5.7 %
Owner-Occupied Retail Stores   126,451     2,317     1,246     3,563   2.8 %
Restaurants   7,481               0.0 %
Oil & Gas Industry   17,152               0.0 %
Other Commercial Loans   1,134,759     12,006     286     12,292   1.1 %
                   Total Commercial Loans   1,542,750     62,059     14,909     76,968   5.0 %
Residential 1-4 Family Personal   305,093     159     1,754     1,913   0.6 %
Residential 1-4 Family Rentals   194,612     148     73     221   0.1 %
Home Equity Loans   81,588               0.0 %
       Total Residential Real Estate Loans   581,293     307     1,827     2,134   0.4 %
Consumer Loans   33,906     48     143     191   0.6 %
Mortgage Warehouse Loans   251,810               0.0 %
Credit Cards and Overdrafts   2,394               0.0 %
                              Total Loans $ 2,412,153   $ 62,414   $ 16,879   $ 79,293   3.3 %
    Loan Balances Modified Due to COVID-19 as of 9/30/2020
Dollars in thousands Total Loan
Balance as of
9/30/2020
 Loans Modified
to Interest Only
Payments
Loans Modified
to Payment
Deferral
Total Loans
Modified
Percentage
of Loans
Modified
Hospitality Industry $ 120,324   $ 36,803   $ 11,466   $ 48,269   40.1 %
Non-Owner Occupied Retail Stores   108,326     19,497         19,497   18.0 %
Owner-Occupied Retail Stores   100,926     1,601     1,409     3,010   3.0 %
Restaurants   7,968               0.0 %
Oil & Gas Industry   24,404     914         914   3.7 %
Other Commercial Loans   1,084,385     40,846         40,846   3.8 %
                   Total Commercial Loans   1,446,333     99,661     12,875     112,536   7.8 %
Residential 1-4 Family Personal   263,315     195     991     1,186   0.5 %
Residential 1-4 Family Rentals   178,529     3,567     336     3,903   2.2 %
Home Equity Loans   82,991               0.0 %
       Total Residential Real Estate Loans   524,835     3,762     1,327     5,089   1.0 %
Consumer Loans   34,655     34     22     56   0.2 %
Mortgage Warehouse Loans   243,730               0.0 %
Credit Cards and Overdrafts   2,251               0.0 %
                              Total Loans $ 2,251,804   $ 103,457   $ 14,224   $ 117,681   5.2 %

About the Company

Summit Financial Group, Inc. is a $3.11 billion financial holding company headquartered in Moorefield, West Virginia. Summit provides community banking services primarily in the Eastern Panhandle, Southern and North Central regions of West Virginia, the Northern, Shenandoah Valley and Southwestern regions of Virginia and the central region of Kentucky, through its bank subsidiary, Summit Community Bank, Inc., which operates 43 banking locations.

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: the effect of the COVID-19 pandemic, including the negative impacts and disruptions on the communities we serve, and the domestic and global economy, which may have an adverse effect on our business; current and future economic and market conditions, including the effects of declines in housing prices, high unemployment rates, U.S. fiscal debt, budget and tax matters, geopolitical matters, and any slowdown in global economic growth; fiscal and monetary policies of the Federal Reserve; future provisions for credit losses on loans and debt securities; changes in nonperforming assets; changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; the successful integration of operations of our acquisitions; 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.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)    
Quarterly Performance Summary (unaudited)      
Q4 2020 vs Q4 2019      
       
    For the Quarter Ended Percent
Dollars in thousands 12/31/2020 12/31/2019 Change
Statements of Income      
  Interest income      
     Loans, including fees $ 27,897   $ 24,772   12.6 %
     Securities   2,228     2,195   1.5 %
     Other   51     105   -51.4 %
                         Total interest income   30,176     27,072   11.5 %
  Interest expense                
     Deposits   2,956     5,952   -50.3 %
     Borrowings   1,014     1,292   -21.5 %
                         Total interest expense   3,970     7,244   -45.2 %
  Net interest income   26,206     19,828   32.2 %
  Provision for credit losses   3,000     500   n/m
  Net interest income after provision                
      for credit losses   23,206     19,328   20.1 %
                   
  Noninterest income                
     Insurance commissions   127     90   41.1 %
     Trust and wealth management fees   626     734   -14.7 %
     Mortgage origination revenue   1,163     379   206.9 %
     Service charges on deposit accounts   1,305     1,377   -5.2 %
     Bank card revenue   1,237     906   36.5 %
     Realized securities gains   912     403   126.3 %
     Bank owned life insurance and annuity income   233     310   -24.8 %
     Other income   174     205   -15.1 %
                         Total noninterest income   5,777     4,404   31.2 %
  Noninterest expense                
      Salaries and employee benefits   8,501     7,099   19.7 %
      Net occupancy expense   1,046     815   28.3 %
      Equipment expense   1,502     1,278   17.5 %
      Professional fees   370     412   -10.2 %
      Advertising and public relations   207     214   -3.3 %
      Amortization of intangibles   409     401   2.0 %
      FDIC premiums   261       n/a
      Bank card expense   573     454   26.2 %
      Foreclosed properties expense, net   676     262   158.0 %
      Merger-related expense   218     98   122.4 %
      Other expenses   2,843     2,126   33.7 %
                         Total noninterest expense   16,606     13,159   26.2 %
  Income before income taxes   12,377     10,573   17.1 %
  Income taxes   2,126     2,424   -12.3 %
                                  Net income $ 10,251   $ 8,149   25.8 %
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)    
Quarterly Performance Summary (unaudited)    
Q4 2020 vs Q4 2019    
         
    For the Quarter Ended Percent
    12/31/2020 12/31/2019 Change
Per Share Data      
  Earnings per common share      
     Basic $ 0.79   $ 0.66   19.7%  
     Diluted $ 0.79   $ 0.65   21.5%  
                   
  Cash dividends $ 0.17   $ 0.15   13.3%  
  Dividend payout ratio   21.5%     22.3%   -3.6%  
                   
  Average common shares outstanding                
     Basic   12,932,768     12,400,932   4.3%  
     Diluted   12,980,041     12,458,702   4.2%  
                   
  Common shares outstanding at period end   12,942,004     12,408,542   4.3%  
                   
Performance Ratios                
  Return on average equity   14.90%     13.32%   11.9%  
  Return on average tangible equity   18.70%     15.25%   22.6%  
  Return on average assets   1.37%     1.39%   -1.4%  
  Net interest margin (A)   3.76%     3.63%   3.6%  
  Efficiency ratio (B)   49.38%     52.25%   -5.5%  

NOTE (A) – Presented on a tax-equivalent basis assuming a federal tax rate of 21%.

NOTE (B) – Computed on a tax equivalent basis excluding merger-related expenses, gains/losses on sales of assets, write-downs of OREO properties to fair value and amortization of intangibles.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)    
Annual Performance Summary (unaudited)      
2020 vs 2019      
         
    For the Year Ended Percent
Dollars in thousands 12/31/2020 12/31/2019 Change
Statements of Income      
  Interest income      
     Loans, including fees $ 105,564   $ 97,115   8.7 %
     Securities   9,173     9,361   -2.0 %
     Other   266     595   -55.3 %
                         Total interest income   115,003     107,071   7.4 %
  Interest expense                
     Deposits   16,044     23,697   -32.3 %
     Borrowings   3,477     6,290   -44.7 %
                         Total interest expense   19,521     29,987   -34.9 %
  Net interest income   95,482     77,084   23.9 %
  Provision for credit losses   14,500     1,550   n/m
  Net interest income after provision                
      for credit losses   80,982     75,534   7.2 %
                   
  Noninterest income                
     Insurance commissions   202     1,911   -89.4 %
     Trust and wealth management fees   2,495     2,564   -2.7 %
     Mortgage origination revenue   2,799     770   263.5 %
     Service charges on deposit accounts   4,588     5,094   -9.9 %
     Bank card revenue   4,494     3,536   27.1 %
     Realized securities gains   3,472     1,938   79.2 %
     Gain on sale of Summit Insurance Services, LLC       1,906   n/a
     Bank owned life insurance and annuity income   1,567     1,044   50.1 %
     Other income   466     440   5.9 %
                         Total noninterest income   20,083     19,203   4.6 %
  Noninterest expense                
      Salaries and employee benefits   32,211     29,066   10.8 %
      Net occupancy expense   3,963     3,417   16.0 %
      Equipment expense   5,765     4,972   15.9 %
      Professional fees   1,538     1,678   -8.3 %
      Advertising and public relations   596     698   -14.6 %
      Amortization of intangibles   1,659     1,701   -2.5 %
      FDIC premiums   856     88   872.7 %
      Bank card expense   2,225     1,820   22.3 %
      Foreclosed properties expense, net   2,490     2,498   -0.3 %
      Merger-related expense   1,671     617   170.8 %
      Other expenses   9,337     8,599   8.6 %
                         Total noninterest expense   62,311     55,154   13.0 %
  Income before income taxes   38,754     39,583   -2.1 %
  Income taxes   7,428     7,717   -3.7 %
                                  Net income $ 31,326   $ 31,866   -1.7 %
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)    
Annual Performance Summary (unaudited)      
2020 vs 2019    
         
    For the Year Ended Percent
    12/31/20020 12/31/2019 Change
Per Share Data      
  Earnings per common share      
     Basic $ 2.42   $ 2.55   -5.1%  
     Diluted $ 2.41   $ 2.53   -4.7%  
                   
  Cash dividends $ 0.68   $ 0.59   15.3%  
  Dividend payout ratio   28.2%     23.1%   22.1%  
                   
  Average common shares outstanding                
     Basic   12,935,430     12,516,474   3.3%  
     Diluted   12,975,385     12,575,145   3.2%  
                   
  Common shares outstanding at period end   12,942,004     12,408,542   4.3%  
                   
Performance Ratios                
  Return on average equity   11.80%     13.43%   -12.1%  
  Return on average tangible equity   14.73%     15.65%   -5.9%  
  Return on average assets   1.13%     1.40%   -19.3%  
  Net interest margin (A)   3.71%     3.66%   1.4%  
  Efficiency ratio (B)   50.34%     54.55%   -7.7%  

NOTE (A) – Presented on a tax-equivalent basis assuming a federal tax rate of 21%.

NOTE (B) – Computed on a tax equivalent basis excluding merger-related expenses, gains/losses on sales of assets, write-downs of OREO properties to fair value and amortization of intangibles.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)        
Five Quarter Performance Summary (unaudited)          
           
    For the Quarter Ended
Dollars in thousands 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019
Statements of Income          
  Interest income          
     Loans, including fees $ 27,897   $ 26,807   $ 25,624   $ 25,235   $ 24,772  
     Securities   2,228     2,382     2,253     2,310     2,195  
     Other   51     57     60     98     105  
                        Total interest income   30,176     29,246     27,937     27,643     27,072  
  Interest expense                              
     Deposits   2,956     3,552     4,186     5,351     5,952  
     Borrowings   1,014     928     685     849     1,292  
                        Total interest expense   3,970     4,480     4,871     6,200     7,244  
                            Net interest income   26,206     24,766     23,066     21,443     19,828  
  Provision for credit losses   3,000     3,250     3,000     5,250     500  
  Net interest income after provision                              
      for credit losses   23,206     21,516     20,066     16,193     19,328  
  Noninterest income                              
     Insurance commissions   127     44     24     7     90  
     Trust and wealth management fees   626     622     582     665     734  
     Mortgage origination revenue   1,163     780     641     214     379  
     Service charges on deposit accounts   1,305     1,138     882     1,263     1,377  
     Bank card revenue   1,237     1,237     1,087     933     906  
     Realized securities gains   912     1,522         1,038     403  
     Bank owned life insurance and annuity income   233     795     275     264     310  
     Other income   174     69     107     118     205  
                         Total noninterest income   5,777     6,207     3,598     4,502     4,404  
  Noninterest expense                              
     Salaries and employee benefits   8,501     8,108     7,930     7,672     7,099  
     Net occupancy expense   1,046     1,057     977     883     815  
     Equipment expense   1,502     1,474     1,360     1,429     1,278  
     Professional fees   370     364     417     387     412  
     Advertising and public relations   207     145     93     152     214  
     Amortization of intangibles   409     412     410     429     401  
     FDIC premiums   261     320     110     165      
     Bank card expense   573     589     560     503     454  
     Foreclosed properties expense, net   676     607     240     966     262  
     Merger-related expenses   218     28     637     788     98  
     Other expenses   2,843     2,405     2,463     1,625     2,126  
                          Total noninterest expense   16,606     15,509     15,197     14,999     13,159  
  Income before income taxes   12,377     12,214     8,467     5,696     10,573  
  Income tax expense   2,126     2,594     1,518     1,190     2,424  
                          Net income $ 10,251   $ 9,620   $ 6,949   $ 4,506   $ 8,149  
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)        
Five Quarter Performance Summary (unaudited)          
           
    For the Quarter Ended
    12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019
Per Share Data          
  Earnings per common share          
     Basic $ 0.79   $ 0.74   $ 0.54   $ 0.35   $ 0.66  
     Diluted $ 0.79   $ 0.74   $ 0.54   $ 0.35   $ 0.65  
                                 
  Cash dividends $ 0.17   $ 0.17   $ 0.17   $ 0.17   $ 0.15  
  Dividend payout ratio   21.5%     22.9%     31.7%     49.1%     22.3%  
                                 
  Average common shares outstanding                              
     Basic   12,932,768     12,922,158     12,911,979     12,975,429     12,400,932  
     Diluted   12,980,041     12,949,584     12,943,804     13,028,409     12,458,702  
                                 
  Common shares outstanding at period end   12,942,004     12,932,415     12,922,045     12,920,244     12,408,542  
                                 
Performance Ratios                              
  Return on average equity   14.90%     14.38%     10.75%     6.92%     13.32%  
  Return on average tangible equity   18.70%     18.12%     13.57%     8.55%     15.25%  
  Return on average assets   1.37%     1.31%     1.02%     0.73%     1.39%  
  Net interest margin (A)   3.76%     3.64%     3.68%     3.76%     3.63%  
  Efficiency ratio (B)   49.38%     48.95%     51.97%     51.41%     52.25%  

NOTE (A) – Presented on a tax-equivalent basis assuming a federal tax rate of 21%.

NOTE (B) – Computed on a tax equivalent basis excluding merger-related expenses, gains/losses on sales of assets, write-downs of OREO properties to fair value and amortization of intangibles.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)          
Selected Balance Sheet Data (unaudited)          
             
Dollars in thousands, except per share amounts 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019
             
Assets          
  Cash and due from banks $ 19,522   $ 16,257   $ 16,572   $ 18,633   $ 28,137  
  Interest bearing deposits other banks   80,265     92,729     26,218     22,821     33,751  
  Securities, available for sale   286,127     297,989     322,539     305,045     276,355  
  Securities, held to maturity   99,914     91,600     80,497          
  Loans, net   2,379,907     2,222,450     2,192,541     1,982,661     1,900,425  
  Property held for sale   15,588     17,831     17,954     18,287     19,276  
  Premises and equipment, net   52,537     52,880     51,847     47,078     44,168  
  Goodwill and other intangible assets   55,123     48,101     48,513     34,132     23,022  
  Cash surrender value of life insurance policies and annuities   59,438     57,029     55,315     46,497     43,603  
  Other assets   57,963     49,996     49,355     38,168     34,755  
                                           Total assets $ 3,106,384   $ 2,946,862   $ 2,861,351   $ 2,513,322   $ 2,403,492  
                                 
Liabilities and Shareholders’ Equity                              
  Deposits $ 2,595,651   $ 2,451,891   $ 2,451,769   $ 2,044,914   $ 1,913,237  
  Short-term borrowings   140,146     140,145     90,945     161,745     199,345  
  Long-term borrowings and                              
       subordinated debentures   49,652     50,292     20,297     20,301     20,306  
  Other liabilities   39,355     32,571     34,909     30,337     22,840  
  Shareholders’ equity   281,580     271,963     263,431     256,025     247,764  
                         Total liabilities and shareholders’ equity $ 3,106,384   $ 2,946,862   $ 2,861,351   $ 2,513,322   $ 2,403,492  
                                 
  Book value per common share $ 21.76   $ 21.03   $ 20.39   $ 19.82   $ 19.97  
  Tangible book value per common share $ 17.50   $ 17.31   $ 16.63   $ 17.17   $ 18.11  
  Tangible common equity to tangible assets   7.4%     7.7%     7.6%     9.0%     9.4%  
SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)      
Regulatory Capital Ratios (unaudited)          
             
    12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019
Summit Financial Group, Inc.          
  CET1 Risk-based Capital 9.3 % 9.9 % 9.7 % 10.8 % 11.1 %
  Tier 1 Risk-based Capital 10.0 % 10.7 % 10.5 % 11.7 % 12.1 %
  Total Risk-based Capital 12.1 % 12.9 % 11.3 % 12.5 % 12.7 %
  Tier 1 Leverage 8.6 % 8.7 % 9.0 % 10.2 % 10.5 %
             
Summit Community Bank, Inc.          
  CET1 Risk-based Capital 11.1 % 11.8 % 10.5 % 11.7 % 12.1 %
  Tier 1 Risk-based Capital 11.1 % 11.8 % 10.5 % 11.7 % 12.1 %
  Total Risk-based Capital 12.0 % 12.7 % 11.4 % 12.5 % 12.7 %
  Tier 1 Leverage 9.5 % 9.6 % 9.0 % 10.2 % 10.6 %
SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)      
Loan Composition (unaudited)          
           
Dollars in thousands 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019
           
Commercial $ 296,832   $ 338,685   $ 311,755   $ 224,659   $ 207,138  
Mortgage warehouse lines   251,815     243,730     252,472     166,826     126,237  
Commercial real estate                              
     Owner occupied   351,859     312,502     336,143     331,486     276,218  
     Non-owner occupied   685,563     618,624     593,168     580,619     629,206  
Construction and development                              
     Land and development   107,342     97,343     92,706     92,332     84,112  
     Construction   91,100     66,878     48,115     43,121     37,523  
Residential real estate                              
     Conventional   425,520     368,008     371,225     378,540     354,963  
     Jumbo   74,185     73,836     76,360     64,944     70,947  
     Home equity   81,588     82,991     88,929     75,170     76,568  
Consumer   35,269     35,905     35,781     36,611     36,470  
Other   11,080     13,302     13,053     12,961     14,117  
   Total loans, net of unearned fees   2,412,153     2,251,804     2,219,707     2,007,269     1,913,499  
Less allowance for credit losses   32,246     29,354     27,166     24,608     13,074  
                         Loans, net $ 2,379,907   $ 2,222,450   $ 2,192,541   $ 1,982,661   $ 1,900,425  
SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)      
Deposit Composition (unaudited)        
           
Dollars in thousands 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019
Core deposits          
   Non-interest bearing checking $ 440,819   $ 420,070   $ 443,190   $ 337,446   $ 260,553  
   Interest bearing checking   934,185     867,442     830,258     648,214     630,352  
   Savings   621,168     598,564     561,029     457,010     418,096  
   Time deposits   460,443     414,542     422,286     384,062     373,125  
          Total core deposits   2,456,615     2,300,618     2,256,763     1,826,732     1,682,126  
                               
Brokered time deposits   55,454     64,120     90,279     111,156     150,554  
Other non-core time deposits   83,582     87,153     104,727     107,026     80,557  
                Total deposits $ 2,595,651   $ 2,451,891   $ 2,451,769   $ 2,044,914   $ 1,913,237  
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)        
Asset Quality Information (unaudited)          
    For the Quarter Ended
Dollars in thousands 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019
             
  Gross loan charge-offs $ 434   $ 1,259   $ 218   $ 698   $ 455  
  Gross loan recoveries   (195 )   (245 )   (269 )   (197 )   (88 )
     Net loan charge-offs/(recoveries) $ 239   $ 1,014   $ (51 ) $ 501   $ 367  
                                 
  Net loan charge-offs to average loans (annualized)   0.04%     0.18%     -0.01 %   0.10%     0.08%  
  Allowance for loan credit losses $ 32,246   $ 29,354   $ 27,166   $ 24,608   $ 13,074  
  Allowance for loan credit losses as a percentage                              
      of period end loans   1.34%     1.30%     1.22%     1.23%     0.68%  
  Allowance for credit losses on                              
      unfunded loan commitments $ 4,190   $ 3,525   $ 3,477   $ 2,984   $  
  Nonperforming assets:                              
     Nonperforming loans                              
         Commercial $ 525   $ 553   $ 754   $ 560   $ 764  
         Commercial real estate   14,237     4,313     5,822     5,644     5,800  
         Residential construction and development   235     2     14     11     326  
         Residential real estate   5,264     5,104     5,873     4,343     4,404  
         Consumer   74     31     29     65     116  
         Other           35     100     100  
       Total nonperforming loans   20,335     10,003     12,527     10,723     11,510  
     Foreclosed properties                              
         Commercial real estate   2,581     2,500     1,774     1,866     1,930  
         Commercial construction and development   4,154     4,154     4,511     4,511     4,601  
         Residential construction and development   7,791     10,330     10,645     10,774     11,169  
         Residential real estate   1,062     847     1,024     1,136     1,576  
       Total foreclosed properties   15,588     17,831     17,954     18,287     19,276  
    Other repossessed assets               49     17  
       Total nonperforming assets $ 35,923   $ 27,834   $ 30,481   $ 29,059   $ 30,803  
                                 
  Nonperforming loans to period end loans   0.84%     0.44%     0.56%     0.53%     0.60%  
  Nonperforming assets to period end assets   1.16%     0.94%     1.07%     1.16%     1.28%  
                                 
  Troubled debt restructurings                              
       Performing $ 21,375   $ 22,232   $ 22,117   $ 22,966   $ 23,339  
       Nonperforming   3,127     2,988     3,003     2,831     2,337  
       Total troubled debt restructurings $ 24,502   $ 25,220   $ 25,120   $ 25,797   $ 25,676  
Loans Past Due 30-89 Days (unaudited)          
    For the Quarter Ended
Dollars in thousands 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019
             
  Commercial $ 1   $ 147   $ 196   $ 160   $ 111  
  Commercial real estate   274     1,740     1,231     2,106     1,196  
  Construction and development   47     422     8     53     236  
  Residential real estate   4,405     4,464     2,763     5,178     4,775  
  Consumer   233     160     164     222     269  
  Other   5     2     3     7     25  
     Total $ 4,965   $ 6,935   $ 4,365   $ 7,726   $ 6,612  
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)                          
Average Balance Sheet, Interest Earnings & Expenses and Average Rates                          
Q4 2020 vs Q3 2020 vs Q4 2019 (unaudited)                          
                                                     
  Q4 2020
  Q3 2020
  Q4 2019
    Average     Earnings /   Yield /       Average     Earnings /   Yield /       Average     Earnings /   Yield /  
Dollars in thousands   Balances     Expense   Rate       Balances     Expense   Rate       Balances     Expense   Rate  
                                                     
ASSETS                                                    
Interest earning assets                                                    
  Loans, net of unearned interest (1)                                                    
    Taxable $ 2,292,797   $ 27,774   4.82 %   $ 2,251,722   $ 26,656   4.71 %   $ 1,853,197   $ 24,622   5.27 %
    Tax-exempt (2)   13,062     156   4.75 %     16,245     191   4.68 %     15,738     189   4.76 %
  Securities                                                    
    Taxable   258,594     1,341   2.06 %     261,231     1,445   2.20 %     218,375     1,654   3.00 %
    Tax-exempt (2)   147,979     1,122   3.02 %     150,350     1,186   3.14 %     69,276     686   3.93 %
   Interest bearing deposits other banks                                                    
        and Federal funds sold   87,151     51   0.23 %     60,639     57   0.37 %     32,779     105   1.27 %
Total interest earning assets   2,799,583     30,444   4.33 %     2,740,187     29,535   4.29 %     2,189,365     27,256   4.94 %
                                                     
Noninterest earning assets                                                    
  Cash & due from banks   16,846                 16,603                 12,932            
  Premises & equipment   52,688                 52,329                 44,136            
  Other assets   157,436                 154,578                 103,481            
  Allowance for credit losses   (30,778 )               (28,144 )               (13,055 )          
    Total assets $ 2,995,775               $ 2,935,553               $ 2,336,859            
                                                     
 LIABILITIES AND SHAREHOLDERS’ EQUITY                                                    
                                                     
Liabilities                                                    
Interest bearing liabilities                                                    
  Interest bearing                                                    
    demand deposits $ 895,325   $ 357   0.16 %   $ 850,281   $ 380   0.18 %   $ 619,939   $ 1,378   0.88 %
  Savings deposits   607,481     716   0.47 %     588,085     925   0.63 %     351,653     1,201   1.35 %
  Time deposits   566,917     1,883   1.32 %     585,092     2,247   1.53 %     641,160     3,373   2.09 %
  Short-term borrowings   140,243     467   1.32 %     165,555     734   1.76 %     188,007     1,062   2.24 %
  Long-term borrowings and                                                    
     subordinated debentures   49,637     547   4.38 %     23,230     194   3.32 %     20,308     230   4.49 %
Total interest bearing liabilities   2,259,603     3,970   0.70 %     2,212,243     4,480   0.81 %     1,821,067     7,244   1.58 %
                                                     
Noninterest bearing liabilities                                                    
  Demand deposits   426,441                 421,741                 248,159            
  Other liabilities   34,558                 33,978                 22,856            
    Total liabilities   2,720,602                 2,667,962                 2,092,082            
                                                     
Shareholders’ equity   275,173                 267,591                 244,777            
  Total liabilities and                                                    
    shareholders’ equity $ 2,995,775               $ 2,935,553               $ 2,336,859            
                                                     
NET INTEREST EARNINGS       $ 26,474               $ 25,055               $ 20,012      
                                                     
NET INTEREST MARGIN             3.76 %               3.64 %               3.63 %
                                                     
(1) – For purposes of this table, nonaccrual loans are included in average loan balances.          
(2) – Interest income on tax-exempt securities and loans has been adjusted assuming a Federal tax rate of 21% for all periods presented.
       The tax equivalent adjustment resulted in an increase in interest income of $268,000, $289,000, and $184,000 for Q4 2020,
       Q3 2020 and Q4 2019, respectively.                    
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)                                  
Average Balance Sheet, Interest Earnings & Expenses and Average Rates                                  
YTD 2020 vs YTD 2019 (unaudited)                                  
                                   
  YTD 2020
  YTD 2019
    Average     Earnings /   Yield /       Average     Earnings /   Yield /  
Dollars in thousands   Balances     Expense   Rate       Balances     Expense   Rate  
                                   
ASSETS                                  
Interest earning assets                                  
  Loans, net of unearned interest (1)                                  
    Taxable $ 2,150,294   $ 104,986   4.88 %   $ 1,782,477   $ 96,499   5.41 %
    Tax-exempt (2)   15,352     732   4.77 %     15,315     780   5.09 %
  Securities                                  
    Taxable   256,893     5,996   2.33 %     205,340     6,511   3.17 %
    Tax-exempt (2)   122,386     4,020   3.28 %     90,823     3,608   3.97 %
   Interest bearing deposits other banks                                  
        and Federal funds sold   56,399     266   0.47 %     39,408     595   1.51 %
Total interest earning assets   2,601,324     116,000   4.46 %     2,133,363     107,993   5.06 %
                                   
Noninterest earning assets                                  
  Cash & due from banks   16,139                 12,939            
  Premises & equipment   50,418                 41,778            
  Other assets   143,284                 107,456            
  Allowance for loan losses   (26,915 )               (13,225 )          
    Total assets $ 2,784,250               $ 2,282,311            
                                   
 LIABILITIES AND SHAREHOLDERS’ EQUITY                                  
                                   
Liabilities                                  
Interest bearing liabilities                                  
  Interest bearing                                  
    demand deposits $ 789,064   $ 2,187   0.28 %   $ 586,938   $ 6,394   1.09 %
  Savings deposits   539,625     4,178   0.77 %     317,569     3,969   1.25 %
  Time deposits   598,085     9,680   1.62 %     660,910     13,334   2.02 %
  Short-term borrowings   130,411     2,330   1.79 %     194,450     5,303   2.73 %
  Long-term borrowings and                                  
     subordinated debentures   28,396     1,147   4.04 %     20,315     987   4.86 %
    2,085,581     19,522   0.94 %     1,780,182     29,987   1.68 %
Noninterest bearing liabilities                                  
  Demand deposits   401,502                 244,559            
  Other liabilities   31,712                 20,341            
    Total liabilities   2,518,795                 2,045,082            
                                   
Shareholders’ equity   265,455                 237,229            
  Total liabilities and                                  
    shareholders’ equity $ 2,784,250               $ 2,282,311            
                                   
NET INTEREST EARNINGS       $ 96,478               $ 78,006      
                                   
NET INTEREST MARGIN             3.71 %               3.66 %
                                   
(1) – For purposes of this table, nonaccrual loans are included in average loan balances.    
(2) – Interest income on tax-exempt securities and loans has been adjusted assuming a Federal tax rate of 21%.  
       The tax equivalent adjustment resulted in an increase in interest income of $998,000 and $922,000 for the  
       YTD 2020 and YTD 2019 periods, respectively.            
Contact:
Telephone:
Email:
Robert S. Tissue, Executive Vice President & CFO
(304) 530-0552
rtissue@summitfgi.com



Source Google News