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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): January 29, 2019

 396523728_sfglogousethisone.jpg

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

West Virginia
 
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)
 
(Zip Code)

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

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. ¨  





Section 2 - Financial Information

Item 2.02. Results of Operations and Financial Condition

On January 29, 2019, Summit Financial Group, Inc. (“Summit”) issued a News Release announcing its earnings for the three months and year ended December 31, 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: January 29, 2019
 
By: /s/ Julie R. Markwood          
 
 
Julie R. Markwood
 
 
Vice President & Chief Accounting Officer


    


2
(Back To Top)

Section 2: EX-99 (EXHIBIT 99)

Exhibit


EXHIBIT 99
396523728_sfglogousethisone.jpg
FOR RELEASE 6:00 AM ET, January 29, 2019

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

SUMMIT FINANCIAL GROUP REPORTS FOURTH QUARTER AND FULL YEAR 2018 RESULTS
Q4 2018 Diluted EPS $0.60, equaling a Quarterly Record; Full Year 2018 Diluted EPS $2.26, an Annual Record
MOOREFIELD, WV - January 29, 2019 (GLOBE NEWSWIRE) - Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ: SMMF) today reported quarterly net income of $7.45 million for fourth quarter 2018, or $0.60 per diluted share -- equaling our previous quarterly record, compared to $2.32 million, or $0.19 per diluted share, for the fourth quarter of 2017. Earnings per diluted share for fourth quarter 2017 were negatively impacted (on an after-tax basis) by the one-time charge of $0.28 to re-measure the Company’s net deferred tax assets as result of enactment of the Tax Cuts and Jobs Act (“TCJA”).
For the full year 2018, Summit achieved record net income of $28.07 million, and record earnings per diluted share of $2.26, compared with $11.92 million, or $1.00 per diluted share, for 2017. Full year 2018 results were positively impacted (on a diluted earnings per share basis) $0.29 as result of higher net interest income, $0.06 due to growth in trust and wealth management fees, $0.08 from increased deposit account-related fees and $0.25 in lower income tax expense as result of TCJA’s lower income tax rates. Higher total noninterest expense of $0.16 per diluted share partially offset these positive impacts. Lower earnings in 2017 were principally attributable to the following non-core or one-time items (on an after-tax, diluted earnings per share basis): $0.52 as result of a litigation settlement, $0.29 due to the enactment of the TCJA, and $0.08 as result of merger-related expenses.
Highlights for Q4 2018
Loan balances, excluding mortgage warehouse lines of credit, increased $46.1 million during the quarter, or 11.5 percent (on an annualized basis); excluding mortgage warehouse lines of credit, loans grew $80.4 million or 5.1 percent since year-end 2017;
Net interest margin for the quarter increased 8 basis points to 3.61 percent compared to Q3 2018;
Efficiency ratio improved to 51.02 percent compared to 54.25 percent for the linked-quarter as result of the improved net interest margin and well-controlled overhead;






Provision for loan losses remained unchanged at $500,000 compared to the prior quarter;
Realized securities losses of $205,000 in Q4 2018 compared to realized securities gains of $8,000 in Q3 2018; and
Write-downs of foreclosed properties were $318,000 in Q4 2018 compared to $39,000 in Q3 2018, while the net loss on sales of foreclosed properties increased to $70,000 in Q4 2018 from $18,000 in Q3 2018.
H. Charles Maddy, III, President and Chief Executive Officer of Summit, commented, “I am very gratified to report that for fourth quarter 2018, Summit had record quarterly net income and tied its previous record for quarterly earnings per share; and for the full year 2018, we achieved a new annual earnings record both in net income and on a per share basis. In addition, I am particularly pleased by our continued solid lending activity and strong core operating performance in this past quarter. Our acquisition of Peoples Bankshares, Inc. closed at the beginning of 2019, and it serves to combine Summit with a financially strong bank that shares the same commitment to build long-term client relationships by providing ‘Service Beyond Expectations’. The financial synergies relative to this transaction are already evident. I optimistically look forward to 2019 and beyond as we are laser-focused on our goal to be a consistent growing, high-performing community banking institution.
Results from Operations
Total revenue for fourth quarter 2018, consisting of net interest income and noninterest income, increased 4.1 percent to $22.2 million compared to $21.4 million for the fourth quarter 2017. For the full year 2018, total revenue was $87.2 million compared to $80.6 million for 2017, representing an 8.2 percent increase primarily due to the acquisition of First Century Bankshares, Inc. (“FCB”) in Q2 2017.
For the fourth quarter of 2018, net interest income increased 3.5 percent to $18.1 million compared to $17.4 million for the prior-year fourth quarter and grew 4.9 percent compared to the linked quarter principally as result of $44.2 million in growth in average loans and 19 basis point improvement in average loan yields during the quarter. The net interest margin for fourth quarter 2018 was 3.61 percent compared to 3.65 percent for the same year-ago quarter, and 3.53 percent for the linked quarter. Excluding the impact of accretion and amortization of fair value acquisition accounting adjustments related to the acquired interest earning assets and interest bearing liabilities, Summit’s net interest margin was 3.57 percent for Q4 2018 and 3.54 percent for full year 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 fourth quarter 2018 was $4.19 million compared to $3.93 million for the comparable period of 2017. Excluding realized securities gains and losses, noninterest income was $4.39 million for fourth quarter 2018, compared to $4.00 million reported for fourth quarter 2017 and $4.20 million for the linked quarter.








We recorded a $500,000 provision for loan losses during fourth quarter 2018 and $375,000 in Q4 2017. The need for increased loan loss provisioning during 2018 is directionally consistent with changes in the credit quality in our loan portfolio and our loan growth.
Q4 2018 total noninterest expense increased 1.0 percent to $12.47 million compared to $12.35 million for the prior-year fourth quarter. Noninterest expense for full year 2018 decreased 13.6 percent compared to 2017 principally due to: 1) $144,000 in merger expenses being incurred in 2018 compared to $1.59 million in 2017; and 2) a $9.9 million charge to resolve fully all litigation with Residential Funding Company, LLC and ResCap Liquidating Trust (collectively “ResCap”) recorded during 2017. Excluding the impact of the ResCap litigation settlement charge and merger-related expenses, noninterest expense for 2018 increased 7.5 percent to $49.9 million compared to $46.3 million for 2017, principally as result of the FCB acquisition.
Balance Sheet
At December 31, 2018, total assets were $2.20 billion, an increase of $66.3 million, or 3.1 percent since December 31, 2017. Total loans, net of unearned fees and allowance for loan losses, were $1.68 billion at December 31, 2018, up $88.3 million, or 5.5 percent, from the $1.59 billion reported at year-end 2017. Loans, excluding mortgage warehouse lines of credit, increased $46.1 million during the quarter, or 11.5 percent (on an annualized basis), and have grown $80.4 million or 5.1 percent since year-end 2017.
At December 31, 2018, deposits were $1.63 billion, an increase of $34.2 million, or 2.1 percent, since year end 2017. During 2018, checking deposits increased $117.3 million or 18.7 percent, time deposits declined by $9.1 million or 1.5 percent and savings deposits declined $74.0 million or 20.7 percent.
Shareholders’ equity was $219.8 million as of December 31, 2018 compared to $213.6 million at September 30, 2018 and $201.5 million at December 31, 2017. Tangible book value per common share increased to $15.75 at December 31, 2018 compared to $15.13 at the end of third quarter 2018 and $14.08 at year end 2017. Summit had 12,312,933 outstanding common shares at year end 2018 compared to 12,358,562 at year end 2017.
As previously announced in Q3 2018, the Board of Directors authorized the open market repurchase of up to 500,000 shares of the issued and outstanding shares of Summit's common stock. The timing and quantity of purchases under this stock repurchase plan are at the discretion of management. The plan will expire December 31, 2019, but may be discontinued, suspended, or restarted at any time at the Company's discretion. During Q4 2018, 82,423 shares of our common stock were repurchased under the Plan at an average price of $20.46 per share.












Asset Quality
As of December 31, 2018, nonperforming assets (“NPAs”), consisting of nonperforming loans, foreclosed properties, and repossessed assets, were $36.5 million, or 1.66 percent of assets. This compares to $39.0 million, or 1.82 percent of assets at the linked quarter-end, and $36.9 million, or 1.73 percent of assets, at year-end 2017 as result of our continuing emphasis on improving our overall asset quality.
Fourth quarter 2018 net loan charge-offs were $398,000, or 0.10 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 0.77 percent of total loans at December 31, 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 December 31, 2018 and December 31, 2017 would have been 0.84 percent and 0.91 percent, respectively.
About the Company
Summit Financial Group, Inc. is a $2.20 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-three 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.








SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
 
 
 
 
 
Quarterly Performance Summary (unaudited) -- Q4 2018 vs Q4 2017
 
 
 
 
 
 
 For the Quarter Ended
 
 Percent
Dollars in thousands
12/31/2018
 
12/31/2017
 
 Change
Statements of Income
 
 
 
 
 
 Interest income
 
 
 
 
 
    Loans, including fees
$
22,659

 
$
20,031

 
13.1
 %
    Securities
2,527

 
2,412

 
4.8
 %
    Other
127

 
144

 
-11.8
 %
 Total interest income
25,313

 
22,587

 
12.1
 %
 Interest expense
 
 
 
 
 
    Deposits
5,103

 
3,224

 
58.3
 %
    Borrowings
2,158

 
1,925

 
12.1
 %
 Total interest expense
7,261

 
5,149

 
41.0
 %
 
 
 
 
 
 
 Net interest income
18,052

 
17,438

 
3.5
 %
 Provision for loan losses
500

 
375

 
33.3
 %
 Net interest income after provision for loan losses
17,552

 
17,063

 
2.9
 %
 
 
 
 
 
 
 Noninterest income
 
 
 
 
 
    Insurance commissions
1,132

 
1,005

 
12.6
 %
    Trust and wealth management fees
627

 
578

 
8.5
 %
    Service charges on deposit accounts
1,209

 
1,200

 
0.8
 %
    Bank card revenue
809

 
743

 
8.9
 %
    Realized securities (losses) gains
(205
)
 
(71
)
 
188.7
 %
    Bank owned life insurance income
249

 
258

 
-3.5
 %
    Other income
366

 
218

 
67.9
 %
Total noninterest income
4,187

 
3,931

 
6.5
 %
 Noninterest expense
 
 
 
 
 
    Salaries and employee benefits
6,928

 
6,520

 
6.3
 %
    Net occupancy expense
836

 
772

 
8.3
 %
    Equipment expense
1,139

 
1,095

 
4.0
 %
    Professional fees
385

 
355

 
8.5
 %
    Advertising and public relations
193

 
185

 
4.3
 %
    Amortization of intangibles
410

 
435

 
-5.7
 %
    FDIC premiums
140

 
250

 
-44.0
 %
    Bank card expense
395

 
319

 
23.8
 %
    Foreclosed properties expense, net of losses
507

 
516

 
-1.7
 %
    Merger-related expense
59

 
14

 
321.4
 %
    Other expenses
1,474

 
1,885

 
-21.8
 %
Total noninterest expense
12,466

 
12,346

 
1.0
 %
 Income before income taxes
9,273

 
8,648

 
7.2
 %
 Income tax expense
1,823

 
6,325

 
-71.2
 %
 Net income
$
7,450

 
$
2,323

 
220.7
 %





SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
 
 
 
 
 
Quarterly Performance Summary (unaudited) -- Q4 2018 vs Q4 2017
 
 
 
 
 
 
 
 
 
 
 
 
 For the Quarter Ended
 
 Percent
 
12/31/2018
 
12/31/2017
 
 Change
 Per Share Data
 
 
 
 
 
 Earnings per common share
 
 
 
 
 
    Basic
$
0.60

 
$
0.19

 
215.8
 %
    Diluted
$
0.60

 
$
0.19

 
215.8
 %
 
 
 
 
 
 
 Cash dividends
$
0.14

 
$
0.11

 
27.3
 %
 
 
 
 
 
 
 Average common shares outstanding
 
 
 
 
 
    Basic
12,358,104

 
12,325,067

 
0.3
 %
    Diluted
12,407,678

 
12,371,507

 
0.3
 %
 
 
 
 
 
 
 Common shares outstanding at period end
12,312,933

 
12,358,562

 
-0.4
 %
 
 
 
 
 
 
 Performance Ratios
 
 
 
 
 
 Return on average equity
13.85
%
 
4.62
%
 
199.8
 %
 Return on average tangible equity
16.41
%
 
6.12
%
 
168.1
 %
 Return on average assets
1.38
%
 
0.44
%
 
213.6
 %
 Net interest margin (A)
3.61
%
 
3.65
%
 
-1.1
 %
 Efficiency ratio (B)
51.02
%
 
51.47
%
 
-0.9
 %
 
 
 
 
 
 
 
 
 
 
 
 
NOTE (A) - Presented on a tax-equivalent basis assuming a federal tax rate of 21% for 2018 and 35% for 2017.
 
 
 
 
 
 
NOTE (B) - 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)
 
 
 
 
 
Annual Performance Summary (unaudited) -- 2018 vs 2017
 
 
 
 
 
 
 For the Year Ended
 
 Percent
Dollars in thousands
12/31/2018
 
12/31/2017
 
 Change
Statements of Income
 
 
 
 
 
 Interest income
 
 
 
 
 
    Loans, including fees
$
85,283

 
$
74,908

 
13.9
 %
    Securities
9,587

 
9,010

 
6.4
 %
    Other
539

 
609

 
-11.5
 %
 Total interest income
95,409

 
84,527

 
12.9
 %
 Interest expense
 
 
 
 
 
    Deposits
17,675

 
11,210

 
57.7
 %
    Borrowings
7,937

 
7,170

 
10.7
 %
 Total interest expense
25,612

 
18,380

 
39.3
 %
 
 
 
 
 
 
 Net interest income
69,797

 
66,147

 
5.5
 %
 Provision for loan losses
2,250

 
1,250

 
80.0
 %
 Net interest income after provision for loan losses
67,547

 
64,897

 
4.1
 %
 
 
 
 
 
 
 Noninterest income
 
 
 
 
 
    Insurance commissions
4,320

 
4,005

 
7.9
 %
    Trust and wealth management fees
2,653

 
1,863

 
42.4
 %
    Service charges on deposit accounts
4,631

 
4,109

 
12.7
 %
    Bank card revenue
3,152

 
2,697

 
16.9
 %
    Realized securities gains (losses)
622

 
(14
)
 
n/m

    Bank owned life insurance income
1,022

 
1,017

 
0.5
 %
    Other income
1,022

 
750

 
36.3
 %
Total noninterest income
17,422

 
14,427

 
20.8
 %
 Noninterest expense
 
 
 
 
 
    Salaries and employee benefits
27,478

 
25,075

 
9.6
 %
    Net occupancy expense
3,364

 
3,011

 
11.7
 %
    Equipment expense
4,411

 
3,954

 
11.6
 %
    Professional fees
1,607

 
1,367

 
17.6
 %
    Advertising and public relations
654

 
578

 
13.1
 %
    Amortization of intangibles
1,671

 
1,410

 
18.5
 %
    FDIC premiums
830

 
1,065

 
-22.1
 %
    Bank card expense
1,475

 
1,432

 
3.0
 %
    Foreclosed properties expense, net of losses
1,350

 
1,339

 
0.8
 %
    Litigation settlement

 
9,900

 
-100.0
 %
    Merger-related expense
144

 
1,589

 
-90.9
 %
    Other expenses
6,889

 
7,025

 
-1.9
 %
Total noninterest expense
49,873

 
57,745

 
-13.6
 %
 Income before income taxes
35,096

 
21,579

 
62.6
 %
 Income tax expense
7,024

 
9,664

 
-27.3
 %
 Net income
$
28,072

 
$
11,915

 
135.6
 %





SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
 
 
 
 
 
Annual Performance Summary (unaudited) -- 2018 vs 2017
 
 
 
 
 
 
 
 
 
 
 
 
 For the Year Ended
 
 Percent
 
12/31/2018
 
12/31/2017
 
 Change
 Per Share Data
 
 
 
 
 
 Earnings per common share
 
 
 
 
 
    Basic
$
2.27

 
$
1.00

 
127.0
 %
    Diluted
$
2.26

 
$
1.00

 
126.0
 %
 
 
 
 
 
 
 Cash dividends
$
0.53

 
$
0.44

 
20.5
 %
 
 
 
 
 
 
 Average common shares outstanding
 
 
 
 
 
    Basic
12,364,468

 
11,918,390

 
3.7
 %
    Diluted
12,424,573

 
11,949,245

 
4.0
 %
 
 
 
 
 
 
 Common shares outstanding at period end
12,312,933

 
12,358,562

 
-0.4
 %
 
 
 
 
 
 
 Performance Ratios
 
 
 
 
 
 Return on average equity
13.43
%
 
6.40
%
 
109.8
 %
 Return on average tangible equity
16.09
%
 
8.01
%
 
100.9
 %
 Return on average assets
1.32
%
 
0.59
%
 
123.7
 %
 Net interest margin (A)
3.57
%
 
3.67
%
 
-2.7
 %
 Efficiency ratio (B)
53.72
%
 
52.41
%
 
2.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
NOTE (A) - Presented on a tax-equivalent basis assuming a federal tax rate of 21% for 2018 and 35% for 2017.
 
 
 
 
 
 
NOTE (B) - 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)
Five Quarter Performance Summary (unaudited)
 
 
 
 
 
 
 
 
 
 
 
For the Quarter Ended
 Dollars in thousands
12/31/2018
 
9/30/2018
 
6/30/2018
 
3/31/2018
 
12/31/2017
Statements of Income
 
 
 
 
 
 
 
 
 
 Interest income
 
 
 
 
 
 
 
 
 
    Loans, including fees
$
22,659

 
$
21,295

 
$
20,962

 
$
20,366

 
$
20,031

    Securities
2,527

 
2,367

 
2,303

 
2,391

 
2,412

    Other
127

 
138

 
134

 
140

 
144

 Total interest income
25,313

 
23,800

 
23,399

 
22,897

 
22,587

 Interest expense
 
 
 
 
 
 
 
 
 
    Deposits
5,103

 
4,714

 
4,309

 
3,549

 
3,224

    Borrowings
2,158

 
1,873

 
1,815

 
2,091

 
1,925

 Total interest expense
7,261

 
6,587

 
6,124

 
5,640

 
5,149

 
 
 
 
 
 
 
 
 
 
    Net interest income
18,052

 
17,213

 
17,275

 
17,257

 
17,438

 Provision for loan losses
500

 
500

 
750

 
500

 
375

 Net interest income after provision for loan losses
17,552

 
16,713

 
16,525

 
16,757

 
17,063

 
 
 
 
 
 
 
 
 
 
 Noninterest income
 
 
 
 
 
 
 
 
 
    Insurance commissions
1,132

 
1,062

 
1,013

 
1,113

 
1,005

    Trust and wealth management fees
627

 
687

 
672

 
667

 
578

    Service charges on deposit accounts
1,209

 
1,215

 
1,116

 
1,091

 
1,200

    Bank card revenue
809

 
793

 
801

 
749

 
742

    Realized securities (losses) gains
(205
)
 
8

 
87

 
732

 
(71
)
    Bank owned life insurance income
248

 
250

 
249

 
275

 
258

    Other income
367

 
196

 
210

 
249

 
219

Total noninterest income
4,187

 
4,211

 
4,148

 
4,876

 
3,931

 Noninterest expense
 
 
 
 
 
 
 
 
 
   Salaries and employee benefits
6,928

 
6,806

 
6,922

 
6,821

 
6,520

   Net occupancy expense
836

 
856

 
840

 
832

 
772

   Equipment expense
1,139

 
1,118

 
1,071

 
1,083

 
1,095

   Professional fees
385

 
503

 
385

 
333

 
355

   Advertising and public relations
193

 
170

 
188

 
103

 
185

   Amortization of intangibles
410

 
413

 
413

 
436

 
435

   FDIC premiums
140

 
210

 
240

 
240

 
250

   Bank card expense
395

 
384

 
361

 
335

 
319

   Foreclosed properties expense, net of losses
507

 
169

 
350

 
325

 
516

   Merger-related expense
59

 
86

 

 

 
14

   Other expenses
1,474

 
1,643

 
1,965

 
1,806

 
1,885

Total noninterest expense
12,466

 
12,358

 
12,735


12,314

 
12,346

 Income before income taxes
9,273

 
8,566

 
7,938

 
9,319

 
8,648

 Income tax expense
1,823

 
1,667

 
1,658

 
1,876

 
6,325

 Net income
$
7,450

 
$
6,899

 
$
6,280

 
$
7,443

 
$
2,323






SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
 
 
 
 
 
 
Five Quarter Performance Summary (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Quarter Ended
 
12/31/2018
 
9/30/2018
 
6/30/2018
 
3/31/2018
 
12/31/2017
 Per Share Data
 
 
 
 
 
 
 
 
 
 Earnings per common share
 
 
 
 
 
 
 
 
 
    Basic
$
0.60

 
$
0.56

 
$
0.51

 
$
0.60

 
$
0.19

    Diluted
$
0.60

 
$
0.55

 
$
0.51

 
$
0.60

 
$
0.19

 
 
 
 
 
 
 
 
 
 
Cash dividends
$
0.14

 
$
0.13

 
$
0.13

 
$
0.13

 
$
0.11

 
 
 
 
 
 
 
 
 
 
 Average common shares outstanding
 
 
 
 
 
 
 
 
 
    Basic
12,358,104

 
12,374,350

 
12,366,522

 
12,358,849

 
12,325,067

    Diluted
12,407,678

 
12,439,051

 
12,431,984

 
12,383,757

 
12,371,507

 
 
 
 
 
 
 
 
 
 
Common shares outstanding at period end
12,312,933

 
12,382,450

 
12,373,747

 
12,366,360

 
12,358,562

 
 
 
 
 
 
 
 
 
 
 Performance Ratios
 
 
 
 
 
 
 
 
 
 Return on average equity
13.85
%
 
13.00
%
 
12.16
%
 
14.73
%
 
4.62
%
 Return on average tangible equity
16.41
%
 
15.53
%
 
14.68
%
 
17.80
%
 
6.12
%
 Return on average assets
1.38
%
 
1.31
%
 
1.19
%
 
1.40
%
 
0.44
%
 Net interest margin (A)
3.61
%
 
3.53
%
 
3.58
%
 
3.58
%
 
3.65
%
 Efficiency ratio (B)
51.02
%
 
54.25
%
 
55.88
%
 
53.84
%
 
52.44
%
 
 
 
 
 
 
 
 
 
 
NOTE (A) - Presented on a tax-equivalent basis assuming a federal tax rate of 21% for 2018 and 35% for 2017.
 
 
 
 
 
 
 
 
 
 
NOTE (B) - 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
12/31/2018
 
9/30/2018
 
6/30/2018
 
3/31/2018
 
12/31/2017
 
 
 
 
 
 
 
 
 
 
 Assets
 
 
 
 
 
 
 
 
 
Cash and due from banks
$
23,061

 
$
9,382

 
$
8,314

 
$
9,042

 
$
9,641

Interest bearing deposits other banks
36,479

 
44,452

 
38,097

 
38,365

 
42,990

Securities
293,284

 
288,040

 
283,221

 
296,890

 
328,723

Loans, net
1,682,005

 
1,632,747

 
1,617,373

 
1,631,150

 
1,593,744

Property held for sale
21,432

 
22,017

 
21,606

 
21,442

 
21,470

Premises and equipment, net
37,553

 
36,888

 
36,017

 
35,554

 
34,209

Goodwill and other intangible assets
25,842

 
26,252

 
26,665

 
27,077

 
27,513

Cash surrender value of life insurance policies
42,420

 
42,208

 
41,932

 
41,668

 
41,358

Other assets
38,510

 
36,741

 
34,427

 
33,707

 
34,592

   Total assets
$
2,200,586

 
$
2,138,727

 
$
2,107,652

 
$
2,134,895

 
$
2,134,240

 
 
 
 
 
 
 
 
 
 
 Liabilities and Shareholders' Equity
 
 
 
 
 
 
 
 
 
Deposits
$
1,634,826

 
$
1,651,064

 
$
1,639,996

 
$
1,654,523

 
$
1,600,601

Short-term borrowings
309,084

 
238,403

 
202,429

 
193,513

 
250,499

Long-term borrowings and
     subordinated debentures
20,324

 
20,328

 
40,332

 
65,336

 
65,340

Other liabilities
16,522

 
15,376

 
15,016

 
16,514

 
16,295

Shareholders' equity
219,830

 
213,556

 
209,879

 
205,009

 
201,505

   Total liabilities and shareholders' equity
$
2,200,586

 
$
2,138,727

 
$
2,107,652

 
$
2,134,895

 
$
2,134,240

 
 
 
 
 
 
 
 
 
 
Book value per common share
$
17.85

 
$
17.25

 
$
16.96

 
$
16.55

 
$
16.30

Tangible book value per common share
$
15.75

 
$
15.13

 
$
14.81

 
$
14.36

 
$
14.08

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

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Regulatory Capital Ratios (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12/31/2018
 
9/30/2018
 
6/30/2018
 
3/31/2018
 
12/31/2017
Summit Financial Group, Inc.
 
 
 
 
 
 
 
 
 
CET1 Risk-based Capital
11.1
%
 
11.1
%
 
11.0
%
 
10.7
%
 
10.6
%
Tier 1 Risk-based Capital
12.2
%
 
12.2
%
 
12.1
%
 
11.8
%
 
11.8
%
Total Risk Based Capital
12.9
%
 
12.9
%
 
12.8
%
 
12.5
%
 
12.5
%
Tier 1 Leverage Ratio
10.1
%
 
10.1
%
 
9.9
%
 
9.5
%
 
9.4
%
 
 
 
 
 
 
 
 
 
 
Summit Community Bank, Inc.
 
 
 
 
 
 
 
 
 
CET1 Risk-based Capital
12.0
%
 
12.0
%
 
12.0
%
 
11.7
%
 
11.7
%
Tier 1 Risk-based Capital
12.0
%
 
12.0
%
 
12.0
%
 
11.7
%
 
11.7
%
Total Risk Based Capital
12.8
%
 
12.7
%
 
12.8
%
 
12.5
%
 
12.5
%
Tier 1 Leverage Ratio
10.0
%
 
9.9
%
 
9.8
%
 
9.5
%
 
9.4
%





SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Loan Composition (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dollars in thousands
12/31/2018
 
9/30/2018
 
6/30/2018
 
3/31/2018
 
12/31/2017
 
 
 
 
 
 
 
 
 
 
Commercial
$
194,315

 
$
167,972

 
$
171,410

 
$
189,586

 
$
189,981

Mortgage warehouse lines
39,140

 
35,910

 
54,332

 
45,702

 
30,757

Commercial real estate
 
 
 
 
 
 
 
 
 
     Owner occupied
266,362

 
272,475

 
262,174

 
265,075

 
250,202

     Non-owner occupied
564,826

 
530,568

 
503,047

 
498,445

 
484,902

Construction and development
 
 
 
 
 
 
 
 
 
     Land and development
68,833

 
71,819

 
74,018

 
66,841

 
67,219

     Construction
24,731

 
25,703

 
25,711

 
33,327

 
33,412

Residential real estate
 
 
 
 
 
 
 
 
 
     Non-jumbo
336,977

 
340,783

 
343,044

 
346,477

 
354,101

     Jumbo
73,599

 
72,327

 
66,831

 
67,169

 
62,267

     Home equity
80,910

 
82,018

 
82,409

 
83,382

 
84,028

Consumer
32,460

 
33,664

 
34,249

 
34,825

 
36,202

Other
12,899

 
12,452

 
12,728

 
12,578

 
13,238

Total loans, net of unearned fees
1,695,052

 
1,645,691

 
1,629,953

 
1,643,407

 
1,606,309

Less allowance for loan losses
13,047

 
12,944

 
12,580

 
12,257

 
12,565

Loans, net
$
1,682,005

 
$
1,632,747

 
$
1,617,373

 
$
1,631,150

 
$
1,593,744


SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Deposit Composition (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
Dollars in thousands
12/31/2018
 
9/30/2018
 
6/30/2018
 
3/31/2018
 
12/31/2017
Core deposits
 
 
 
 
 
 
 
 
 
Non interest bearing checking
$
222,120

 
$
232,697

 
$
217,134

 
$
219,293

 
$
217,493

Interest bearing checking
523,257

 
505,411

 
472,041

 
447,172

 
410,606

Savings
284,173

 
301,269

 
322,940

 
346,962

 
358,168

Time deposits
316,914

 
316,941

 
322,801

 
318,556

 
318,036

Total core deposits
1,346,464

 
1,356,318

 
1,334,916

 
1,331,983

 
1,304,303

 
 
 
 
 
 
 
 
 
 
Brokered deposits
220,497

 
227,312

 
238,662

 
242,049

 
202,509

Other non-core time deposits
67,866

 
67,434

 
66,418

 
80,491

 
93,789

Total deposits
$
1,634,827

 
$
1,651,064

 
$
1,639,996

 
$
1,654,523

 
$
1,600,601






SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Asset Quality Information (unaudited)
 
 
 
 
 
 
 
 
 
 
 For the Quarter Ended
 Dollars in thousands
12/31/2018
 
9/30/2018
 
6/30/2018
 
3/31/2018
 
12/31/2017
 
 
 
 
 
 
 
 
 
 
Gross loan charge-offs
$
705

 
$
413

 
$
525

 
$
960

 
$
550

Gross loan recoveries
(307
)
 
(278
)
 
(97
)
 
(153
)
 
(276
)
Net loan charge-offs (recoveries)
$
398

 
$
135

 
$
428

 
$
807

 
$
274

 
 
 
 
 
 
 
 
 
 
Net loan charge-offs to average loans (annualized)
0.10
%
 
0.03
%
 
0.10
%
 
0.20
%
 
0.07
%
Allowance for loan losses
$
13,047

 
$
12,944

 
$
12,580

 
$
12,257

 
$
12,565

Allowance for loan losses as a percentage
    of period end loans
0.77
%
 
0.79
%
 
0.77
%
 
0.75
%
 
0.78
%
 
 
 
 
 
 
 
 
 
 
Nonperforming assets:
 
 
 
 
 
 
 
 
 
   Nonperforming loans
 
 
 
 
 
 
 
 
 
       Commercial
$
935

 
$
801

 
$
954

 
$
734

 
$
696

       Commercial real estate
3,239

 
5,090

 
3,238

 
3,400

 
3,164

       Residential construction and development
3,198

 
3,200

 
3,233

 
3,642

 
3,569

       Residential real estate
7,506

 
7,760

 
8,241

 
7,521

 
7,656

       Consumer
147

 
118

 
110

 
160

 
238

Total nonperforming loans
15,025

 
16,969

 
15,776

 
15,457

 
15,323

   Foreclosed properties
 
 
 
 
 
 
 
 
 
       Commercial real estate
1,762

 
1,762

 
1,818

 
1,875

 
1,789

       Commercial construction and development
6,479

 
6,790

 
6,815

 
7,140

 
7,392

       Residential construction and development
11,543

 
11,614

 
11,517

 
11,053

 
11,182

       Residential real estate
1,648

 
1,851

 
1,456

 
1,374

 
1,107

Total foreclosed properties
21,432

 
22,017

 
21,606

 
21,442

 
21,470

  Other repossessed assets
5

 
5

 
12

 
18

 
68

Total nonperforming assets
$
36,462

 
$
38,991

 
$
37,394

 
$
36,917

 
$
36,861

 
 
 
 
 
 
 
 
 
 
Nonperforming loans to period end loans
0.89
%
 
1.03
%
 
0.97
%
 
0.94
%
 
0.95
%
Nonperforming assets to period end assets
1.66
%
 
1.82
%
 
1.77
%
 
1.73
%
 
1.73
%
 
 
 
 
 
 
 
 
 
 
Troubled debt restructurings
 
 
 
 
 
 
 
 
 
Performing
$
26,609

 
$
27,441

 
$
27,559

 
$
27,408

 
$
28,347

Nonperforming
388

 
113

 
281

 
76

 
26

Total troubled debt restructurings
$
26,997

 
$
27,554

 
$
27,840

 
$
27,484

 
$
28,373


Loans Past Due 30-89 Days (unaudited)
 
 
 
 For the Quarter Ended
 Dollars in thousands
12/31/2018
 
9/30/2018
 
6/30/2018
 
3/31/2018
 
12/31/2017
 
 
 
 
 
 
 
 
 
 
Commercial
$
219

 
$
607

 
$
319

 
$
539

 
$
586

Commercial real estate
161

 
988

 
546

 
601

 
1,082

Construction and development
194

 
393

 
264

 
174

 
1,127

Residential real estate
6,249

 
5,513

 
4,125

 
5,218

 
7,236

Consumer
593

 
345

 
337

 
425

 
504

Other
38

 
11

 
8

 
15

 
38

Total
$
7,454

 
$
7,857

 
$
5,599

 
$
6,972

 
$
10,573





SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
 
 
 
 
 
 
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
 
 
 
 
Q4 2018 vs Q3 2018 vs Q4 2017 (unaudited)
 
 
 
 
 
 
 
 
 
 
 
Q4 2018
 
Q3 2018
 
Q4 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 (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Taxable
$
1,660,250

 
$
22,519

 
5.38
%
 
$
1,615,700

 
$
21,154

 
5.19
%
 
$
1,562,978

 
$
19,879

 
5.05
%
    Tax-exempt (2)
15,322

 
177

 
4.58
%
 
15,688

 
178

 
4.50
%
 
16,902

 
234

 
5.49
%
  Securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Taxable
176,059

 
1,502

 
3.38
%
 
155,574

 
1,227

 
3.13
%
 
202,377

 
1,328

 
2.60
%
    Tax-exempt (2)
132,088

 
1,296

 
3.89
%
 
146,174

 
1,443

 
3.92
%
 
142,641

 
1,668

 
4.64
%
Interest bearing deposits other banks
   and Federal funds sold
35,402

 
127

 
1.42
%
 
38,642

 
138

 
1.42
%
 
42,021

 
144

 
1.36
%
Total interest earning assets
2,019,121

 
25,621

 
5.03
%
 
1,971,778

 
24,140

 
4.86
%
 
1,966,919

 
23,253

 
4.69
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest earning assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Cash & due from banks
9,686

 
 
 
 
 
9,326

 
 
 
 
 
9,753

 
 
 
 
  Premises & equipment
37,224

 
 
 
 
 
36,533

 
 
 
 
 
34,263

 
 
 
 
  Other assets
109,228

 
 
 
 
 
108,628

 
 
 
 
 
111,596

 
 
 
 
  Allowance for loan losses
(13,172
)
 
 
 
 
 
(12,865
)
 
 
 
 
 
(12,628
)
 
 
 
 
    Total assets
$
2,162,087

 
 
 
 
 
$
2,113,400

 
 
 
 
 
$
2,109,903