Toggle SGML Header (+)


Section 1: 8-K (8-K)

Document



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): July 25, 2019

 398891053_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 July 25, 2019, Summit Financial Group, Inc. (“Summit”) issued a News Release announcing its earnings for the three months and six months ended June 30, 2019. 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


SIGNATURES
 
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: July 25, 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
398891053_sfglogousethisone.jpg
SUMMIT FINANCIAL GROUP REPORTS RECORD SECOND QUARTER AND FIRST HALF 2019 RESULTS

Q2 2019 Diluted EPS $0.68 compared to $0.56 for Q1 2019 and $0.51 for Q2 2018
MOOREFIELD, WV - July 25, 2019 (GLOBE NEWSWIRE) - Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ: SMMF) today reported record second quarter 2019 net income of $8.56 million, or $0.68 per diluted share. In comparison, earnings for first quarter 2019 were $7.09 million, or $0.56 per diluted share, and for second quarter 2018 were $6.28 million, or $0.51 per diluted share.
For the six months ended June 30, 2019, Summit recorded net income of $15.7 million, or $1.23 per diluted share, compared with $13.7 million, or $1.10 per diluted share, for the comparable 2018 six-month period, representing an increase of 14.1 percent or 11.8 percent per diluted share.
Both quarterly and six-month 2019 earnings were positively impacted by increased net interest income resulting primarily from loan growth as well as a higher net interest margin, significant realized securities gains, and the previously announced gain on sale of our insurance agency, Summit Insurance Services, LLC (“SIS”) in Q2. These results were partially offset by larger write-downs on foreclosed properties in Q2 with the goal of selling such properties more rapidly.
Summit completed its acquisition of Peoples Bankshares, Inc. (“PBI”) and its subsidiary, First Peoples Bank, headquartered in Mullens, West Virginia on January 1, 2019 and converted its business processes and accounts to that of Summit’s during Q2 2019; accordingly, PBI’s results of operations are included in Summit’s consolidated results of operations from the date of acquisition. Therefore, Summit’s second quarter and six months ended June 30, 2019 period results reflect increased levels of average balances, income and expenses compared to the same periods of 2018. At consummation, PBI had total assets of $133.1 million, loans of $42.4 million, and deposits of $112.9 million. In addition, our merger-related expenses totaled $382,000 in Q2 2019 versus $63,000 in the prior quarter.


Highlights for Q2 2019

Loan balances, excluding mortgage warehouse lines of credit, grew $28.6 million during the quarter, and $61.5 million year-to-date;

Net interest income increased 14.90 percent (annualized) primarily as result of loan growth and higher loan yields, while funding costs remained well controlled; these factors also contributed to the 6 basis points increase in net interest margin to 3.72 percent;

Efficiency ratio was 56.21 percent compared to 55.88 percent for Q2 2018;




Provision for loan losses was $300,000 for the quarter compared to $250,000 for the linked quarter;

Realized securities gains of $1.09 million in Q2 2019;

Write-downs of foreclosed properties were $1.20 million in Q2 2019 compared to $249,000 in Q1 2019, while the net gain on sales of foreclosed properties increased from $1,000 in Q1 2019 to $156,000 in Q2 2019; and

Recognized a $1.91 million pre-tax gain on the sale of SIS.

H. Charles Maddy, III, President and Chief Executive Officer of Summit, commented, “I am very pleased to report that Summit achieved record earnings both for the quarter and the six-month periods just ended. I am particularly gratified by this past quarter’s solid core operating performance highlighted by our quarter-over-quarter strong lending activity, growth in net interest income and higher net interest margin. Further, this past quarter’s sale of SIS unlocked significant value for our shareholders, as the transaction resulted in a $0.54 increase in the Company’s tangible book value per share, while the entity’s earnings historically accounted for less than $0.01 per share of our quarterly earnings.”

Results from Operations
Total revenue for second quarter 2019, consisting of net interest income and noninterest income, increased 21.7 percent to $26.1 million, principally as a result of higher net interest income, increased realized securities gains and the gain on the sale of Summit Insurance Services, LLC, compared to $21.4 million for the second quarter 2018. For the year-to-date period ended June 30, 2019, total revenue was $48.9 million compared to $43.6 million for the same period of 2018, representing a 12.2 percent increase primarily as a result of higher net interest income and the gain on the sale of Summit Insurance Services, LLC.
For the second quarter of 2019, net interest income was $19.3 million, an increase of 11.5 percent from the $17.3 million reported in the prior-year second quarter and a 3.7 percent increase compared to the linked quarter. The net interest margin for second quarter 2019 was 3.72 percent compared to 3.66 percent for the linked quarter and 3.58 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 3.62 percent for Q2 2019, 3.64 percent for Q1 2019 and 3.56 percent for Q2 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 second quarter 2019 was $6.81 million compared to $4.15 million for the comparable period of 2018. Excluding realized securities gains and the gain on the sale of Summit Insurance Services, LLC, noninterest income was $3.82 million for second quarter 2019, compared to $4.06 million reported for second quarter 2018 and $4.23 million for the linked quarter.
We recorded a $300,000 provision for loan losses during second quarter 2019 and $750,000 in Q2 2018. Our provision continues to be directionally consistent with changes in the credit quality in our loan portfolio.
Q2 2019 total noninterest expense increased 20.4 percent to $15.3 million compared to $12.7 million for the prior-year second quarter and increased 10.6 percent compared to the linked quarter. Our increased noninterest expense is principally due to higher foreclosed properties expense due to increased write-downs on foreclosed properties with the goal of selling such properties more rapidly and to merger-related expenses.




Noninterest expense for the first half of 2019 increased 16.5 percent compared to the first half of 2018. Our increased noninterest expense is principally due to expenses associated with the acquired PBI operations (including merger-related expenses), increased write-downs of foreclosed properties and to deferred director compensation plan expense of $594,000 for the first six months of 2019 compared to $145,000 for the same period of 2018. Under our director deferred compensation plans, directors optionally elect to defer their director fees into a "phantom" investment plan whereby the Company recognizes expense or benefit relative to the phantom returns or losses of such investments. As result of the stock market’s exceptionally robust performance during Q1 2019, we recognized significantly greater quarterly deferred director compensation expense than we recognized previously when market values were lower.

Balance Sheet
At June 30, 2019, total assets were $2.30 billion, an increase of $98.6 million, or 4.5 percent since December 31, 2018. Total loans, net of unearned fees and allowance for loan losses, were $1.81 billion at June 30, 2019, up $123.8 million, or 7.4 percent, from the $1.68 billion reported at year-end 2018. Loans, excluding mortgage warehouse lines of credit, increased $28.6 million during the quarter, or 6.8 percent (on an annualized basis), and have increased $61.5 million, or 7.4 percent (on an annualized basis) since year-end 2018.
At June 30, 2019, deposits were $1.80 billion, an increase of $162.7 million, or 10.0 percent, since year end 2018. During first half 2019, checking deposits increased $78.0 million or 10.5 percent, time deposits grew by $67.5 million or 11.1 percent and savings deposits increased $17.2 million or 6.1 percent.
Shareholders’ equity was $235.7 million as of June 30, 2019 compared to $219.8 million at December 31, 2018. In conjunction with the acquisition of PBI on January 1, 2019, Summit issued 465,931 shares of common stock valued at $9.0 million to the former PBI shareholders.
Tangible book value per common share increased to $17.04 at June 30, 2019 compared to $15.75 at December 31, 2018. Summit had 12,449,986 outstanding common shares at Q2 2019 quarter end compared to 12,312,933 at year end 2018.
As 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 stock purchases under this 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 Q2 2019, 235,717 shares of our common stock were repurchased under the Plan at an average price of $25.74 per share. Through June 30, 2019, the Company has repurchased 447,540 shares under the Plan since its inception at an average price of $23.99 per share.

Asset Quality
As of June 30, 2019, nonperforming assets (“NPAs”), consisting of nonperforming loans, foreclosed properties, and repossessed assets, were $34.9 million, or 1.52 percent of assets. This compares to $34.4 million, or 1.53 percent of assets at the linked quarter-end, and $36.5 million, or 1.66 percent of assets at year end 2018. During Q2 2019, nonperforming loans increased $3.50 million as result of two commercial real estate loan relationships in Virginia totaling $3.85 million that became nonperforming, while foreclosed properties declined by $3.00 million as result of sales activity and the prior noted write-downs.
Second quarter 2019 net loan charge-offs were $280,000, or 0.06 percent of average loans annualized; while adding $300,000 to the allowance for loan losses through the provision for loan losses. The allowance for loan losses stood at 0.72 percent of total loans at June 30, 2019, compared to 0.77 percent at year-end 2018.





About the Company
Summit Financial Group, Inc. is a $2.30 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-two 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 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) -- Q2 2019 vs Q2 2018
 
 
 
 
 
 
 For the Quarter Ended
 
 Percent
Dollars in thousands
6/30/2019
 
6/30/2018
 
 Change
Statements of Income
 
 
 
 
 
 Interest income
 
 
 
 
 
    Loans, including fees
$
24,352

 
$
20,962

 
16.2
 %
    Securities
2,396

 
2,303

 
4.0
 %
    Other
134

 
134

 
 %
 Total interest income
26,882

 
23,399

 
14.9
 %
 Interest expense
 
 
 
 
 
    Deposits
5,967

 
4,309

 
38.5
 %
    Borrowings
1,652

 
1,815

 
-9.0
 %
 Total interest expense
7,619

 
6,124

 
24.4
 %
 
 
 
 
 
 
 Net interest income
19,263

 
17,275

 
11.5
 %
 Provision for loan losses
300

 
750

 
-60.0
 %
 Net interest income after provision for loan losses
18,963

 
16,525

 
14.8
 %
 
 
 
 
 
 
 Noninterest income
 
 
 
 
 
    Insurance commissions
606

 
1,013

 
-40.2
 %
    Trust and wealth management fees
612

 
672

 
-8.9
 %
    Service charges on deposit accounts
1,224

 
1,116

 
9.7
 %
    Bank card revenue
893

 
801

 
11.5
 %
    Realized securities gains
1,086

 
87

 
n/m

    Gain on sale of Summit Insurance Services, LLC
1,906

 

 
n/a

    Bank owned life insurance income
248

 
249

 
-0.4
 %
    Other income
235

 
210

 
11.9
 %
Total noninterest income
6,810

 
4,148

 
64.2
 %
 Noninterest expense
 
 
 
 
 
    Salaries and employee benefits
7,576

 
6,922

 
9.4
 %
    Net occupancy expense
880

 
840

 
4.8
 %
    Equipment expense
1,219

 
1,071

 
13.8
 %
    Professional fees
475

 
385

 
23.4
 %
    Advertising and public relations
155

 
188

 
-17.6
 %
    Amortization of intangibles
420

 
413

 
1.7
 %
    FDIC premiums
88

 
240

 
-63.3
 %
    Bank card expense
473

 
361

 
31.0
 %
    Foreclosed properties expense, net of losses
1,545

 
350

 
341.4
 %
    Merger-related expense
382

 

 
n/a

    Other expenses
2,116

 
1,965

 
7.7
 %
Total noninterest expense
15,329

 
12,735

 
20.4
 %
 Income before income taxes
10,444

 
7,938

 
31.6
 %
 Income tax expense
1,880

 
1,658

 
13.4
 %
 Net income
$
8,564

 
$
6,280

 
36.4
 %





SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
 
 
 
 
 
Quarterly Performance Summary (unaudited) -- Q2 2019 vs Q2 2018
 
 
 
 
 
 
 
 
 
 
 
 
 For the Quarter Ended
 
 Percent
 
6/30/2019
 
6/30/2018
 
 Change
 Per Share Data
 
 
 
 
 
 Earnings per common share
 
 
 
 
 
    Basic
$
0.68

 
$
0.51

 
33.3
%
    Diluted
$
0.68

 
$
0.51

 
33.3
%
 
 
 
 
 
 
 Cash dividends
$
0.15

 
$
0.13

 
15.4
%
 
 
 
 
 
 
 Average common shares outstanding
 
 
 
 
 
    Basic
12,539,095

 
12,366,522

 
1.4
%
    Diluted
12,600,071

 
12,431,984

 
1.4
%
 
 
 
 
 
 
 Common shares outstanding at period end
12,449,986

 
12,373,747

 
0.6
%
 
 
 
 
 
 
 Performance Ratios
 
 
 
 
 
 Return on average equity
14.62
%
 
12.16
%
 
20.2
%
 Return on average tangible equity
17.02
%
 
14.68
%
 
15.9
%
 Return on average assets
1.52
%
 
1.19
%
 
27.7
%
 Net interest margin (A)
3.72
%
 
3.58
%
 
3.9
%
 Efficiency ratio (B)
56.21
%
 
55.88
%
 
0.6
%
 
 
 
 
 
 
 
 
 
 
 
 
NOTE (A) - Presented on a tax-equivalent basis assuming a federal tax rate of 21%.
 
 
 
 
 
 
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)
 
 
 
 
 
Six Month Performance Summary (unaudited) -- 2019 vs 2018
 
 
 
 
 
 
 For the Six Months Ended
 
 Percent
Dollars in thousands
6/30/2019
 
6/30/2018
 
 Change
Statements of Income
 
 
 
 
 
 Interest income
 
 
 
 
 
    Loans, including fees
$
47,404

 
$
41,329

 
14.7
 %
    Securities
4,981

 
4,694

 
6.1
 %
    Other
365

 
274

 
33.2
 %
 Total interest income
52,750

 
46,297

 
13.9
 %
 Interest expense
 
 
 
 
 
    Deposits
11,531

 
7,858

 
46.7
 %
    Borrowings
3,383

 
3,906

 
-13.4
 %
 Total interest expense
14,914

 
11,764

 
26.8
 %
 
 
 
 
 
 
 Net interest income
37,836

 
34,533

 
9.6
 %
 Provision for loan losses
550

 
1,250

 
-56.0
 %
 Net interest income after provision for loan losses
37,286

 
33,283

 
12.0
 %
 
 
 
 
 
 
 Noninterest income
 
 
 
 
 
    Insurance commissions
1,780

 
2,126

 
-16.3
 %
    Trust and wealth management fees
1,198

 
1,339

 
-10.5
 %
    Service charges on deposit accounts
2,405

 
2,207

 
9.0
 %
    Bank card revenue
1,707

 
1,550

 
10.1
 %
    Realized securities gains
1,082

 
819

 
32.1
 %
    Gain on sale Summit Insurance Services, LLC
1,906

 

 
n/a

    Bank owned life insurance income
486

 
523

 
-7.1
 %
    Other income
476

 
459

 
3.7
 %
Total noninterest income
11,040

 
9,023

 
22.4
 %
 Noninterest expense
 
 
 
 
 
    Salaries and employee benefits
14,923

 
13,744

 
8.6
 %
    Net occupancy expense
1,803

 
1,672

 
7.8
 %
    Equipment expense
2,398

 
2,153

 
11.4
 %
    Professional fees
878

 
719

 
22.1
 %
    Advertising and public relations
308

 
291

 
5.8
 %
    Amortization of intangibles
897

 
848

 
5.8
 %
    FDIC premiums
88

 
480

 
-81.7
 %
    Bank card expense
911

 
696

 
30.9
 %
    Foreclosed properties expense, net of losses
1,930

 
675

 
185.9
 %
    Merger-related expense
445

 

 
n/a

    Other expenses
4,608

 
3,771

 
22.2
 %
Total noninterest expense
29,189

 
25,049

 
16.5
 %
 Income before income taxes
19,137

 
17,257

 
10.9
 %
 Income tax expense
3,481

 
3,534

 
-1.5
 %
 Net income
$
15,656

 
$
13,723

 
14.1
 %





SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
 
 
 
 
 
Six Month Performance Summary (unaudited) -- 2019 vs 2018
 
 
 
 
 
 
 
 
 
 
 
 
 For the Six Months Ended
 
 Percent
 
6/30/2019
 
6/30/2018
 
 Change
 Per Share Data
 
 
 
 
 
 Earnings per common share
 
 
 
 
 
    Basic
$
1.24

 
$
1.11

 
11.7
 %
    Diluted
$
1.23

 
$
1.10

 
11.8
 %
 
 
 
 
 
 
 Cash dividends
$
0.29

 
$
0.26

 
11.5
 %
 
 
 
 
 
 
 Average common shares outstanding
 
 
 
 
 
    Basic
12,627,806

 
12,362,679

 
2.1
 %
    Diluted
12,688,865

 
12,425,751

 
2.1
 %
 
 
 
 
 
 
 Common shares outstanding at period end
12,449,986

 
12,373,747

 
0.6
 %
 
 
 
 
 
 
 Performance Ratios
 
 
 
 
 
 Return on average equity
13.46
%
 
13.43
%
 
0.2
 %
 Return on average tangible equity
15.93
%
 
16.21
%
 
-1.7
 %
 Return on average assets
1.39
%
 
1.29
%
 
7.8
 %
 Net interest margin (A)
3.69
%
 
3.58
%
 
3.1
 %
 Efficiency ratio (B)
56.35
%
 
54.86
%
 
2.7
 %
 
 
 
 
 
 
 
 
 
 
 
 
NOTE (A) - Presented on a tax-equivalent basis assuming a federal tax rate of 21%.
 
 
 
 
 
 
NOTE (B) - Computed on a tax equivalent basis excluding 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
6/30/2019
 
3/31/2019
 
12/31/2018
 
9/30/2018
 
6/30/2018
Statements of Income
 
 
 
 
 
 
 
 
 
 Interest income
 
 
 
 
 
 
 
 
 
    Loans, including fees
$
24,352

 
$
23,051

 
$
22,659

 
$
21,295

 
$
20,962

    Securities
2,396

 
2,586

 
2,527

 
2,367

 
2,303

    Other
134

 
231

 
127

 
138

 
134

 Total interest income
26,882

 
25,868

 
25,313

 
23,800

 
23,399

 Interest expense
 
 
 
 
 
 
 
 
 
    Deposits
5,967

 
5,564

 
5,103

 
4,714

 
4,309

    Borrowings
1,652

 
1,731

 
2,158

 
1,873

 
1,815

 Total interest expense
7,619

 
7,295

 
7,261

 
6,587

 
6,124

 
 
 
 
 
 
 
 
 
 
    Net interest income
19,263

 
18,573

 
18,052

 
17,213

 
17,275

 Provision for loan losses
300

 
250

 
500

 
500

 
750

 Net interest income after provision for loan losses
18,963

 
18,323

 
17,552

 
16,713

 
16,525

 
 
 
 
 
 
 
 
 
 
 Noninterest income
 
 
 
 
 
 
 
 
 
    Insurance commissions
606

 
1,174

 
1,132

 
1,062

 
1,013

    Trust and wealth management fees
612

 
586

 
627

 
687

 
672

    Service charges on deposit accounts
1,224

 
1,180

 
1,209

 
1,215

 
1,116

    Bank card revenue
893

 
814

 
809

 
793

 
801

    Realized securities gains (losses)
1,086

 
(3
)
 
(205
)
 
8

 
87

    Gain on sale of Summit Insurance Services, LLC
1,906

 

 

 

 

    Bank owned life insurance income
248

 
238

 
248

 
250

 
249

    Other income
235

 
241

 
367

 
196

 
210

Total noninterest income
6,810

 
4,230

 
4,187

 
4,211

 
4,148

 Noninterest expense
 
 
 
 
 
 
 
 
 
   Salaries and employee benefits
7,576

 
7,347

 
6,928

 
6,806

 
6,922

   Net occupancy expense
880

 
924

 
836

 
856

 
840

   Equipment expense
1,219

 
1,179

 
1,139

 
1,118

 
1,071

   Professional fees
475

 
403

 
385

 
503

 
385

   Advertising and public relations
155

 
153

 
193

 
170

 
188

   Amortization of intangibles
420

 
476

 
410

 
413

 
413

   FDIC premiums
88

 

 
140

 
210

 
240

   Bank card expense
473

 
439

 
395

 
384

 
361

   Foreclosed properties expense, net of losses
1,545

 
384

 
507

 
169

 
350

   Merger-related expense
382

 
63

 
59

 
86

 

   Other expenses
2,116

 
2,492

 
1,474

 
1,643

 
1,965

Total noninterest expense
15,329

 
13,860

 
12,466

 
12,358

 
12,735

 Income before income taxes
10,444

 
8,693

 
9,273

 
8,566

 
7,938

 Income tax expense
1,880

 
1,601

 
1,823

 
1,667

 
1,658

 Net income
$
8,564

 
$
7,092

 
$
7,450

 
$
6,899

 
$
6,280






SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
 
 
Five Quarter Performance Summary (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Quarter Ended
 
6/30/2019
 
3/31/2019
 
12/31/2018
 
9/30/2018
 
6/30/2018
 Per Share Data
 
 
 
 
 
 
 
 
 
 Earnings per common share
 
 
 
 
 
 
 
 
 
    Basic
$
0.68

 
$
0.56

 
$
0.60

 
$
0.56

 
$
0.51

    Diluted
$
0.68

 
$
0.56

 
$
0.60

 
$
0.55

 
$
0.51

 
 
 
 
 
 
 
 
 
 
Cash dividends
$
0.15

 
$
0.14

 
$
0.14

 
$
0.13

 
$
0.13

 
 
 
 
 
 
 
 
 
 
 Average common shares outstanding
 
 
 
 
 
 
 
 
 
    Basic
12,539,095

 
12,717,501

 
12,358,104

 
12,374,350

 
12,366,522

    Diluted
12,600,071

 
12,778,644

 
12,407,678

 
12,439,051

 
12,431,984

 
 
 
 
 
 
 
 
 
 
Common shares outstanding at period end
12,449,986

 
12,661,528

 
12,312,933

 
12,382,450

 
12,373,747

 
 
 
 
 
 
 
 
 
 
 Performance Ratios
 
 
 
 
 
 
 
 
 
 Return on average equity
14.62
%
 
12.28
%
 
13.85
%
 
13.00
%
 
12.16
%
 Return on average tangible equity
17.02
%
 
14.80
%
 
16.41
%
 
15.53
%
 
14.68
%
 Return on average assets
1.52
%
 
1.27
%
 
1.38
%
 
1.31
%
 
1.19
%
 Net interest margin (A)
3.72
%
 
3.66
%
 
3.61
%
 
3.53
%
 
3.58
%
 Efficiency ratio (B)
56.21
%
 
56.50
%
 
51.02
%
 
54.25
%
 
55.88
%
 
 
 
 
 
 
 
 
 
 
NOTE (A) - Presented on a tax-equivalent basis assuming a federal tax rate of 21%.
 
 
 
 
 
 
 
 
 
 
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
6/30/2019
 
3/31/2019
 
12/31/2018
 
9/30/2018
 
6/30/2018
 
 
 
 
 
 
 
 
 
 
 Assets
 
 
 
 
 
 
 
 
 
Cash and due from banks
$
13,481

 
$
14,265

 
$
23,061

 
$
9,382

 
$
8,314

Interest bearing deposits other banks
42,994

 
43,689

 
36,479

 
44,452

 
38,097

Securities
269,920

 
297,126

 
293,284

 
288,040

 
283,221

Loans, net
1,805,850

 
1,725,064

 
1,682,005

 
1,632,747

 
1,617,373

Property held for sale
21,390

 
24,393

 
21,432

 
22,017

 
21,606

Premises and equipment, net
42,896

 
39,345

 
37,553

 
36,888

 
36,017

Goodwill and other intangible assets
23,585

 
29,349

 
25,842

 
26,252

 
26,665

Cash surrender value of life insurance policies
42,976

 
42,714

 
42,420

 
42,208

 
41,932

Other assets
36,022

 
33,696

 
38,510

 
36,741

 
34,427

   Total assets
$
2,299,114

 
$
2,249,641

 
$
2,200,586

 
$
2,138,727

 
$
2,107,652

 
 
 
 
 
 
 
 
 
 
 Liabilities and Shareholders' Equity
 
 
 
 
 
 
 
 
 
Deposits
$
1,797,493

 
$
1,789,032

 
$
1,634,826

 
$
1,651,064

 
$
1,639,996

Short-term borrowings
225,343

 
186,292

 
309,084

 
238,403

 
202,429

Long-term borrowings and
     subordinated debentures
20,315

 
20,319

 
20,324

 
20,328

 
40,332

Other liabilities
20,262

 
20,368

 
16,522

 
15,376

 
15,016

Shareholders' equity
235,701

 
233,630

 
219,830

 
213,556

 
209,879

   Total liabilities and shareholders' equity
$
2,299,114

 
$
2,249,641

 
$
2,200,586

 
$
2,138,727

 
$
2,107,652

 
 
 
 
 
 
 
 
 
 
Book value per common share
$
18.93

 
$
18.45

 
$
17.85

 
$
17.25

 
$
16.96

Tangible book value per common share
$
17.04

 
$
16.13

 
$
15.75

 
$
15.13

 
$
14.81

Tangible common equity to tangible assets
9.3
%
 
9.2
%
 
8.9
%
 
8.9
%
 
8.8
%

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Regulatory Capital Ratios (unaudited)
 
 
 
 
 
 
 
 
 
 
 
6/30/2019
 
3/31/2019
 
12/31/2018
 
9/30/2018
 
6/30/2018
Summit Financial Group, Inc.
 
 
 
 
 
 
 
 
 
CET1 Risk-based Capital
11.1
%
 
11.4
%
 
11.1
%
 
11.1
%
 
11.0
%
Tier 1 Risk-based Capital
12.1
%
 
12.5
%
 
12.2
%
 
12.2
%
 
12.1
%
Total Risk Based Capital
12.8
%
 
13.2
%
 
12.9
%
 
12.9
%
 
12.8
%
Tier 1 Leverage Ratio
10.4
%
 
10.2
%
 
10.1
%
 
10.1
%
 
9.9
%
 
 
 
 
 
 
 
 
 
 
Summit Community Bank, Inc.
 
 
 
 
 
 
 
 
 
CET1 Risk-based Capital
11.9
%
 
12.3
%
 
12.0
%
 
12.0
%
 
12.0
%
Tier 1 Risk-based Capital
11.9
%
 
12.3
%
 
12.0
%
 
12.0
%
 
12.0
%
Total Risk Based Capital
12.6
%
 
13.0
%
 
12.8
%
 
12.7
%
 
12.8
%
Tier 1 Leverage Ratio
10.2
%
 
10.0
%
 
10.0
%
 
9.9
%
 
9.8
%





SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Loan Composition (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dollars in thousands
6/30/2019
 
3/31/2019
 
12/31/2018
 
9/30/2018
 
6/30/2018
 
 
 
 
 
 
 
 
 
 
Commercial
$
204,138

 
$
189,248

 
$
194,315

 
$
167,972

 
$
171,410

Mortgage warehouse lines
101,607

 
49,355

 
39,140

 
35,910

 
54,332

Commercial real estate
 
 
 
 
 
 
 
 
 
     Owner occupied
262,901

 
256,671

 
257,256

 
261,290

 
256,827

     Non-owner occupied
574,677

 
585,809

 
573,932

 
541,753

 
508,394

Construction and development
 
 
 
 
 
 
 
 
 
     Land and development
67,769

 
64,192

 
68,833

 
71,819

 
74,018

     Construction
46,975

 
36,040

 
24,731

 
25,703

 
25,711

Residential real estate
 
 
 
 
 
 
 
 
 
     Non-jumbo
360,752

 
359,107

 
336,977

 
340,783

 
343,044

     Jumbo
70,171

 
69,313

 
73,599

 
72,327

 
66,831

     Home equity
81,373

 
80,370

 
80,910

 
82,018

 
82,409

Consumer
36,715

 
36,046

 
32,460

 
33,664

 
34,249

Other
11,924

 
12,045

 
12,899

 
12,452

 
12,728

Total loans, net of unearned fees
1,819,002

 
1,738,196

 
1,695,052

 
1,645,691

 
1,629,953

Less allowance for loan losses
13,152

 
13,132

 
13,047

 
12,944

 
12,580

Loans, net
$
1,805,850

 
$
1,725,064

 
$
1,682,005

 
$
1,632,747

 
$
1,617,373


SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Deposit Composition (unaudited)
 
 
 
 
 
 
 
 
 
 
Dollars in thousands
6/30/2019
 
3/31/2019
 
12/31/2018
 
9/30/2018
 
6/30/2018
Core deposits
 
 
 
 
 
 
 
 
 
Non interest bearing checking
$
234,397

 
$
258,679

 
$
222,120

 
$
232,697

 
$
217,134

Interest bearing checking
588,948

 
560,800

 
523,257

 
505,411

 
472,041

Savings
301,403

 
310,646

 
284,173

 
301,269

 
322,940

Time deposits
365,275

 
359,141

 
316,914

 
316,941

 
322,801

Total core deposits
1,490,023

 
1,489,266

 
1,346,464

 
1,356,318

 
1,334,916

 
 
 
 
 
 
 
 
 
 
Brokered deposits
222,901

 
218,913

 
220,497

 
227,312

 
238,662

Other non-core time deposits
84,569

 
80,852

 
67,866

 
67,434

 
66,418

Total deposits
$
1,797,493

 
$
1,789,031

 
$
1,634,827

 
$
1,651,064

 
$
1,639,996






SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
 
 
Asset Quality Information (unaudited)
 
 
 
 
 
 
 
 
 
 
 For the Quarter Ended
 Dollars in thousands
6/30/2019
 
3/31/2019
 
12/31/2018
 
9/30/2018
 
6/30/2018
 
 
 
 
 
 
 
 
 
 
Gross loan charge-offs
$
391

 
$
414

 
$
705

 
$
413

 
$
525

Gross loan recoveries
(111
)
 
(249
)
 
(307
)
 
(278
)
 
(97
)
Net loan charge-offs (recoveries)
$
280

 
$
165

 
$
398

 
$
135

 
$
428

 
 
 
 
 
 
 
 
 
 
Net loan charge-offs to average loans (annualized)
0.06
%
 
0.04
%
 
0.10
%
 
0.03
%
 
0.10
%
Allowance for loan losses
$
13,152

 
$
13,132

 
$
13,047

 
$
12,944

 
$
12,580

Allowance for loan losses as a percentage
    of period end loans
0.72
%
 
0.76
%
 
0.77
%
 
0.79
%
 
0.77
%
 
 
 
 
 
 
 
 
 
 
Nonperforming assets:
 
 
 
 
 
 
 
 
 
   Nonperforming loans
 
 
 
 
 
 
 
 
 
       Commercial
$
948

 
$
729

 
$
935

 
$
801

 
$
954

       Commercial real estate
6,544

 
2,981

 
3,239

 
5,090

 
3,238

       Residential construction and development
66

 
24

 
3,198

 
3,200

 
3,233

       Residential real estate
5,657

 
5,928

 
7,506

 
7,760

 
8,241

       Consumer
160

 
182

 
147

 
118

 
110

       Other
100

 
130

 

 

 

Total nonperforming loans
13,475

 
9,974

 
15,025

 
16,969

 
15,776

   Foreclosed properties
 
 
 
 
 
 
 
 
 
       Commercial real estate
1,544

 
1,841

 
1,762

 
1,762

 
1,818

       Commercial construction and development
4,910

 
6,326

 
6,479

 
6,790

 
6,815

       Residential construction and development
13,132

 
14,347

 
11,543

 
11,614

 
11,517

       Residential real estate
1,804

 
1,879

 
1,648

 
1,851

 
1,456

Total foreclosed properties
21,390

 
24,393

 
21,432

 
22,017

 
21,606

  Other repossessed assets
12

 
34

 
5

 
5

 
12

Total nonperforming assets
$
34,877

 
$
34,401

 
$
36,462

 
$
38,991

 
$
37,394

 
 
 
 
 
 
 
 
 
 
Nonperforming loans to period end loans
0.74
%
 
0.57
%
 
0.89
%
 
1.03
%
 
0.97
%
Nonperforming assets to period end assets
1.52
%
 
1.53
%
 
1.66
%
 
1.82
%
 
1.77
%

Loans Past Due 30-89 Days (unaudited)
 
 For the Quarter Ended
 Dollars in thousands
6/30/2019
 
3/31/2019
 
12/31/2018
 
9/30/2018
 
6/30/2018
 
 
 
 
 
 
 
 
 
 
Commercial
$
375

 
$
264

 
$
219

 
$
607

 
$
319

Commercial real estate
1,719

 
4,128

 
161

 
988

 
546

Construction and development
235

 
179

 
194

 
393

 
264

Residential real estate
5,670

 
2,944

 
6,249

 
5,513

 
4,125

Consumer
234

 
432

 
593

 
345

 
337

Other
9

 
52

 
38

 
11

 
8

Total
$
8,242

 
$
7,999

 
$
7,454

 
$
7,857

 
$
5,599





SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
 
 
 
 
 
 
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
 
 
 
 
Q2 2019 vs Q1 2019 vs Q2 2018 (unaudited)
 
 
 
 
 
 
 
 
 
 
 
Q2 2019
 
Q1 2019
 
Q2 2018
 
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
$
1,749,032

 
$
24,184

 
5.55
%
 
$
1,712,286

 
$
22,907

 
5.43
%
 
$
1,618,726

 
$
20,820

 
5.16
%
    Tax-exempt (2)
14,695

 
213

 
5.81
%
 
14,907

 
184

 
5.01
%
 
15,800

 
180

 
4.57
%
  Securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Taxable
203,049

 
1,607

 
3.17
%
 
195,932

 
1,687

 
3.49
%
 
160,632

 
1,240

 
3.10
%
    Tax-exempt (2)
100,307

 
999

 
3.99
%
 
114,831

 
1,139

 
4.02
%
 
136,984

 
1,346

 
3.94
%
Interest bearing deposits other banks
   and Federal funds sold
38,214

 
134

 
1.41
%
 
51,187

 
230

 
1.82
%
 
38,936

 
134

 
1.38
%
Total interest earning assets
2,105,297

 
27,137

 
5.17
%
 
2,089,143

 
26,147

 
5.08
%
 
1,971,078

 
23,720

 
4.83
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest earning assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Cash & due from banks
14,124

 
 
 
 
 
12,825

 
 
 
 
 
9,100

 
 
 
 
  Premises & equipment
41,318

 
 
 
 
 
38,834

 
 
 
 
 
35,721

 
 
 
 
  Other assets
109,642

 
 
 
 
 
112,910

 
 
 
 
 
108,073

 
 
 
 
  Allowance for loan losses
(13,260
)
 
 
 
 
 
(13,309
)
 
 
 
 
 
(12,541
)
 
 
 
 
    Total assets
$
2,257,121

 
 
 
 
 
$
2,240,403

 
 
 
 
 
$
2,111,431

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 LIABILITIES AND SHAREHOLDERS' EQUITY