MOOREFIELD, W.Va., Jan. 29, 2009 (GLOBE NEWSWIRE) -- Summit Financial Group, Inc. ("Company" or "Summit") (Nasdaq:SMMF) today reported fourth quarter 2008 net income of $3.6 million, or $0.48 per diluted share, compared with earnings from continuing operations of $3.9 million, or $0.52 per diluted share, in the prior-year fourth quarter. For 2008, Summit's net income was $2.3 million, or $0.31 per diluted share, compared with 2007 earnings from continuing operations of $13.5 million, or $1.85 per diluted share.
Excluding other-than-temporary impairment ("OTTI") charges primarily relating to investments in Fannie Mae and Freddie Mac preferred stock, aggregating $7.1 million for 2008 ($4.4 million after-tax) and pre-tax gains in the fair value of interest rate swaps of $0.7 million and $1.5 million in 2008 and 2007, respectively, pro forma earnings for the year ended December 31, 2008 were $6.3 million, or $0.85 per diluted share, compared with pro forma net income from continuing operations of $12.6 million, or $1.72 per diluted share for 2007.
Fourth quarter 2008 earnings include an OTTI pre-tax charge of $1.0 million representing a $0.7 million impairment charge on Summit's investment in Greater Atlantic Financial Corp.'s ("Greater Atlantic") common stock and $0.3 million in further impairments of its Fannie Mae and Freddie Mac preferred stock. Fourth quarter 2007 earnings include a gain of $0.8 million from changes in the fair value of interest rate swaps. Excluding these non-recurring or non-cash items, fourth quarter pro forma earnings were $4.2 million, or $0.57 per diluted share, in 2008 and $3.4 million, or $0.45 per diluted share in 2007.
H. Charles Maddy III, president and chief executive officer of Summit, stated, "Our core business remains healthy. We continue to see modest loan demand from existing customers, but we've become increasingly selective toward new business. Much of our attention has shifted to the resolution of our problem assets, which appear to be stabilizing after their sharp increase last quarter.
"Our workout team has not wasted time. Of the $23.8 million of construction and development loans we identified and transferred to nonaccrual last quarter, we reduced that amount by nearly forty percent. This includes the transfer of $6.8 million to OREO where we have the opportunity to manage the properties more efficiently. This also includes $4.5 million of charge-offs against the reserves we established for that purpose in the third quarter.
"Excluding one-time OTTI issues, swings from changes in fair value, and costs associated with credit administration, our core banking business has remained stable and well under control. Our revenue has increased gradually in synch with modest growth of noninterest expense. We are disappointed that we were not able to consummate our merger with Greater Atlantic, but we believe its mutual termination was in the best interest of our shareholders, customers and employees.
Highlights for 2008 include:
-- Strengthening our loan loss reserves to reflect the weaker economy
and its current and future impact on asset quality. The $15.5
million loan loss provision recorded this year raised the reserve
to 1.40 percent of total loans at year-end, after net loan
charge-offs of $7.8 million during the course of the year.
-- The impact of the housing crisis as reflected by the impairment
of Summit's investments in Freddie Mac and Fannie Mae preferred
stock resulting in $6.4 million in charges recorded relative to
these securities in 2008.
-- Loan growth of $147.9 million, or 13.9 percent year-over-year,
derived principally from commercial and commercial real estate
loans.
-- Stability of the net interest margin; this continues to be a
highlight of Summit's performance despite the rapid decline of
interest rates beginning in third quarter 2007. However, the
impact of foregone interest income from nonaccruing loans has
negatively impacted the margin in the most recent two quarters.
-- The mutual termination of the Greater Atlantic merger
agreement.
Results from Operations
Total revenue, composed of net interest income and noninterest income, was $46.9 million for 2008, up 1.1 percent from prior-year revenue of $46.4 million. Excluding the 2008 impairment charge on securities and the 2008 and 2007 changes in fair value of interest rate swaps, operating revenue for 2008 was $53.3 million, up 18.6 percent from the $44.9 million reported in 2007. Net interest income was $44.1 million, a 12.8 percent increase above the $39.1 million reported for 2007; a 17.0 percent increase in average earning assets over the past twelve months was partially offset by a 13 basis point decline in the net interest margin, which was 3.13 percent for 2008.
Mr. Maddy remarked, "As I have mentioned in the past, our goal has been to maintain a neutral balance sheet and a stable net interest margin, and we have been consistently successful in doing so until the third quarter jump in nonaccruals. Substantially all of our variable rate loans have interest rate floors and our balance sheet is modestly liability sensitive, so we are quite pleased with the current interest rate environment."
Noninterest income, reported on a GAAP basis, was $2.9 million for 2008 compared with income of $7.4 million for the prior year. Excluding the 2008 OTTI charge of $7.1 million and the pre-tax changes in the fair value of interest rate swaps of $705,000 and $1,478,000 in 2008 and 2007, respectively, noninterest income from operations totaled $9.2 million for 2008 and $5.9 million for 2007. Insurance commissions increased 78.7 percent to $5.1 million for 2008 compared with $2.9 million for 2007, primarily from the purchase of the Kelly Agencies in third quarter 2007. The $15.5 million provision for loan losses recorded for 2008 was the primary factor contributing to the decline in operating earnings for the year; the 2008 provision increased by $13.4 million above the $2.1 million recorded for 2007. Of this total, the third quarter provision accounted for the lion's share: $12.0 million, or 77 percent of the 2008 provision. Having identified and reserved for the loss potential in each of third quarter's new problem loans, Summit recorded a significantly lower provision of $750,000 in the 2008 fourth quarter. In addition, two-thirds of 2008's net charge-offs occurred in the fourth quarter: $5.2 million out of total 2008 net-charge-offs of $7.8 million. The Company ended the year with a loan loss reserve of $16.9 million, or 1.40 percent of total loans, up sharply from the prior year-end level: $9.2 million or 0.86 percent of loans.
Noninterest expense for the 2008 full year was $29.4 million, up $4.3 million, or 17.1 percent, from 2007. Salaries and employee benefits rose $2.1 million or 14.6 percent, above 2007 levels, to $16.7 million. The other expense category accounted for $7.9 million, up 30.5 percent, from $6.0 million in 2007; contributing factors include a $454,000 higher FDIC premium and the write-off of capitalized acquisition costs associated with the terminated Greater Atlantic transaction totaling $514,000. Summit's efficiency ratio, based on continuing operations and excluding one-time nonrecurring items, was 52.01 percent for 2008, a 99 basis point improvement over the 2007 ratio of 53.00 percent, benefitting primarily from a higher level of net interest income.
Balance Sheet and Asset Quality
Assets at December 31, 2008 were $1.6 billion, up $191.5 million, or 13.3 percent since the 2007 year-end. Total loans were $1.2 billion at year-end 2008, up $147.9 million, or 13.9 percent over the past twelve months. Year-over-year loan growth was derived foremost from commercial real estate lending, up $67.8 million, or 17.6 percent, followed by residential real estate, up $53.4 million, and commercial loans, up $37.5 million. Construction and development (C&D) was the only loan category to decline, by $9.8 million, or 4.4 percent, to $215.5 million. Growth was paced throughout the year, with a modest pickup in fourth quarter relative to the third.
Commercial real estate and 1-4 family residential mortgages represent 37.3 percent and 31.0 percent of total loans, respectively, at December 31, 2008. Non real estate-related commercial loans accounted for 10.7 percent of the loan portfolio, while C&D loans represented 17.8 percent of the total, down from 21.2 percent at December 31, 2007.
Nonperforming loans were $48.0 million at year-end 2008, or 3.97 percent of total loans, compared with $59.8 million, or 5.13 percent of loans, for the linked quarter, and $10.3 million, or 0.97 percent, for the year-ago quarter. Nonperforming loans were concentrated in the commercial real estate (CRE) category: $24.3 million, equivalent to 5.4 percent of CRE loans. While C&D nonperforming loans represented $18.4 million at year end 2008, this loan category has been aggressively managed and reduced by $10.7 million during this past quarter.
At December 31, 2008, foreclosed real estate was $8.1 million compared with $2.3 million for the linked quarter and $2.1 million for the year-ago quarter. Approximately $6.8 million of the $11.9 million decline in nonperforming loans this past quarter represents foreclosures. Summit believes its own workout team is often better equipped to maximize recoveries on real estate projects and shorten the collection period.
Loans in the 30-89 day delinquent category totaled $8.9 million at December 31, 2008, compared with $13.8 million in the preceding quarter and $8.7 million at December 31, 2007. Residential mortgages accounted for $5.0 million of fourth quarter 2008 30-89 day delinquencies.
The combined level of problem assets, including foreclosed properties, nonaccruing loans, and 30-89 day delinquencies, at December 31, 2008 was $64.9 million, or 4.0 percent of assets; this compares with problem assets of $75.9 million for the linked quarter and $21.1 million for the year-ago quarter, equivalent to 4.8 percent of assets and 1.5 percent of assets, respectively.
The Company recorded net charge-offs of $7.8 million, or 0.68 percent of average loans for 2008 compared with net charge-offs of $1.1 million, or 0.11 percent of average loans for 2007. For the fourth quarter, net charge-offs were $5.2 million, or an annualized 1.75 percent of average loans, compared with $917,000, or an annualized 0.32 percent for the linked quarter, and $285,000, or 0.11 percent annualized for the year earlier period. Following the $12.0 million provision for loan losses taken in the third quarter, the allowance for loan losses rose to 1.87 percent; fourth quarter net charge-offs subsequently reduced the allowance to 1.40 percent as of December 31, 2008, which compared favorably to 0.86 percent at December 31, 2007.
Total deposits at December 31, 2008 were $965.9 million compared with $945.2 million at September 30, 2008 and $828.7 million for the year-ago quarter, an increase of $20.6 million, or 2.2 percent, and $137.2, or 16.6 percent, respectively. Core deposits, which include all in-market CDs regardless of size, were $669.3 million at year-end 2008, approximately 69 percent of total deposits in the current quarter compared with 79 percent in the year-ago quarter. Summit's remaining funding needs are met through the national broker market and the FHLB borrowings, whichever is less expensive.
Shareholders' equity at December 31, 2008 was $87.2 million, a decrease of 2.4 percent over the last twelve months. Capital ratios for Summit and its banking subsidiary, Summit Community Bank, remain in excess of regulatory requirements for "well-capitalized," the highest regulatory capital requirement under Federal regulation. As of fourth quarter-end 2008, common shares outstanding totaled 7,415,310 compared with 7,408,941 for the 2007 fourth quarter.
ABOUT THE COMPANY
Summit Financial Group, Inc., a financial holding company with total assets of $1.6 billion, operates fifteen banking locations through its wholly-owned community bank, Summit Community Bank, headquartered in Moorefield, West Virginia. Summit also operates Summit Insurance Services, LLC headquartered in Moorefield, West Virginia.
The Summit Financial Group, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=2990
FORWARD-LOOKING STATEMENTS
This press release contains comments or information that constitute forward-looking statements (within the meaning of the Private Securities Litigation Act of 1995) that are based on current expectations that involve a number of risks and uncertainties. Words such as "expects", "anticipates", "believes", "estimates" and other similar expressions or future or conditional verbs such as "will", "should", "would" and "could" are intended to identify such forward-looking statements.
Although we believe the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially. Factors that might cause such a difference include changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking laws and regulations; changes in tax laws; the impact of technological advances; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; and changes in the national and local economies. We undertake no obligation to revise these statements following the date of this press release.
NON-GAAP FINANCIAL MEASURES
This press release contains financial information determined by methods other than in accordance with generally accepted accounting principles in the United States of America ("GAAP"). Specifically, Summit adjusted several GAAP performance measures to exclude the effects of the non-cash, other-than-temporary impairment charges on securities and to exclude the effects of the non-cash changes in fair value of interest rate swaps included in its Statements of Income. Management deems these items to be unusual in nature and believes presentations of financial measures excluding the impact of these items provide useful supplemental information that is important for a proper understanding of the operating results of Summit's core business. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary -- Q4 2008 vs Q4 2007
For the Quarter Ended
---------------------- Percent
Dollars in thousands 12/31/2008 12/31/2007 Change
---------------------------------------------------------------------
Condensed Statements of Income
Interest income
Loans, including fees $ 19,343 $ 20,199 -4.2%
Securities 4,305 3,590 19.9%
Other 1 8 -87.5%
-------- --------
Total interest income 23,649 23,797 -0.6%
-------- --------
Interest expense
Deposits 7,081 7,759 -8.7%
Borrowings 5,190 5,697 -8.9%
-------- --------
Total interest expense 12,271 13,456 -8.8%
-------- --------
Net interest income 11,378 10,341 10.0%
Provision for loan losses 750 750 0.0%
-------- --------
Net interest income after provision
for loan losses 10,628 9,591 10.8%
-------- --------
Noninterest income
Insurance commissions 1,200 1,157 3.7%
Service fee income 851 863 -1.4%
Other-than-temporary impairment of
securities (1,024) -- n/m
Net cash settlement on interest rate
swaps -- (183) n/m
Change in fair value of interest
rate swaps -- 783 n/m
Other income 40 78 -48.7%
-------- --------
Total noninterest income 1,067 2,698 -60.5%
-------- --------
Noninterest expense
Salaries and employee benefits 4,047 4,090 -1.1%
Net occupancy expense 463 466 -0.6%
Equipment expense 567 568 -0.2%
Professional fees 250 152 64.5%
Other expenses 2,534 1,634 55.1%
-------- --------
Total noninterest expense 7,861 6,910 13.8%
-------- --------
Income from continuing operations
before income taxes 3,834 5,379 -28.7%
Income taxes 277 1,511 -81.7%
-------- --------
Income from continuing operations 3,557 3,868 -8.0%
-------- --------
Discontinued operations
Exit costs and impairment of long-
lived assets -- (435) n/m
Operating income (loss) -- (9,549) n/m
-------- --------
Income (loss) from discontinued
operations before income taxes -- (9,984) n/m
Income taxes -- (3,347) n/m
-------- --------
Income (loss) from discontinued
operations -- (6,637) n/m
-------- --------
Net Income (loss) $ 3,557 $ (2,769) n/m
======== ========
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary -- Q4 2008 vs Q4 2007
For the Quarter Ended
----------------------- Percent
12/31/2008 12/31/2007 Change
---------------------------------------------------------------------
Per Share Data
Earnings per share from
continuing operations
Basic $ 0.48 $ 0.52 -7.7%
Diluted $ 0.48 $ 0.52 -7.7%
Earnings per share from
discontinued operations
Basic $ -- $ (0.89) -100.0%
Diluted $ -- $ (0.89) -100.0%
Earnings per share
Basic $ 0.48 $ (0.37) -229.7%
Diluted $ 0.48 $ (0.37) -229.7%
Average shares outstanding
Basic 7,411,577 7,401,684 0.1%
Diluted 7,434,643 7,450,049 -0.2%
Performance Ratios
Return on average equity 17.08% -11.62% -247.0%
Return on average equity -
continuing operations 17.08% 16.23% 5.2%
Return on average assets 0.89% -0.81% -209.9%
Return on average assets -
continuing operations 0.89% 1.13% -21.2%
Net interest margin 3.04% 3.24% -6.2%
Efficiency ratio - continuing
operations (A) 51.72% 53.03% -2.5%
NOTE: (A) - Computed on a tax equivalent basis excluding
nonrecurring income and expense items and amortization of
intangibles.
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Annual Performance Summary -- 2008 vs 2007
For the Years Ended
--------------------- Percent
Dollars in thousands 12/31/2008 12/31/2007 Change
---------------------------------------------------------------------
Condensed Statements of Income
Interest income
Loans, including fees $ 77,515 $ 77,911 -0.5%
Securities 15,961 13,422 18.9%
Other 8 51 -84.3%
-------- --------
Total interest income 93,484 91,384 2.3%
-------- --------
Interest expense
Deposits 27,343 34,296 -20.3%
Borrowings 22,066 18,021 22.4%
-------- --------
Total interest expense 49,409 52,317 -5.6%
-------- --------
Net interest income 44,075 39,067 12.8%
Provision for loan losses 15,500 2,055 654.3%
-------- --------
Net interest income after provision
for loan losses 28,575 37,012 -22.8%
-------- --------
Noninterest income
Insurance commissions 5,139 2,876 78.7%
Service fee income 3,246 3,004 8.1%
Realized securities gains/(losses) (6) -- --
Other-than-temporary impairment of
securities (7,060) -- --
Net cash settlement on interest rate
swaps (170) (727) -76.6%
Change in fair value of interest rate
swaps 705 1,478 -52.3%
Other income 1,014 726 39.7%
-------- --------
Total noninterest income 2,868 7,357 -61.0%
-------- --------
Noninterest expense
Salaries and employee benefits 16,742 14,608 14.6%
Net occupancy expense 1,870 1,758 6.4%
Equipment expense 2,173 2,004 8.4%
Professional fees 723 695 4.0%
Other expenses 7,876 6,033 30.5%
-------- --------
Total noninterest expense 29,384 25,098 17.1%
-------- --------
Income from continuing operations
before income taxes 2,059 19,271 -89.3%
Income taxes (241) 5,734 -104.2%
-------- --------
Income from continuing operations 2,300 13,537 -83.0%
-------- --------
Discontinued operations
Exit costs and impairment of long-
lived assets -- (312) n/m
Operating income (loss) -- (10,347) n/m
-------- --------
Income (loss) from discontinued
operations before income taxes -- (10,659) n/m
Income taxes -- (3,578) n/m
-------- --------
Income (loss) from discontinued
operations -- (7,081) n/m
-------- --------
Net Income $ 2,300 $ 6,456 -64.4%
======== ========
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Annual Performance Summary -- 2008 vs 2007
For the Years Ended
---------------------- Percent
12/31/2008 12/31/2007 Change
--------------------------------------------------------------------
Per Share Data
Earnings per share from continuing
operations
Basic 0.31 1.87 -83.4%
Diluted 0.31 1.85 -83.2%
Earnings per share from
discontinued operations
Basic -- (0.98) -100.0%
Diluted -- (0.97) -100.0%
Earnings per share
Basic $ 0.31 $ 0.89 -65.2%
Diluted $ 0.31 $ 0.88 -64.8%
Average shares outstanding
Basic 7,411,715 7,244,011 2.3%
Diluted 7,446,991 7,303,391 2.0%
Performance Ratios
Return on average equity 2.59% 7.34% -64.7%
Return on average equity -
continuing operations 2.59% 15.39% -83.2%
Return on average assets 0.15% 0.50% -70.0%
Return on average assets -
continuing operations 0.15% 1.04% -85.6%
Net interest margin 3.13% 3.26% -4.0%
Efficiency ratio - continuing
operations (A) 52.01% 53.00% -1.9%
NOTE: (A) - Computed on a tax equivalent basis excluding
nonrecurring income and expense items and amortization of
intangibles.
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Five Quarter Performance Summary
For the Quarter Ended
----------------------------------------------------
Dollars in
thousands 12/31/2008 9/30/2008 6/30/2008 3/31/2008 12/31/2007
---------------------------------------------------------------------
Condensed
Statements of
Income
Interest income
Loans,
including
fees $ 19,343 $ 18,527 $ 19,576 $ 20,069 $ 20,199
Securities 4,305 4,108 3,761 3,786 3,590
Other 1 2 3 4 8
-------- -------- -------- -------- --------
Total interest
income 23,649 22,637 23,340 23,859 23,797
-------- -------- -------- -------- --------
Interest expense
Deposits 7,081 6,704 6,435 7,124 7,759
Borrowings 5,190 5,549 5,530 5,796 5,697
-------- -------- -------- -------- --------
Total interest
expense 12,271 12,253 11,965 12,920 13,456
-------- -------- -------- -------- --------
Net interest
income 11,378 10,384 11,375 10,939 10,341
Provision for
loan losses 750 12,000 1,750 1,000 750
-------- -------- -------- -------- --------
Net interest
income after
provision for
loan losses 10,628 (1,616) 9,625 9,939 9,591
-------- -------- -------- -------- --------
Noninterest
income
Insurance
commissions 1,200 1,337 1,275 1,327 1,157
Service fee
income 851 828 824 743 863
Other-than-
temporary
impairment of
securities (1,024) (4,495) (1,541) -- --
Net cash
settlement on
interest rate
swaps -- -- -- (170) (183)
Change in fair
value of
interest rate
swaps -- -- -- 705 783
Other income 40 155 570 243 78
-------- -------- -------- -------- --------
Total
noninterest
income 1,067 (2,175) 1,128 2,848 2,698
-------- -------- -------- -------- --------
Noninterest
expense
Salaries and
employee
benefits 4,047 4,113 4,187 4,395 4,090
Net occupancy
expense 463 489 443 476 466
Equipment
expense 567 538 533 534 568
Professional
fees 250 173 182 118 152
Other expenses 2,534 1,972 1,804 1,566 1,634
-------- -------- -------- -------- --------
Total
noninterest
expense 7,861 7,285 7,149 7,089 6,910
-------- -------- -------- -------- --------
Income before
income taxes 3,834 (11,076) 3,604 5,698 5,379
Income taxes 277 (3,402) 1,010 1,874 1,511
-------- -------- -------- -------- --------
Income (loss)
from
continuing
operations 3,557 (7,674) 2,594 3,824 3,868
-------- -------- -------- -------- --------
Discontinued
operations
Exit costs and
impairment of
long-lived
assets -- -- -- -- (435)
Operating
income (loss) -- -- -- -- (9,549)
-------- -------- -------- -------- --------
Income (loss)
from
discontinued
operations
before income
taxes -- -- -- -- (9,984)
Income taxes -- -- -- -- (3,347)
-------- -------- -------- -------- --------
Income (loss)
from
discontinued
operations -- -- -- -- (6,637)
-------- -------- -------- -------- --------
Net Income
(loss) $ 3,557 $ (7,674) $ 2,594 $ 3,824 $ (2,769)
======== ======== ======== ======== ========
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Five Quarter Performance Summary
For the Quarter Ended
--------------------------------------------------------
12/31/2008 9/30/2008 6/30/2008 3/31/2008 12/31/2007
---------------------------------------------------------------------
Per Share Data
Earnings per
share from
continuing
operations
Basic $ 0.48 $ (1.04) $ 0.35 $ 0.52 $ 0.52
Diluted $ 0.48 $ (1.03) $ 0.35 $ 0.51 $ 0.52
Earnings per
share from
discontinued
operations
Basic $ -- $ -- $ -- $ -- $ (0.89)
Diluted $ -- $ -- $ -- $ -- $ (0.89)
Earnings per
share
Basic $ 0.48 $ (1.04) $ 0.35 $ 0.52 $ (0.37)
Diluted $ 0.48 $ (1.03) $ 0.35 $ 0.51 $ (0.37)
Average
shares
outstanding
Basic 7,411,577 7,410,791 7,410,217 7,408,941 7,401,684
Diluted 7,434,643 7,445,242 7,448,170 7,449,105 7,450,049
Performance
Ratios
Return on
average
equity 17.08% -34.71% 11.16% 16.55% -11.62%
Return on
average
equity -
continuing
operations 17.08% -34.71% 11.16% 16.55% 16.23%
Return on
average
assets 0.89% -1.99% 0.70% 1.06% -0.81%
Return on
average
assets -
continuing
operations 0.89% -1.99% 0.70% 1.06% 1.13%
Net interest
margin 3.04% 2.89% 3.33% 3.28% 3.24%
Efficiency
ratio -
continuing
operations
(A) 51.72% 54.52% 49.87% 52.11% 53.03%
NOTE: (A) - Computed on a tax equivalent basis excluding
nonrecurring income and expense items and amortization of
intangibles.
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Selected Balance Sheet Data
Dollars in
thousands,
except per For the Quarter Ended
share ------------------------------------------------------
amounts 12/31/2008 9/30/2008 6/30/2008 3/31/2008 12/31/2007
-------------------------------------------------------------------
Assets $1,627,066 $1,567,325 $1,525,978 $1,465,110 $1,435,536
Securities 350,622 327,648 307,232 302,029 300,066
Loans, net 1,192,157 1,145,606 1,130,483 1,079,223 1,052,489
Intangible
assets 9,704 9,792 9,880 9,968 10,055
Retail
deposits 669,261 663,569 634,007 652,148 652,296
Brokered
time
deposits 296,589 281,655 223,742 184,796 176,391
Short-term
borrow-
ings 153,100 98,316 147,900 93,950 172,055
Long-term
borrow-
ings and
sub-
ordinated
deben-
tures 412,337 434,016 419,775 431,918 335,327
Share-
holders'
equity 87,244 80,510 91,466 91,955 89,420
Book value
per share $ 11.77 $ 10.86 $ 12.34 $ 12.41 $ 12.06
Tangible
book
value per
share $ 10.46 $ 9.54 $ 11.01 $ 11.07 $ 10.70
Tangible
equity /
Tangible
assets 4.8% 4.5% 5.4% 5.6% 5.6%
Tier 1
leverage
ratio 6.2% 6.2% 7.0% 7.8% 7.3%
SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Loan Composition
Dollars in
thousands 12/31/2008 9/30/2008 6/30/2008 3/31/2008 12/31/2007
--------------------------------------------------------------------
Commercial $ 130,106 $ 115,106 $ 112,793 $ 111,442 $ 92,599
Commercial
real estate 452,264 423,982 415,187 394,619 384,478
Construction
and
development 215,465 225,582 217,623 211,052 225,270
Residential
real estate 376,026 366,989 361,009 336,985 322,640
Consumer 31,519 31,433 30,361 30,206 31,956
Other 6,061 6,240 6,206 6,395 6,641
---------- ---------- ---------- ---------- ----------
Total loans 1,211,441 1,169,332 1,143,179 1,090,699 1,063,584
Less unearned
fees and
interest 2,351 2,293 2,347 1,878 1,903
---------- ---------- ---------- ---------- ----------
Total loans
net of
unearned fees
and interest 1,209,090 1,167,039 1,140,832 1,088,821 1,061,681
Less allowance
for loan
losses 16,933 21,433 10,349 9,598 9,192
---------- ---------- ---------- ---------- ----------
Loans, net $1,192,157 $1,145,606 $1,130,483 $1,079,223 $1,052,489
========== ========== ========== ========== ==========
SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Retail Deposit Composition
Dollars in
thousands
12/31/2008 9/30/2008 6/30/2008 3/31/2008 12/31/2007
---------------------------------------------------------------------
Non interest
bearing
checking $ 69,808 $ 70,353 $ 68,912 $ 64,111 $ 65,727
Interest
bearing
checking 156,990 182,383 194,255 201,820 222,825
Savings 61,688 58,678 60,245 53,427 40,845
Time deposits 380,775 352,155 310,595 332,790 322,899
-------- -------- -------- -------- --------
Total
retail
deposits $669,261 $663,569 $634,007 $652,148 $652,296
======== ======== ======== ======== ========
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Asset Quality Information
For the Quarter Ended
------------------------------------------------------
Dollars in
thousands 12/31/2008 9/30/2008 6/30/2008 3/31/2008 12/31/2007
--------------------------------------------------------------------
Gross loan
charge-offs $ 5,351 $ 969 $ 1,079 $ 646 $ 332
Gross loan
recoveries (102) (52) (80) (52) (47)
-------- -------- -------- -------- --------
Net loan
charge-offs $ 5,249 $ 917 $ 999 $ 594 $ 285
======== ======== ======== ======== ========
Net loan
charge-offs
to average
loans
(annualized) 1.75% 0.32% 0.36% 0.22% 0.11%
Allowance for
loan losses $ 16,933 $ 21,433 $ 10,349 $ 9,598 $ 9,192
Allowance for
loan losses
as a
percentage
of period
end loans 1.40% 1.87% 0.91% 0.88% 0.86%
Nonperforming
assets:
Nonperforming
loans $ 47,969 $ 59,845 $ 15,614 $ 13,957 $ 10,333
Foreclosed
properties
and other
repossessed
assets 8,113 2,284 2,546 2,205 2,058
-------- -------- -------- -------- --------
Total $ 56,082 $ 62,129 $ 18,160 $ 16,162 $ 12,391
======== ======== ======== ======== ========
Nonperforming
loans to
period end
loans 3.97% 5.13% 1.37% 1.28% 0.97%
======== ======== ======== ======== ========
Nonperforming
assets to
period end
assets 3.45% 3.96% 1.19% 1.11% 0.86%
======== ======== ======== ======== ========
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Nonperforming Loans
For the Quarter Ended
------------------------------------------------------
Dollars in
thousands 12/31/2008 9/30/2008 6/30/2008 3/31/2008 12/31/2007
--------------------------------------------------------------------
Commercial $ 199 $ 140 $ 81 $ 695 $ 716
Commercial
real estate 24,323 27,347 3,184 5,095 4,346
Construction
and
development 18,382 29,127 6,460 3,694 2,016
Residential
real estate 4,986 2,799 5,521 4,247 3,012
Consumer 79 432 368 226 243
-------- -------- -------- -------- --------
Total $ 47,969 $ 59,845 $ 15,614 $ 13,957 $ 10,333
======== ======== ======== ======== ========
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Loans Past Due 30-89 Days
For the Quarter Ended
------------------------------------------------------
Dollars in
thousands 12/31/2008 9/30/2008 6/30/2008 3/31/2008 12/31/2007
--------------------------------------------------------------------
Commercial $ 114 $ 706 $ 1,089 $ 321 $ 264
Commercial
real estate 195 1,407 24,606 1,249 1,604
Construction
and
development 2,722 1,996 9,919 1,059 997
Residential
real estate 5,009 8,537 2,962 3,792 4,485
Consumer 824 1,140 979 946 1,335
-------- -------- -------- -------- --------
Total $ 8,864 $ 13,786 $ 39,555 $ 7,367 $ 8,685
======== ======== ======== ======== ========
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q4 2008 vs Q4 2007
Q4 2008
------------------------------------
Average Earnings / Yield /
Dollars in thousands Balances Expense Rate
---------------------------------------------------------------------
ASSETS
Interest earning assets
Loans, net of unearned
interest
Taxable $ 1,188,368 $ 19,232 6.44%
Tax-exempt 8,174 168 8.18%
Securities
Taxable 287,789 3,786 5.23%
Tax-exempt 47,062 786 6.64%
Interest bearing deposits
other banks and Federal
funds sold 305 1 1.30%
------------ ---------- -----
Total interest earning assets 1,531,698 23,973 6.23%
Noninterest earning assets
Cash & due from banks 20,799
Premises & equipment 22,441
Other assets 45,152
Allowance for loan losses (21,191)
------------
Total assets $ 1,598,899
============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing demand
deposits $ 165,705 $ 283 0.68%
Savings deposits 58,444 240 1.63%
Time deposits 663,789 6,558 3.93%
Short-term borrowings 118,801 231 0.77%
Long-term borrowings and
subordinated debentures 422,996 4,959 4.66%
------------ ---------- -----
1,429,735 12,271 3.41%
Noninterest bearing liabilities
Demand deposits 78,180
Other liabilities 7,675
------------
Total liabilities 1,515,590
Shareholders' equity 83,309
------------
Total liabilities and
shareholders' equity $ 1,598,899
============
NET INTEREST EARNINGS $ 11,702
==========
NET INTEREST YIELD ON EARNING
ASSETS 3.04%
=====
Q4 2007
------------------------------------
Average Earnings / Yield /
Dollars in thousands Balances Expense Rate
---------------------------------------------------------------------
ASSETS
Interest earning assets
Loans, net of unearned
interest
Taxable $ 1,015,397 $ 20,075 7.84%
Tax-exempt 9,259 188 8.06%
Securities
Taxable 234,444 3,008 5.09%
Tax-exempt 49,760 870 6.94%
Interest bearing deposits
other banks and Federal
funds sold 479 9 7.45%
------------ ---------- -----
Total interest earning assets 1,309,339 24,150 7.32%
Noninterest earning assets
Cash & due from banks 14,391
Premises & equipment 22,092
Other assets 35,362
Allowance for loan losses (9,033)
------------
Total assets $ 1,372,151
============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing demand
deposits $ 225,686 $ 1,575 2.77%
Savings deposits 38,706 145 1.49%
Time deposits 487,609 6,039 4.91%
Short-term borrowings 147,144 1,724 4.65%
Long-term borrowings and
subordinated debentures 299,420 3,973 5.26%
------------ ---------- -----
1,198,565 13,456 4.45%
Noninterest bearing liabilities
Demand deposits 68,123
Other liabilities 10,131
------------
Total liabilities 1,276,819
Shareholders' equity 95,332
------------
Total liabilities and
shareholders' equity $ 1,372,151
============
NET INTEREST EARNINGS $ 10,694
==========
NET INTEREST YIELD ON EARNING
ASSETS 3.24%
=====
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and
Average Rates
YTD 2008 vs YTD 2007
For the Years Ended December 31,
--------------------------------
2008
--------------------------------
Average Earnings / Yield /
Dollars in thousands Balances Expense Rate
---------------------------------------------------------------------
ASSETS
Interest earning assets
Loans, net of unearned interest
Taxable $1,127,808 $77,055 6.83%
Tax-exempt 8,528 697 8.17%
Securities
Taxable 264,667 13,707 5.18%
Tax-exempt 49,953 3,380 6.77%
Interest bearing deposits other
banks and Federal funds sold 370 8 2.16%
---------- ------- ----
Total interest earning assets 1,451,326 94,847 6.54%
Noninterest earning assets
Cash & due from banks 18,792
Premises & equipment 22,154
Other assets 38,760
Allowance for loan losses (12,980)
----------
Total assets $1,518,052
==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing demand deposits $ 190,066 $ 2,416 1.27%
Savings deposits 55,554 908 1.63%
Time deposits 568,491 24,019 4.23%
Short-term borrowings 112,383 2,392 2.13%
Long-term borrowings and
subordinated debentures 419,454 19,674 4.69%
---------- ------- ----
1,345,948 49,409 3.67%
Noninterest bearing liabilities
Demand deposits 75,165
Other liabilities 7,976
----------
Total liabilities 1,429,089
Shareholders' equity 88,963
----------
Total liabilities and
shareholders' equity $1,518,052
==========
NET INTEREST EARNINGS $45,438
=======
NET INTEREST YIELD ON EARNING ASSETS 3.13%
====
For the Years Ended December 31,
--------------------------------
2007
--------------------------------
Average Earnings / Yield /
Dollars in thousands Balances Expense Rate
---------------------------------------------------------------------
ASSETS
Interest earning assets
Loans, net of unearned interest
Taxable $ 963,116 $77,510 8.05%
Tax-exempt 9,270 738 7.96%
Securities
Taxable 219,605 11,224 5.11%
Tax-exempt 47,645 3,289 6.90%
Interest bearing deposits other
banks and Federal funds sold 1,011 51 5.04%
---------- ------- ----
Total interest earning assets 1,240,647 92,812 7.48%
Noninterest earning assets
Cash & due from banks 14,104
Premises & equipment 22,179
Other assets 30,795
Allowance for loan losses (8,683)
----------
Total assets $1,299,042
==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing demand deposits $ 227,014 $ 7,695 3.39%
Savings deposits 42,254 706 1.67%
Time deposits 524,389 25,895 4.94%
Short-term borrowings 95,437 4,822 5.05%
Long-term borrowings and
subordinated debentures 245,937 13,199 5.37%
---------- ------- ----
1,135,031 52,317 4.61%
Noninterest bearing liabilities
Demand deposits 65,060
Other liabilities 11,000
----------
Total liabilities 1,211,091
Shareholders' equity 87,951
----------
Total liabilities and shareholders'
equity $1,299,042
==========
NET INTEREST EARNINGS $40,495
=======
NET INTEREST YIELD ON EARNING ASSETS 3.26%
====
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Reconciliation of Non-GAAP Financial Measures to GAAP Financial
Measures
For the Quarter Ended For the Years Ended
----------------------------------------------
Dollars in
thousands (except
per share amounts) 12/31/2008 12/31/2007 12/31/2008 12/31/2007
---------------------------------------------------------------------
Income from continuing
operations - excluding
other- than- temporary
charge on securities
and change in fair
value of interest rate
swaps $ 4,202 $ 3,375 $ 6,304 $12,606
Other-than-temporary
impairment charge
on securities (1,024) -- (7,060) --
Applicable income
tax effect 379 -- 2,612 --
Change in fair value
of interest rate
swaps -- 783 705 1,478
Applicable income
tax effect -- (290) (261) (547)
--------- ------- ------- -------
(645) 493 (4,004) 931
--------- ------- ------- -------
GAAP income from
continuing operations $ 3,557 $ 3,868 $ 2,300 $13,537
========= ======= ======= =======
Diluted earnings per
share from continuing
operations - excluding
other-than-temporary
impairment charge
on securities $ 0.57 $ 0.45 $ 0.85 $ 1.72
Other-than-temporary
impairment charge
on securities (0.14) -- (0.95) --
Applicable income
tax effect 0.05 -- 0.35 --
Change in fair value
of interest rate
swaps -- 0.11 0.09 0.20
Applicable income
tax effect -- (0.04) (0.03) (0.07)
--------- ------- ------- -------
(0.09) 0.07 (0.54) 0.13
--------- ------- ------- -------
GAAP diluted earnings
per share $ 0.48 $ 0.52 $ 0.31 $ 1.85
========= ======= ======= =======
Total revenue -
excluding other-than-
temporary impairment
charge on securities
and change in fair
value of interest
rate swaps $13,469 $12,256 $53,298 $44,946
Other-than-temporary
impairment charge
on securities (1,024) -- (7,060) --
Change in fair
value of interest
rate swaps -- 783 705 1,478
--------- ------- ------- -------
(1,024) 783 (6,355) 1,478
--------- ------- ------- -------
GAAP total revenue $12,445 $13,039 $46,943 $46,424
========= ======= ======= =======
Non-interest income -
excluding other-than-
temporary impairment
charge on securities
and change in fair
value of interest rate
swaps $ 2,091 $ 1,915 $ 9,223 $ 5,879
Other-than-temporary
impairment charge on
securities (1,024) -- (7,060) --
Change in fair value
of interest rate
swaps -- 783 705 1,478
--------- ------- ------- -------
(1,024) 783 (6,355) 1,478
--------- ------- ------- -------
GAAP non-interest
income $ 1,067 $ 2,698 $ 2,868 $ 7,357
========= ======= ======= =======