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Section 1: 8-K (8-K)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________

FORM 8-K
__________________________________

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 25, 2018

 395484197_sfglogousethisonea60.jpg

Summit Financial Group, Inc.
(Exact name of registrant as specified in its charter)

West Virginia
 
No. 0-16587
 
55-0672148
(State or other jurisdiction of
 
(Commission File Number)
 
(I.R.S. Employer
incorporation or organization)
 
 
 
Identification No.)
 
300 North Main Street
Moorefield, West Virginia 26836
(Address of Principal Executive Offices)

(304) 530-1000
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
 
 
 
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
 
 
 
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
 
 
 
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))




Indicate by check mark whether the registrant is an emerging growth company as defined by Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
Emerging growth company ¨  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨  

2




Section 2 - Financial Information

Item 2.02. Results of Operations and Financial Condition

On October 25, 2018, Summit Financial Group, Inc. (“Summit”) issued a News Release announcing its earnings for the three months and nine months ended September 30, 2018. This News Release is furnished as Exhibit 99 and is incorporated herein by reference.


Section 9 - Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits

(d)    Exhibits
99


SIGNATURE
 
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
SUMMIT FINANCIAL GROUP, INC.
 
 
 
 
 
Date: October 25, 2018
 
By: /s/ Julie R. Markwood          
 
 
Julie R. Markwood
 
 
Vice President & Chief Accounting Officer


    


3
(Back To Top)

Section 2: EX-99 (EXHIBIT 99)

Exhibit


EXHIBIT 99
395484197_sfglogousethisonea60.jpg
FOR RELEASE 6:00 AM ET, October 25, 2018

Contact:    Robert S. Tissue, Sr. Vice President & CFO
Telephone:    (304) 530-0552
Email:        [email protected]

SUMMIT FINANCIAL GROUP REPORTS THIRD QUARTER AND FIRST NINE MONTHS 2018 RESULTS
Q3 2018 Diluted EPS up 14.6% to $0.55 compared to $0.48 for Q3 2017
MOOREFIELD, WV - October 25, 2018 (GLOBE NEWSWIRE) - Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ: SMMF) today reported record third quarter 2018 net income of $6.90 million, or $0.55 per diluted share, compared to $5.93 million, or $0.48 per diluted share, for the third quarter of 2017, an increase of 16.3 percent, or 14.6 percent per diluted share.
For the nine months ended September 30, 2018, Summit recorded net income of $20.62 million, or $1.66 per diluted share, compared with $9.59 million, or $0.81 per diluted share, for the comparable 2017 nine-month period, representing an increase of 115.0 percent or 104.9 percent per diluted share. The lower earnings in the 2017 period were principally attributable to a legal settlement during first quarter 2017 which reduced earnings by $0.54 per diluted share.
Highlights for Q3 2018 include:
Loan balances, excluding mortgage warehouse lines of credit, increased $34.2 million during the quarter, or 8.7 percent (on an annualized basis);
Core deposits grew $21.4 million quarter-over-quarter, or 6.4 percent (on an annualized basis);
Net interest margin for the quarter declined 5 basis points to 3.53 percent compared to Q2 2018;
Efficiency ratio improved to 54.25 percent compared to 55.88 percent for the linked-quarter;
Provision for loan losses decreased $250,000 compared to the prior quarter; and
Write-downs of foreclosed properties were $39,000 in Q3 2018 compared to $163,000 in Q2 2018, while the net loss on sales of foreclosed properties decreased to $18,000 in Q3 2018 from a net loss of $58,000 in Q2 2018.





H. Charles Maddy, III, President and Chief Executive Officer of Summit, commented, “I am very pleased to report that Summit achieved record third quarter earnings for the quarter just ended. Further, I am particularly gratified by this past quarter’s robust lending activity, solid deposit growth and strong core operating performance, and I optimistically look forward to the remainder of the year and beyond into 2019 as we seek to be a consistent, high-performing community banking institution. Our pending acquisition of Peoples Bankshares, Inc., expected to close at beginning of 2019, will serve to combine Summit with a financially strong bank that has a similar culture, core values and guiding principles as ours, and shares the same commitment to build long-term client relationships by providing ‘Service Beyond Expectations’.”
Results from Operations
Total revenue for third quarter 2018, consisting of net interest income and noninterest income, increased 0.9 percent to $21.4 million compared to $21.2 million for the third quarter 2017. For the year-to-date period ended September 30, 2018, total revenue was $65.0 million compared to $59.2 million for the same period of 2017, representing a 9.8 percent increase primarily due to the acquisition of First Century Bankshares, Inc. in Q2 2017.
For the third quarter of 2018, net interest income was unchanged at $17.2 million compared to the prior-year third quarter and remained nearly unchanged compared to the linked quarter. The net interest margin for third quarter 2018 was 3.53 percent compared to 3.65 percent for the same year-ago quarter, and 3.58 percent for the linked quarter. Excluding the impact of accretion and amortization of fair value acquisition accounting adjustments related to the interest earning assets and interest bearing liabilities acquired from FCB and HCB, Summit’s net interest margin was 3.51 percent for Q3 2018 and 3.54 percent for first nine months of 2018.
Noninterest income, consisting primarily of insurance commissions from Summit's insurance agency subsidiary, trust and wealth management fees and service fee income from community banking activities, for third quarter 2018 was $4.21 million compared to $4.00 million for the comparable period of 2017. Excluding realized securities gains, noninterest income was $4.20 million for third quarter 2018, compared to $3.97 million reported for third quarter 2017 and $4.06 million for the linked quarter.
We recorded a $500,000 provision for loan losses during third quarter 2018 and $375,000 in Q3 2017. The need for increased loan loss provisioning during 2018 is directionally consistent with changes in the credit quality in our loan portfolio.
Q3 2018 total noninterest expense decreased 0.7 percent to $12.36 million compared to $12.45 million for the prior-year third quarter. Noninterest expense for the first nine months of 2018 decreased 17.6 percent compared to the first nine months of 2017 principally due to 1) $86,000 in merger expenses being incurred in 2018 through September 30 compared to $1.58 million in the 2017 nine-month period and 2) Summit recorded a $9.9 million charge to resolve fully all litigation with Residential Funding Company, LLC and ResCap Liquidating Trust (collectively “ResCap”) during Q1 2017. Excluding the impact of the ResCap litigation settlement charge, noninterest expense for first nine months of 2018 increased 5.4 percent to $37.4 million compared to $35.5 million for the first nine months of 2017, principally as result of the FCB acquisition.







Balance Sheet
At September 30, 2018, total assets were $2.14 billion, an increase of $4.5 million, or 0.2 percent since December 31, 2017. Total loans, net of unearned fees and allowance for loan losses, were $1.63 billion at September 30, 2018, up $39.0 million, or 2.4 percent, from the $1.59 billion reported at year-end 2017. Loans, excluding mortgage warehouse lines of credit, increased $34.2 million during the quarter, or 8.7 percent (on an annualized basis), and have grown $34.2 million or 2.9 percent (on an annualized basis) since year-end 2017.
At September 30, 2018, deposits were $1.65 billion, an increase of $50.5 million, or 3.2 percent, since year end 2017. During first nine months of 2018, checking deposits increased $110.0 million or 17.5 percent, time deposits declined by $2.6 million or 0.4 percent and savings deposits declined $56.9 million or 15.9 percent.
Shareholders’ equity was $213.6 million as of September 30, 2018 compared to $201.5 million at December 31, 2017.
Tangible book value per common share increased to $15.13 at September 30, 2018 compared to $14.08 at December 31, 2017. Summit had 12,382,450 outstanding common shares at Q3 2018 quarter end compared to 12,358,562 at year end 2017.
Asset Quality
As of September 30, 2018, nonperforming assets (“NPAs”), consisting of nonperforming loans, foreclosed properties, and repossessed assets, were $39.0 million, or 1.82 percent of assets. This compares to $37.4 million, or 1.77 percent of assets at the linked quarter-end, and $38.7 million, or 1.84 percent of assets, at third quarter-end 2017.
Third quarter 2018 net loan charge-offs were $135,000, or 0.03 percent of average loans annualized; while adding $500,000 to the allowance for loan losses through the provision for loan losses. The allowance for loan losses stood at 0.79 percent of total loans at September 30, 2018, compared to 0.78 percent at year-end 2017. If the acquired FCB and HCB loans which were recorded at fair value on the acquisition dates were excluded, the allowance for loan losses to total loans ratio at September 30, 2018 and December 31, 2017 would have been 0.87 percent and 0.91 percent, respectively.
About the Company
Summit Financial Group, Inc. is a $2.14 billion financial holding company headquartered in Moorefield, West Virginia. Summit provides community banking services primarily in the Eastern Panhandle and Southern regions of West Virginia and the Northern, Shenandoah Valley and Southwestern regions of Virginia, through its bank subsidiary, Summit Community Bank, Inc., which operates thirty banking locations. Summit also operates Summit Insurance Services, LLC in Moorefield, West Virginia and Leesburg, Virginia.








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.
ADDITIONAL INFORMATION ABOUT THE MERGER WITH PEOPLES BANKSHARES, INC. (“PEOPLES”) AND WHERE TO FIND IT
This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. In connection with the proposed Merger, Summit has filed with the SEC a Registration Statement on Form S-4 with respect to the offering of Summit common stock as the Merger Consideration under the Securities Act, which includes a proxy statement of Peoples seeking approval of the Merger by Peoples’ shareholders and a prospectus of Summit. Peoples delivered the proxy statement/prospectus to its shareholders. In addition, Summit may file other relevant documents concerning the proposed Merger with the SEC. Investors and security holders are urged to read the registration statement and proxy statement/prospectus and other relevant documents because they contain important information about the proposed Merger.
Investors and security holders may obtain free copies of these documents through the website maintained by the SEC at http://www.sec.gov. Security holders of Summit and Peoples may also obtain free copies of these documents by directing a request to Ms. Teresa Ely, Summit’s Director of Shareholder Relations, by telephone at (304) 530-0526 or by email at [email protected] or by accessing these documents at Summit’s website: www.summitfgi.com.







SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
 
 
 
 
 
Quarterly Performance Summary (unaudited) -- Q3 2018 vs Q3 2017
 
 
 
 
 
 
 For the Quarter Ended
 
 Percent
Dollars in thousands
9/30/2018
 
9/30/2017
 
 Change
Statements of Income
 
 
 
 
 
 Interest income
 
 
 
 
 
    Loans, including fees
$
21,295

 
$
19,490

 
9.3
 %
    Securities
2,367

 
2,397

 
-1.3
 %
    Other
138

 
149

 
-7.4
 %
 Total interest income
23,800

 
22,036

 
8.0
 %
 Interest expense
 
 
 
 
 
    Deposits
4,714

 
2,963

 
59.1
 %
    Borrowings
1,873

 
1,841

 
1.7
 %
 Total interest expense
6,587

 
4,804

 
37.1
 %
 
 
 
 
 
 
 Net interest income
17,213

 
17,232

 
-0.1
 %
 Provision for loan losses
500

 
375

 
33.3
 %
 Net interest income after provision for loan losses
16,713

 
16,857

 
-0.9
 %
 
 
 
 
 
 
 Noninterest income
 
 
 
 
 
    Insurance commissions
1,062

 
1,043

 
1.8
 %
    Trust and wealth management fees
687

 
589

 
16.6
 %
    Service charges on deposit accounts
1,215

 
1,162

 
4.6
 %
    Bank card revenue
793

 
738

 
7.5
 %
    Realized securities gains
8

 
26

 
-69.2
 %
    Bank owned life insurance income
250

 
255

 
-2.0
 %
    Other income
196

 
187

 
4.8
 %
Total noninterest income
4,211

 
4,000

 
5.3
 %
 Noninterest expense
 
 
 
 
 
    Salaries and employee benefits
6,806

 
6,610

 
3.0
 %
    Net occupancy expense
856

 
847

 
1.1
 %
    Equipment expense
1,118

 
1,093

 
2.3
 %
    Professional fees
503

 
373

 
34.9
 %
    Advertising and public relations
170

 
137

 
24.1
 %
    Amortization of intangibles
413

 
448

 
-7.8
 %
    FDIC premiums
210

 
310

 
-32.3
 %
    Bank card expense
384

 
395

 
-2.8
 %
    Foreclosed properties expense, net of losses
169

 
233

 
-27.5
 %
    Merger-related expense
86

 
11

 
681.8
 %
    Other expenses
1,643

 
1,990

 
-17.4
 %
Total noninterest expense
12,358

 
12,447

 
-0.7
 %
 Income before income taxes
8,566

 
8,410

 
1.9
 %
 Income tax expense
1,667

 
2,480

 
-32.8
 %
 Net income
$
6,899

 
$
5,930

 
16.3
 %





SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
 
 
 
 
 
Quarterly Performance Summary (unaudited) -- Q3 2018 vs Q3 2017
 
 
 
 
 
 
 
 
 
 
 
 
 For the Quarter Ended
 
 Percent
 
9/30/2018
 
9/30/2017
 
 Change
 Per Share Data
 
 
 
 
 
 Earnings per common share
 
 
 
 
 
    Basic
$
0.56

 
$
0.48

 
16.7
 %
    Diluted
$
0.55

 
$
0.48

 
14.6
 %
 
 
 
 
 
 
 Cash dividends
$
0.13

 
$
0.11

 
18.2
 %
 
 
 
 
 
 
 Average common shares outstanding
 
 
 
 
 
    Basic
12,374,350

 
12,299,987

 
0.6
 %
    Diluted
12,439,051

 
12,318,959

 
1.0
 %
 
 
 
 
 
 
 Common shares outstanding at period end
12,382,450

 
12,311,723

 
0.6
 %
 
 
 
 
 
 
 Performance Ratios
 
 
 
 
 
 Return on average equity
13.00
%
 
12.10
%
 
7.4
 %
 Return on average tangible equity
14.85
%
 
14.12
%
 
5.2
 %
 Return on average assets
1.31
%
 
1.14
%
 
14.9
 %
 Net interest margin
3.53
%
 
3.65
%
 
-3.3
 %
 Efficiency ratio (A)
54.25
%
 
54.51
%
 
-0.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
NOTE (A) - Computed on a tax equivalent basis excluding gains/losses on sales of assets, write-downs of OREO properties to fair value and amortization of intangibles.





SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
 
 
 
 
 
Nine Month Performance Summary (unaudited) -- 2018 vs 2017
 
 
 
 
 
 
 For the Nine Months Ended
 
 Percent
Dollars in thousands
9/30/2018
 
9/30/2017
 
 Change
Statements of Income
 
 
 
 
 
 Interest income
 
 
 
 
 
    Loans, including fees
$
62,624

 
$
54,878

 
14.1
 %
    Securities
7,060

 
6,597

 
7.0
 %
    Other
412

 
466

 
-11.6
 %
 Total interest income
70,096

 
61,941

 
13.2
 %
 Interest expense
 
 
 
 
 
    Deposits
12,572

 
7,987

 
57.4
 %
    Borrowings
5,779

 
5,245

 
10.2
 %
 Total interest expense
18,351

 
13,232

 
38.7
 %
 
 
 
 
 
 
 Net interest income
51,745

 
48,709

 
6.2
 %
 Provision for loan losses
1,750

 
875

 
100.0
 %
 Net interest income after provision for loan losses
49,995

 
47,834

 
4.5
 %
 
 
 
 
 
 
 Noninterest income
 
 
 
 
 
    Insurance commissions
3,188

 
3,000

 
6.3
 %
    Trust and wealth management fees
2,026

 
1,284

 
57.8
 %
    Service charges on deposit accounts
3,421

 
2,910

 
17.6
 %
    Bank card revenue
2,343

 
1,955

 
19.8
 %
    Realized securities gains
828

 
58

 
n/m

    Bank owned life insurance income
773

 
758

 
2.0
 %
    Other income
656

 
531

 
23.5
 %
Total noninterest income
13,235

 
10,496

 
26.1
 %
 Noninterest expense
 
 
 
 
 
    Salaries and employee benefits
20,550

 
18,555

 
10.8
 %
    Net occupancy expense
2,528

 
2,239

 
12.9
 %
    Equipment expense
3,271

 
2,859

 
14.4
 %
    Professional fees
1,222

 
1,012

 
20.8
 %
    Advertising and public relations
461

 
393

 
17.3
 %
    Amortization of intangibles
1,261

 
974

 
29.5
 %
    FDIC premiums
690

 
815

 
-15.3
 %
    Bank card expense
1,080

 
1,113

 
-3.0
 %
    Foreclosed properties expense, net of losses
843

 
824

 
2.3
 %
    Litigation settlement

 
9,900

 
n/a

    Merger-related expense
86

 
1,575

 
n/m

    Other expenses
5,415

 
5,140

 
5.4
 %
Total noninterest expense
37,407

 
45,399

 
-17.6
 %
 Income before income taxes
25,823

 
12,931

 
99.7
 %
 Income tax expense
5,201

 
3,339

 
55.8
 %
 Net income
$
20,622

 
$
9,592

 
115.0
 %





SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
 
 
 
 
 
Nine Month Performance Summary (unaudited) -- 2018 vs 2017
 
 
 
 
 
 
 
 
 
 
 
 
 For the Nine Months Ended
 
 Percent
 
9/30/2018
 
9/30/2017
 
 Change
 Per Share Data
 
 
 
 
 
 Earnings per common share
 
 
 
 
 
    Basic
$
1.67

 
$
0.81

 
106.2
 %
    Diluted
$
1.66

 
$
0.81

 
104.9
 %
 
 
 
 
 
 
 Cash dividends
$
0.39

 
$
0.33

 
18.2
 %
 
 
 
 
 
 
 Average common shares outstanding
 
 
 
 
 
    Basic
12,366,612

 
11,781,342

 
5.0
 %
    Diluted
12,430,227

 
11,807,002

 
5.3
 %
 
 
 
 
 
 
 Common shares outstanding at period end
12,382,450

 
12,311,723

 
0.6
 %
 
 
 
 
 
 
 Performance Ratios
 
 
 
 
 
 Return on average equity
13.28
%
 
7.06
%
 
88.1
 %
 Return on average tangible equity
15.27
%
 
8.08
%
 
89.0
 %
 Return on average assets
1.30
%
 
0.65
%
 
100.0
 %
 Net interest margin
3.56
%
 
3.67
%
 
-3.0
 %
 Efficiency ratio (A)
54.66
%
 
52.76
%
 
3.6
 %
 
 
 
 
 
 
 
 
 
 
 
 
NOTE (A) - Computed on a tax equivalent basis excluding gains/losses on sales of assets, litigation settlement, 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
9/30/2018
 
6/30/2018
 
3/31/2018
 
12/31/2017
 
9/30/2017
Statements of Income
 
 
 
 
 
 
 
 
 
 Interest income
 
 
 
 
 
 
 
 
 
    Loans, including fees
$
21,295

 
$
20,962

 
$
20,366

 
$
20,031

 
$
19,490

    Securities
2,367

 
2,303

 
2,391

 
2,412

 
2,397

    Other
138

 
134

 
140

 
144

 
149

 Total interest income
23,800

 
23,399

 
22,897

 
22,587

 
22,036

 Interest expense
 
 
 
 
 
 
 
 
 
    Deposits
4,714

 
4,309

 
3,549

 
3,224

 
2,963

    Borrowings
1,873

 
1,815

 
2,091

 
1,925

 
1,841

 Total interest expense
6,587

 
6,124

 
5,640

 
5,149

 
4,804

 
 
 
 
 
 
 
 
 
 
    Net interest income
17,213

 
17,275

 
17,257

 
17,438

 
17,232

 Provision for loan losses
500

 
750

 
500

 
375

 
375

 Net interest income after provision for loan losses
16,713

 
16,525

 
16,757

 
17,063

 
16,857

 
 
 
 
 
 
 
 
 
 
 Noninterest income
 
 
 
 
 
 
 
 
 
    Insurance commissions
1,062

 
1,013

 
1,113

 
1,005

 
1,043

    Trust and wealth management fees
687

 
672

 
667

 
578

 
589

    Service charges on deposit accounts
1,215

 
1,116

 
1,091

 
1,200

 
1,162

    Bank card revenue
793

 
801

 
749

 
742

 
738

    Realized securities gains (losses)
8

 
87

 
732

 
(71
)
 
26

    Bank owned life insurance income
250

 
249

 
275

 
258

 
255

    Other income
196

 
210

 
249

 
219

 
187

Total noninterest income
4,211

 
4,148

 
4,876

 
3,931

 
4,000

 Noninterest expense
 
 
 
 
 
 
 
 
 
   Salaries and employee benefits
6,806

 
6,922

 
6,821

 
6,520

 
6,610

   Net occupancy expense
856

 
840

 
832

 
772

 
847

   Equipment expense
1,118

 
1,071

 
1,083

 
1,095

 
1,093

   Professional fees
503

 
385

 
333

 
355

 
373

   Advertising and public relations
170

 
188

 
103

 
185

 
137

   Amortization of intangibles
413

 
413

 
436

 
435

 
448

   FDIC premiums
210

 
240

 
240

 
250

 
310

   Bank card expense
384

 
361

 
335

 
319

 
395

   Foreclosed properties expense, net of losses
169

 
350

 
325

 
516

 
233

   Merger-related expense
86

 

 

 
14

 
11

   Other expenses
1,643

 
1,965

 
1,806

 
1,885

 
1,990

Total noninterest expense
12,358

 
12,735


12,314

 
12,346

 
12,447

 Income before income taxes
8,566

 
7,938

 
9,319

 
8,648

 
8,410

 Income tax expense
1,667

 
1,658

 
1,876

 
6,325

 
2,480

 Net income
$
6,899

 
$
6,280

 
$
7,443

 
$
2,323

 
$
5,930






SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
 
 
 
 
 
 
 
 
Five Quarter Performance Summary (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Quarter Ended
 
9/30/2018
 
6/30/2018
 
3/31/2018
 
12/31/2017
 
9/30/2017
 Per Share Data
 
 
 
 
 
 
 
 
 
 Earnings per common share
 
 
 
 
 
 
 
 
 
    Basic
$
0.56

 
$
0.51

 
$
0.60

 
$
0.19

 
$
0.48

    Diluted
$
0.55

 
$
0.51

 
$
0.60

 
$
0.19

 
$
0.48

 
 
 
 
 
 
 
 
 
 
Cash dividends
$
0.13

 
$
0.13

 
$
0.13

 
$
0.11

 
$
0.11

 
 
 
 
 
 
 
 
 
 
 Average common shares outstanding
 
 
 
 
 
 
 
 
 
    Basic
12,374,350

 
12,366,522

 
12,358,849

 
12,325,067

 
12,299,987

    Diluted
12,439,051

 
12,431,984

 
12,383,757

 
12,371,507

 
12,318,959

 
 
 
 
 
 
 
 
 
 
Common shares outstanding at period end
12,382,450

 
12,373,747

 
12,366,360

 
12,358,562

 
12,311,723

 
 
 
 
 
 
 
 
 
 
 Performance Ratios
 
 
 
 
 
 
 
 
 
 Return on average equity
13.00
%
 
12.16
%
 
14.73
%
 
4.62
%
 
12.10
%
 Return on average tangible equity
14.85
%
 
13.98
%
 
17.04
%
 
5.36
%
 
14.12
%
 Return on average assets
1.31
%
 
1.19
%
 
1.40
%
 
0.44
%
 
1.14
%
 Net interest margin
3.53
%
 
3.58
%
 
3.58
%
 
3.65
%
 
3.65
%
 Efficiency ratio (A)
54.25
%
 
55.88
%
 
53.84
%
 
52.44
%
 
54.51
%
 
 
 
 
 
 
 
 
 
 
NOTE (A) - Computed on a tax equivalent basis excluding 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
9/30/2018
 
6/30/2018
 
3/31/2018
 
12/31/2017
 
9/30/2017
 
 
 
 
 
 
 
 
 
 
 Assets
 
 
 
 
 
 
 
 
 
Cash and due from banks
$
9,382

 
$
8,314

 
$
9,042

 
$
9,641

 
$
9,220

Interest bearing deposits other banks
44,452

 
38,097

 
38,365

 
42,990

 
41,994

Securities
288,040

 
283,221

 
296,890

 
328,723

 
328,726

Loans, net
1,632,747

 
1,617,373

 
1,631,150

 
1,593,744

 
1,559,328

Property held for sale
22,017

 
21,606

 
21,442

 
21,470

 
22,622

Premises and equipment, net
36,888

 
36,017

 
35,554

 
34,209

 
34,220

Goodwill and other intangible assets
26,252

 
26,665

 
27,077

 
27,513

 
27,879

Cash surrender value of life insurance policies
42,208

 
41,932

 
41,668

 
41,358

 
41,076

Other assets
36,741

 
34,427

 
33,707

 
34,592

 
36,071

   Total assets
$
2,138,727

 
$
2,107,652

 
$
2,134,895

 
$
2,134,240

 
$
2,101,136

 
 
 
 
 
 
 
 
 
 
 Liabilities and Shareholders' Equity
 
 
 
 
 
 
 
 
 
Deposits
$
1,651,064

 
$
1,639,996

 
$
1,654,523

 
$
1,600,601

 
$
1,616,768

Short-term borrowings
238,403

 
202,429

 
193,513

 
250,499

 
202,988

Long-term borrowings and
     subordinated debentures
20,328

 
40,332

 
65,336

 
65,340

 
65,344

Other liabilities
15,376

 
15,016

 
16,514

 
16,295

 
17,254

Shareholders' equity
213,556

 
209,879

 
205,009

 
201,505

 
198,782

   Total liabilities and shareholders' equity
$
2,138,727

 
$
2,107,652

 
$
2,134,895

 
$
2,134,240

 
$
2,101,136

 
 
 
 
 
 
 
 
 
 
Book value per common share
$
17.25

 
$
16.96

 
$
16.55

 
$
16.30

 
$
16.15

Tangible book value per common share
$
15.13

 
$
14.81

 
$
14.36

 
$
14.08

 
$
13.88

Tangible common equity to tangible assets
8.9
%
 
8.8
%
 
8.4
%
 
8.3
%
 
8.2
%

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Regulatory Capital Ratios (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9/30/2018
 
6/30/2018
 
3/31/2018
 
12/31/2017
 
9/30/2017
Summit Financial Group, Inc.
 
 
 
 
 
 
 
 
 
CET1 Risk-based Capital
11.1
%
 
11.0
%
 
10.7
%
 
10.6
%
 
10.8
%
Tier 1 Risk-based Capital
12.2
%
 
12.1
%
 
11.8
%
 
11.8
%
 
11.9
%
Total Risk Based Capital
12.9
%
 
12.8
%
 
12.5
%
 
12.5
%
 
12.7
%
Tier 1 Leverage Ratio
10.1
%
 
9.9
%
 
9.5
%
 
9.4
%
 
9.5
%
 
 
 
 
 
 
 
 
 
 
Summit Community Bank, Inc.
 
 
 
 
 
 
 
 
 
CET1 Risk-based Capital
12.0
%
 
12.0
%
 
11.7
%
 
11.7
%
 
11.8
%
Tier 1 Risk-based Capital
12.0
%
 
12.0
%
 
11.7
%
 
11.7
%
 
11.8
%
Total Risk Based Capital
12.7
%
 
12.8
%
 
12.5
%
 
12.5
%
 
12.6
%
Tier 1 Leverage Ratio
9.9
%
 
9.8
%
 
9.5
%
 
9.4
%
 
9.4
%





SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Loan Composition (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dollars in thousands
9/30/2018
 
6/30/2018
 
3/31/2018
 
12/31/2017
 
9/30/2017
 
 
 
 
 
 
 
 
 
 
Commercial
$
167,972

 
$
171,410

 
$
189,586

 
$
189,981

 
$
187,193

Mortgage warehouse lines
35,910

 
54,332

 
45,702

 
30,757

 
33,525

Commercial real estate
 
 
 
 
 
 
 
 
 
     Owner occupied
272,475

 
262,174

 
265,075

 
250,202

 
239,840

     Non-owner occupied
530,568

 
503,047

 
498,445

 
484,902

 
464,543

Construction and development
 
 
 
 
 
 
 
 
 
     Land and development
71,819

 
74,018

 
66,841

 
67,219

 
71,412

     Construction
25,703

 
25,711

 
33,327

 
33,412

 
28,756

Residential real estate
 
 
 
 
 
 
 
 
 
     Non-jumbo
340,783

 
343,044

 
346,477

 
354,101

 
355,642

     Jumbo
72,327

 
66,831

 
67,169

 
62,267

 
61,253

     Home equity
82,018

 
82,409

 
83,382

 
84,028

 
82,720

Consumer
33,664

 
34,249

 
34,825

 
36,202

 
36,915

Other
12,452

 
12,728

 
12,578

 
13,238

 
9,994

Total loans, net of unearned fees
1,645,691

 
1,629,953

 
1,643,407

 
1,606,309

 
1,571,793

Less allowance for loan losses
12,944

 
12,580

 
12,257

 
12,565

 
12,465

Loans, net
$
1,632,747

 
$
1,617,373

 
$
1,631,150

 
$
1,593,744

 
$
1,559,328


SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Deposit Composition (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dollars in thousands
9/30/2018
 
6/30/2018
 
3/31/2018
 
12/31/2017
 
9/30/2017
Core deposits
 
 
 
 
 
 
 
 
 
Non interest bearing checking
$
232,697

 
$
217,134

 
$
219,293

 
$
217,493

 
$
215,910

Interest bearing checking
505,411

 
472,041

 
447,172

 
410,606

 
397,843

Savings
301,269

 
322,940

 
346,962

 
358,168

 
362,653

Time deposits
316,941

 
322,801

 
318,556

 
318,036

 
322,338

Total core deposits
1,356,318

 
1,334,916

 
1,331,983

 
1,304,303

 
1,298,744

 
 
 
 
 
 
 
 
 
 
Brokered deposits
227,312

 
238,662

 
242,049

 
202,509

 
205,274

Other non-core time deposits
67,434

 
66,418

 
80,491

 
93,789

 
112,750

Total deposits
$
1,651,064

 
$
1,639,996

 
$
1,654,523

 
$
1,600,601

 
$
1,616,768






SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
 
 
Asset Quality Information (unaudited)
 
 
 
 
 
 
 
 
 
 
 For the Quarter Ended
 Dollars in thousands
9/30/2018
 
6/30/2018
 
3/31/2018
 
12/31/2017
 
9/30/2017
 
 
 
 
 
 
 
 
 
 
Gross loan charge-offs
$
413

 
$
525

 
$
960

 
$
550

 
$
309

Gross loan recoveries
(278
)
 
(97
)
 
(153
)
 
(276
)
 
(67
)
Net loan charge-offs (recoveries)
$
135

 
$
428

 
$
807

 
$
274

 
$
242

 
 
 
 
 
 
 
 
 
 
Net loan charge-offs to average loans (annualized)
0.03
%
 
0.10
%
 
0.20
%
 
0.07
%
 
0.06
%
Allowance for loan losses
$
12,944

 
$
12,580

 
$
12,257

 
$
12,565

 
$
12,465

Allowance for loan losses as a percentage
    of period end loans
0.79
%
 
0.77
%
 
0.75
%
 
0.78
%
 
0.79
%
 
 
 
 
 
 
 
 
 
 
Nonperforming assets:
 
 
 
 
 
 
 
 
 
   Nonperforming loans
 
 
 
 
 
 
 
 
 
       Commercial
$
801

 
$
954

 
$
734

 
$
696

 
$
757

       Commercial real estate
5,090

 
3,238

 
3,400

 
3,164

 
2,773

       Residential construction and development
3,200

 
3,233

 
3,642

 
3,569

 
3,931

       Residential real estate
7,760

 
8,241

 
7,521

 
7,656

 
8,082

       Consumer
118

 
110

 
160

 
238

 
529

Total nonperforming loans
16,969

 
15,776

 
15,457

 
15,323

 
16,072

   Foreclosed properties
 
 
 
 
 
 
 
 
 
       Commercial real estate
1,762

 
1,818

 
1,875

 
1,789

 
1,988

       Commercial construction and development
6,790

 
6,815

 
7,140

 
7,392

 
7,392

       Residential construction and development
11,614

 
11,517

 
11,053

 
11,182

 
11,852

       Residential real estate
1,851

 
1,456

 
1,374

 
1,107

 
1,390

Total foreclosed properties
22,017

 
21,606

 
21,442

 
21,470

 
22,622

  Other repossessed assets
5

 
12

 
18

 
68

 
12

Total nonperforming assets
$
38,991

 
$
37,394

 
$
36,917

 
$
36,861

 
$
38,706

 
 
 
 
 
 
 
 
 
 
Nonperforming loans to period end loans
1.03
%
 
0.97
%
 
0.94
%
 
0.95
%
 
1.02
%
Nonperforming assets to period end assets
1.82
%
 
1.77
%
 
1.73
%
 
1.73
%
 
1.84
%
 
 
 
 
 
 
 
 
 
 
Troubled debt restructurings
 
 
 
 
 
 
 
 
 
Performing
$
27,441

 
$
27,559

 
$
27,408

 
$
28,347

 
$
28,304

Nonperforming
113

 
281

 
76

 
26

 
760

Total troubled debt restructurings
$
27,554

 
$
27,840

 
$
27,484

 
$
28,373

 
$
29,064


Loans Past Due 30-89 Days (unaudited)
 
 
 
 
 
 For the Quarter Ended
 Dollars in thousands
9/30/2018
 
6/30/2018
 
3/31/2018
 
12/31/2017
 
9/30/2017
 
 
 
 
 
 
 
 
 
 
Commercial
$
607

 
$
319

 
$
539

 
$
586

 
$
378

Commercial real estate
988

 
546

 
601

 
1,082

 
944

Construction and development
393

 
264

 
174

 
1,127

 
238

Residential real estate
5,513

 
4,125

 
5,218

 
7,236

 
6,260

Consumer
345

 
337

 
425

 
504

 
419

Other
11

 
8

 
15

 
38

 
92

Total
$
7,857

 
$
5,599

 
$
6,972

 
$
10,573

 
$
8,331





SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
 
 
 
 
 
 
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
 
 
 
 
Q3 2018 vs Q2 2018 vs Q3 2017 (unaudited)
 
 
 
 
 
 
 
 
 
 
 
Q3 2018
 
Q2 2018
 
Q3 2017
 
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Taxable
$
1,615,700

 
$
21,154

 
5.19
%
 
$
1,618,726

 
$
20,820

 
5.16
%
 
$
1,539,945

 
$
19,387

 
4.99
%
    Tax-exempt
15,688

 
178

 
4.50
%
 
15,800

 
180

 
4.57
%
 
16,314

 
158

 
3.84
%
  Securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Taxable
155,574

 
1,227

 
3.13
%
 
160,632

 
1,240

 
3.10
%
 
198,913

 
1,283

 
2.56
%
    Tax-exempt
146,174

 
1,443

 
3.92
%
 
136,984

 
1,346

 
3.94
%
 
145,599

 
1,714

 
4.67
%
Interest bearing deposits other banks
   and Federal funds sold
38,642

 
138

 
1.42
%
 
38,936

 
134

 
1.38
%
 
42,926

 
149

 
1.38
%
Total interest earning assets
1,971,778

 
24,140

 
4.86
%
 
1,971,078

 
23,720

 
4.83
%
 
1,943,697

 
22,691

 
4.63
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest earning assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Cash & due from banks
9,326

 
 
 
 
 
9,100

 
 
 
 
 
9,591

 
 
 
 
  Premises & equipment
36,533

 
 
 
 
 
35,721

 
 
 
 
 
33,667

 
 
 
 
  Other assets
108,628

 
 
 
 
 
108,073

 
 
 
 
 
113,723

 
 
 
 
  Allowance for loan losses
(12,865
)
 
 
 
 
 
(12,541
)
 
 
 
 
 
(12,418
)
 
 
 
 
    Total assets
$
2,113,400

 
 
 
 
 
$
2,111,431

 
 
 
 
 
$
2,088,260