MOOREFIELD, W.V., Jan. 31, 2008 (PRIME NEWSWIRE) -- Summit Financial Group, Inc. (Nasdaq:SMMF) today reported fiscal year and fourth quarter 2007 financial results from continuing operations, which excludes from income substantially all business activities of Summit Mortgage, its residential mortgage loan origination unit, which ceased operations in January 2007. Income from continuing operations for 2007 was $13.5 million or $1.85 per diluted share, an increase of 22.4 percent and 20.1 percent, respectively, compared with $11.1 million or $1.54 per diluted share reported for the prior-year. Excluding mark-to-market changes in fair value of interest rate swaps, income from continuing operations was $12.6 million for 2007 compared to $11.1 million for 2006. 2007 results from continuing operations reflect strong loan growth, well-controlled operating expenses and a stable net interest margin year-over-year.
For the fourth quarter of 2007, Summit's income from continuing operations was $3.9 million or $0.52 per diluted share compared with the $2.7 million or $0.39 per diluted share reported for the prior-year quarter, an increase of 40.7 percent and 33.3 percent, respectively. Excluding mark-to-market changes in fair value of interest rate swaps, fourth quarter 2007 income from continuing operations was $3.4 million compared to $2.7 million for the same period in 2006.
H. Charles Maddy, III, president and chief executive officer of Summit, commented, "This has not been an easy year for the banking industry, and we include Summit in that statement. We continue to perform well by virtue of our strong markets, our conservative loan and administration policies, and the dedication of our staff. We are expanding successfully in a weak banking environment, keeping our expenses in check and our revenues growing proportionately to our asset size. We are seeing some signs of weakness in our loan portfolio, but so far, these have been at a manageable level."
Highlights of the year include:
* Settlement of the Corinthian Mortgage litigation in Q4
* Completion of the acquisition of the Kelly Agencies in Q3
* Agreement to acquire Greater Atlantic Financial Corp. in Q2; plan to close in Q1 '08
* Consolidation of our two subsidiary banks under the "Summit Community Bank" name in Q2
Mr. Maddy continued, "The big news for us in 2007 is that we have completely exited from our mortgage banking business following settlement of litigation that carried a high price. However, we are relieved to be rid of the uncertainties that have compromised our ability to focus on our core banking business. We are ready to move ahead to close and consolidate our acquisition of Greater Atlantic in the first quarter of 2008. We are confident of our ability to run an outstanding community bank, and Greater Atlantic represents an extension of our core expertise.
"Our accomplishments this past year position us well for continued growth. We consolidated our two banks into one, unifying our brand and improving our operating efficiency. We completed the acquisition of the Kelly Agencies, two Leesburg, Virginia-based insurance agencies primarily specializing in group health, life and disability benefit plans. This acquisition is already performing well for us, generating approximately $1 million of commission revenue per quarter. Next on our agenda is the completion of the Greater Atlantic acquisition, consisting of five branches in some of the highest growth and wealthiest markets in the country. We anticipate closing on the Greater Atlantic acquisition during the first quarter of 2008."
Consolidated net income for 2007 was $6.5 million or $0.88 per diluted share, compared with $8.3 million or $1.15 per diluted share reported for 2006, a decline of 21.8 percent and 23.5 percent, respectively. 2007 consolidated results include a loss from discontinued operations related to Summit Mortgage of $7.1 million, or $0.97 per diluted share, which includes a $5.8 million after-tax charge to settle the Corinthian litigation. 2006 results include a loss from discontinued operations of $2.8 million, or $0.39 per diluted share.
On a consolidated basis, Summit reported a fourth quarter 2007 net loss of $2.8 million, or $0.37 per diluted share, compared with net income of $207,000, or $0.03 per diluted share for the prior-year fourth quarter. Consolidated results for the fourth quarter also reflect the above-mentioned 2007 litigation settlement and a charge to terminate the mortgage company in 2006.
For 2007, the returns on average shareholders' equity and average assets from continuing operations calculated in accordance with GAAP were 15.39 percent and 1.04 percent, respectively, compared with prior-year ratios of 13.99 percent and 0.94 percent. Fourth quarter 2007 returns on average shareholders' equity and average assets from continuing operations were 16.23 percent and 1.13 percent, respectively, compared with prior-year ratios of 13.37 percent and 0.89 percent.
Total revenues for 2007 were $46.4 million, consisting of $39.0 million of net interest income plus $7.4 million of noninterest income, an increase of 17.4 percent compared to total revenues of $39.5 million in 2006. Net interest income for the year increased 8.8 percent above 2006, reflecting 10.7 percent growth in average earning assets, partially offset by a 12 basis point decline in the net interest margin, to 3.26 percent.
Total revenue for the fourth quarter of 2007 was $13.0 million, up 26.3 percent from fourth quarter 2006 revenue of $10.3 million. Net interest income was $10.3 million, up 10.3 percent from the year-ago quarter, from the combined impact of an 11.6 percent increase in average earning assets and an eight basis point decline in the net interest margin, to 3.24 percent. Mr. Maddy commented, "Unlike many community banks, Summit's balance sheet is liability-sensitive, and in this sharply declining interest-rate environment, our net interest margin should strengthen. Competitive pressures from loan and deposit pricing still remain formidable, but with respect to loan pricing, some of our competitors are just not quite as competitive as they were in the past."
Mr. Maddy added, "Our fee-based revenue has been growing solidly. Service fee income is growing incrementally each quarter, and the contribution of insurance commissions surged to approximately 50 percent of noninterest income this quarter (excluding the impact of interest rate swaps from noninterest income). We completed our acquisition of the Kelly Insurance Agencies on July 2, 2007, and for each of the two most recent 2007 quarters, insurance commissions increased by $1 million per quarter."
For 2007, noninterest income was $7.4 million, up $3.7 million or 102.5 percent from the $3.6 million reported for fiscal 2006. Excluding changes in fair value of interest rate swaps and the net cash settlement of interest on these swaps from fiscal 2007 and 2006, and further excluding the $2.1 million of insurance revenues from the Kelly Agencies acquisition, noninterest income from organic sources was $4.5 million, up $249,000 or 5.8 percent above fiscal 2006. Service fee income increased $246,000, or 8.9 percent, to $3.0 million, compared to $2.8 million for the prior-year. For the fourth quarter of 2007, noninterest income was $2.7 million, up $1.8 million from the $946,000 recorded for the year-ago quarter. Service fee income increased $161,000, or 22.9 percent, to $863,000 for fourth quarter of 2007.
2007 noninterest expense was $25.1 million, a 16.1 percent, or $3.5 million increase over the $21.6 million record for the previous fiscal year. Salaries and benefits accounted for 79.9 percent of the increase, increasing $2.8 million, or 23.6 percent, to $14.6 million for the year; 2007 results include the addition of 34 employees associated with the acquisition of the Kelly Agencies. The efficiency ratio for continuing operations was 53.00 percent for 2007, compared with 52.15 percent for 2006. For the fourth quarter of 2007, noninterest expense was $6.9 million, up 30.4 percent or $1.6 million from the fourth quarter of 2006, and 1.3 percent or $90,000 from the linked quarter. The efficiency ratio (for continuing operations) was 53.03 percent for the fourth quarter of 2007, compared with 49.61 percent for the prior-year fourth quarter, and 53.91 percent for the linked quarter.
Assets at December 31, 2007 were $1.44 billion, an increase of $200.0 million, or 16.2 percent, over the prior-year period. Loans, net of unearned income, were $1.06 billion at period end, up $138.1 million, or 15.0 percent, year over year. Loan growth was distributed across virtually every loan category (except consumer loans); however, commercial real estate (CRE) loans, the largest loan category at 36.1 percent of the portfolio, was also the driver of 2007 loan growth, up $70.3 million year-over-year; CRE contributed approximately 50 percent of total loan growth for the year. Residential real estate, the second largest loan category at 30.3 percent, contributed approximately $40 million of loan growth, mostly in the second half of the year. Growth of construction and development loans slowed substantially this year with only a $9.5 million increase, its portfolio share reduced to 21.2 percent from 23.3 percent at year-end 2006.
At December 31, 2007, nonperforming assets were $12.4 million, or 0.86 percent of total assets, compared with $7.7 million, or 0.58 percent for the linked quarter and $5.4 million, or 0.43 percent for the year-ago quarter. Residential real estate loans account for approximately $4.9 million of nonperforming assets, and construction and development loans - largely residential - accounted for an additional $2.0 million. Commercial real estate loans totaled approximately $2.5 million of nonperforming assets. Mr. Maddy noted, "Although our level of nonperforming assets has doubled as a percent of total assets over the course of the past year, we believe our loans are solidly underwritten and supported by real property that should retain its value better than in many markets. Anticipated population growth should serve to absorb the additional housing inventory within a reasonable timeframe. A bright spot has been the CRE portfolio, which has performed well and has yet to demonstrate substantial signs of weakness."
For the current quarter, the Company had net charge-offs of $285,000, or an annualized 0.11 percent of average loans, compared with $566,000, or an annualized 0.23 percent for the linked quarter, and $263,000, or 0.11 percent annualized for the year earlier period. Mr. Maddy commented, "We experienced very low charge-offs on loans that are part of our continuing operations. Approximately $464,000 of charge-offs during the year were loans made by Summit Mortgage; when we discontinued its operations earlier this year, we were obligated to provide recourse for up to one year with respect to nonperforming previously sold loans. We reserved accordingly, and the obligation period will end in first quarter 2008. At December 31, 2007, loan loss reserves were 0.86 percent of loans outstanding.
Total deposits at December 31, 2007 were $828.7 million compared with $888.7 million at the prior year-end, a decrease of $60 million or 6.8 percent. Brokered deposits declined by $103.2 million or 36.9 percent over the past year, to $176.4 million at December 31, 2007, while Summit's retail deposit portfolio increased by $43.2 million, or 7.1 percent, to $652.3 million at year-end 2007. Retail deposits now account for 78.7 percent of total deposits, compared with 68.5 percent at year end 2006.
Shareholders' equity at December 31, 2007 was $89.4 million, an increase of 13.5 percent over the last twelve months. Common shares outstanding totaled 7,408,941 at year-end, compared with 7,089,680 for the prior-year end. The increase includes the issuance of approximately 318,000 shares during the third quarter of 2007 for the acquisition of the Kelly Agencies.
ABOUT THE COMPANY
Summit Financial Group, Inc., a financial holding company with total assets of $1.44 billion, operates fifteen banking locations through its wholly-owned community bank, Summit Community Bank. Summit also operates Summit Insurance Services, LLC.
The Summit Financial Group, Inc. logo is available at http://www.primezone.com/newsroom/prs/?pkgid=2990
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 changes in fair value of interest rate swaps included in its Statements of Income . Management believes presentations of financial measures excluding the impact of this item 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.
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 economy. We undertake no obligation to revise these statements following the date of this press release.
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary -- Q4 2007 vs Q4 2006
For the Quarter Ended
---------------------- Percent
Dollars in thousands 12/31/2007 12/31/2006 Change
-----------------------------------------------------------------
Condensed Statements of Income
Interest income
Loans, including fees $ 20,199 $ 18,746 7.8%
Securities 3,590 3,131 14.7%
Other 8 7 14.3%
-------- --------
Total interest income 23,797 21,884 8.7%
-------- --------
Interest expense
Deposits 7,759 8,990 -13.7%
Borrowings 5,697 3,518 61.9%
-------- --------
Total interest expense 13,456 12,508 7.6%
-------- --------
Net interest income 10,341 9,376 10.3%
Provision for loan losses 750 930 -19.4%
-------- --------
Net interest income after
provision for loan losses 9,591 8,446 13.6%
-------- --------
Noninterest income
Insurance commissions 1,157 228 407.5%
Service fee income 863 702 22.9%
Securities gains (losses) -- -- n/a
Net cash settlement on
interest rate swaps (183) (197) -7.1%
Change in fair value of
interest rate swaps 783 50 1466.0%
Other income 78 163 -52.1%
-------- --------
Total noninterest income 2,698 946 185.2%
-------- --------
Noninterest expense
Salaries and employee benefits 4,090 2,899 41.1%
Net occupancy expense 466 378 23.3%
Equipment expense 568 480 18.3%
Professional fees 152 252 -39.7%
Other expenses 1,634 1,291 26.6%
-------- --------
Total noninterest expense 6,910 5,300 30.4%
-------- --------
Income from continuing
operations before income taxes 5,379 4,092 31.5%
Income taxes 1,511 1,343 12.5%
-------- --------
Income from continuing
operations 3,868 2,749 40.7%
-------- --------
Discontinued operations
Exit costs and impairment
of long-lived assets (435) (2,480) -82.5%
Operating income (loss) (9,549) (1,373) 595.5%
-------- --------
Income (loss) from discontinued
operations before income taxes (9,984) (3,853) 159.1%
Income taxes (3,347) (1,311) 155.3%
-------- --------
Income (loss) from dis-
continued operations (6,637) (2,542) 161.1%
-------- --------
Net Income $ (2,769) $ 207 -1437.7%
======== ========
Per Share Data
Earnings per share from
continuing operations
Basic $ 0.52 $ 0.39 33.3%
Diluted $ 0.52 $ 0.39 33.3%
Earnings per share from dis-
continued operations
Basic $ (0.89) $ (0.36) 147.2%
Diluted $ (0.89) $ (0.36) 147.2%
Earnings per share
Basic $ (0.37) $ 0.03 -1333.3%
Diluted $ (0.37) $ 0.03 -1333.3%
Average shares outstanding
Basic 7,401,684 7,091,560 4.4%
Diluted 7,450,049 7,150,407 4.2%
Performance Ratios
Return on average equity -11.62% 1.01% -1250.5%
Return on average equity
- continuing operations 16.23% 13.37% 21.4%
Return on average assets -0.81% 0.07% -1257.1%
Return on average assets
- continuing operations 1.13% 0.89% 27.0%
Net interest margin 3.24% 3.32% -2.4%
Efficiency ratio - continuing
operations (A) 53.03% 49.61% 6.9%
NOTE: (A) - Computed on a tax equivalent basis excluding nonrecurring
income and expense items, amortization of intangibles, and changes in
fair value of derivatives.
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Annual Performance Summary -- 2007 vs 2006
For the Years Ended
------------------------ Percent
Dollars in thousands 12/31/2007 12/31/2006 Change
---------------------------------------------------------------------
Condensed Statements of Income
Interest income
Loans, including fees $ 77,911 $ 68,656 13.5%
Securities 13,422 11,562 16.1%
Other 51 60 -15.0%
--------- ---------
Total interest income 91,384 80,278 13.8%
--------- ---------
Interest expense
Deposits 34,296 28,312 21.1%
Borrowings 18,021 16,067 12.2%
--------- ---------
Total interest expense 52,317 44,379 17.9%
--------- ---------
Net interest income 39,067 35,899 8.8%
Provision for loan losses 2,055 1,845 11.4%
--------- ---------
Net interest income after
provision for loan losses 37,012 34,054 8.7%
--------- ---------
Noninterest income
Insurance commissions 2,876 924 211.3%
Service fee income 3,004 2,758 8.9%
Securities gains (losses) -- -- --
Net cash settlement on interest
rate swaps (727) (533) 36.4%
Change in fair value of interest
rate swaps 1,478 (91) -1724.2%
Other income 726 575 26.3%
--------- ---------
Total noninterest income 7,357 3,633 102.5%
--------- ---------
Noninterest expense
Salaries and employee benefits 14,608 11,821 23.6%
Net occupancy expense 1,758 1,557 12.9%
Equipment expense 2,004 1,901 5.4%
Professional fees 695 892 -22.1%
Other expenses 6,033 5,438 10.9%
--------- ---------
Total noninterest expense 25,098 21,609 16.1%
--------- ---------
Income from continuing operations
before income taxes 19,271 16,078 19.9%
Income taxes 5,734 5,018 14.3%
--------- ---------
Income from continuing
operations 13,537 11,060 22.4%
--------- ---------
Discontinued operations
Exit costs and impairment of
long-lived assets (312) (2,480) -87.4%
Operating income (loss) (10,347) (1,750) 491.3%
--------- ---------
Income (loss) from discontinued
operations before income taxes (10,659) (4,230) 152.0%
Income taxes (3,578) (1,427) 150.7%
--------- ---------
Income (loss) from dis-
continued operations (7,081) (2,803) 152.6%
--------- ---------
Net Income $ 6,456 $ 8,257 -21.8%
========= =========
Per Share Data
Earnings per share from continuing
operations
Basic 1.87 $ 1.55 20.6%
Diluted 1.85 $ 1.54 20.1%
Earnings per share from dis-
continued operations
Basic (0.98) $ (0.39) 151.3%
Diluted (0.97) $ (0.39) 148.7%
Earnings per share
Basic $ 0.89 $ 1.16 -23.3%
Diluted $ 0.88 $ 1.15 -23.5%
Average shares outstanding
Basic 7,244,011 7,120,518 1.7%
Diluted 7,303,391 7,183,281 1.7%
Performance Ratios
Return on average equity 7.34% 10.44% -29.7%
Return on average equity
- continuing operations 15.39% 13.99% 10.0%
Return on average assets 0.50% 0.70% -28.6%
Return on average assets
- continuing operations 1.04% 0.94% 10.6%
Net interest margin 3.26% 3.38% -3.6%
Efficiency ratio - continuing
operations (A) 53.00% 52.15% 1.6%
NOTE: (A) - Computed on a tax equivalent basis excluding nonrecurring
income and expense items, amortization of intangibles, and changes in
fair value of derivatives.
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Five Quarter Performance Summary
Dollars in thousands
For the Quarter Ended
-----------------------------------------------------
12/31/07 9/30/07 6/30/07 3/31/07 12/31/06
---------------------------------------------------------------------
Condensed Statements
of Income
Interest income
Loans, including
fees $ 20,199 $ 19,921 $ 19,079 $ 18,712 $ 18,746
Securities 3,590 3,446 3,263 3,124 3,131
Other 8 9 27 6 7
--------- --------- --------- --------- ---------
Total
interest
income 23,797 23,376 22,369 21,842 21,884
--------- --------- --------- --------- ---------
Interest expense
Deposits 7,759 8,627 8,882 9,028 8,990
Borrowings 5,697 4,753 3,960 3,611 3,518
--------- --------- --------- --------- ---------
Total
interest
expense 13,456 13,380 12,842 12,639 12,508
--------- --------- --------- --------- ---------
Net interest
income 10,341 9,996 9,527 9,203 9,376
Provision for
loan losses 750 525 390 390 930
--------- --------- --------- --------- ---------
Net interest
income after
provision for
loan losses 9,591 9,471 9,137 8,813 8,446
--------- --------- --------- --------- ---------
Noninterest income
Insurance
commissions 1,157 1,303 209 206 228
Service fee
income 863 788 736 617 702
Securities
gains (losses) -- -- -- -- --
Net cash settle-
ment on interest
rate swaps (183) (181) (179) (184) (197)
Change in fair
value of
interest rate
swaps 783 752 (273) 227 50
Other income 78 244 203 191 163
--------- --------- --------- --------- ---------
Total non-
interest
income 2,698 2,906 696 1,057 946
--------- --------- --------- --------- ---------
Noninterest expense
Salaries and
employee
benefits 4,090 4,054 3,238 3,226 2,899
Net occupancy
expense 466 466 408 418 378
Equipment
expense 568 496 493 446 480
Professional
fees 152 176 193 174 252
Other expenses 1,634 1,628 1,386 1,385 1,291
--------- --------- --------- --------- ---------
Total non-
interest
expense 6,910 6,820 5,718 5,649 5,300
--------- --------- --------- --------- ---------
Income before
income taxes 5,379 5,557 4,115 4,221 4,092
Income taxes 1,511 1,802 1,135 1,286 1,343
--------- --------- --------- --------- ---------
Income from
continuing
operations 3,868 3,755 2,980 2,935 2,749
--------- --------- --------- --------- ---------
Discontinued
operations
Exit costs
and impairment
of long-lived
assets (435) -- 43 80 (2,480)
Operating
income
(loss) (9,549) (200) (227) (372) (1,373)
--------- --------- --------- --------- ---------
Income (loss)
from discontinued
operations before
income taxes (9,984) (200) (184) (292) (3,853)
Income taxes (3,347) (69) (66) (97) (1,311)
--------- --------- --------- --------- ---------
Income (loss)
from discon-
tinued opera-
tions (6,637) (131) (118) (195) (2,542)
--------- --------- --------- --------- ---------
Net Income $ (2,769) $ 3,624 $ 2,862 $ 2,740 $ 207
========= ========= ========= ========= =========
Per Share Data
Earnings per
share from con-
tinuing opera-
tions
Basic $ 0.52 $ 0.51 $ 0.42 $ 0.41 $ 0.39
Diluted $ 0.52 $ 0.50 $ 0.42 $ 0.41 $ 0.39
Earnings per
share from
discontinued
operations
Basic $ (0.89) $ (0.02) $ (0.02) $ (0.03) $ (0.36)
Diluted $ (0.89) $ (0.02) $ (0.02) $ (0.03) $ (0.36)
Earnings per
share
Basic $ (0.37) $ 0.49 $ 0.40 $ 0.38 $ 0.03
Diluted $ (0.37) $ 0.48 $ 0.40 $ 0.38 $ 0.03
Average shares
outstanding
Basic 7,401,684 7,399,213 7,084,980 7,084,980 7,091,560
Diluted 7,450,049 7,458,515 7,148,241 7,147,170 7,150,407
Performance Ratios
Return on average
equity -11.62% 16.13% 13.59% 13.40% 1.01%
Return on average
equity - con-
tinuing opera-
tions 16.23% 16.71% 14.15% 14.35% 13.37%
Return on average
assets -0.81% 1.11% 0.91% 0.88% 0.07%
Return on average
assets - con-
tinuing opera-
tions 1.13% 1.15% 0.94% 0.94% 0.89%
Net interest
margin 3.24% 3.28% 3.28% 3.26% 3.32%
Efficiency ratio
- continuing
operations (A) 53.03% 53.91% 51.46% 53.50% 49.61%
NOTE: (A) - Computed on a tax equivalent basis excluding nonrecurring
income and expense items, amortization of intangibles, and changes in
fair value of derivatives.
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Selected Balance Sheet Data
Dollars in thousands, except per share amounts
For the Quarter Ended
----------------------------------------------------------
12/31/2007 9/30/2007 6/30/2007 3/31/2007 12/31/2006
---------------------------------------------------------------------
Assets $1,435,536 $1,340,679 $1,280,428 $1,254,528 $1,235,519
Securities 300,066 279,289 259,526 258,173 247,874
Loans, net 1,052,489 986,437 949,175 930,769 916,045
Intangible
assets 10,055 10,143 3,121 3,159 3,197
Retail
deposits 652,296 638,633 626,617 623,431 609,064
Brokered time
deposits 176,391 189,966 223,771 253,794 279,623
Short-term
borrowings 172,055 124,699 100,901 79,886 60,428
Long-term
borrowings
and sub-
ordinated
debentures 335,327 283,268 236,347 203,408 195,698
Shareholders'
equity 89,420 93,475 81,910 81,950 78,752
Book value
per share $ 12.06 $ 12.63 $ 11.56 $ 11.57 $ 11.12
Tangible
book value
per share $ 10.70 $ 11.26 $ 11.12 $ 11.12 $ 10.66
Tangible
equity /
Tangible
assets 5.6% 6.3% 6.2% 6.3% 6.1%
Tier 1
leverage
ratio 7.3% 8.1% 7.9% 7.9% 7.8%
SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Loan Composition
Dollars in thousands
For the Quarter Ended
-------------------------------------------------------
12/31/2007 9/30/2007 6/30/2007 3/31/2007 12/31/2006
---------------------------------------------------------------------
Commercial $ 92,599 $ 87,018 $ 81,292 $ 69,700 $ 69,470
Commercial real
estate 384,478 352,396 354,833 329,561 314,199
Construction
and develop-
ment 225,270 212,570 198,721 220,430 215,820
Residential real
estate 322,640 305,016 283,821 279,564 282,512
Consumer 31,956 33,255 33,937 33,845 36,455
Other 6,641 6,793 7,111 7,209 6,968
---------- --------- --------- --------- ---------
Total loans 1,063,584 997,048 959,715 940,309 925,424
Less unearned
fees and
interest 1,903 1,884 1,772 1,757 1,868
---------- --------- --------- --------- ---------
Total loans net
of unearned
fees and
interest 1,061,681 995,164 957,943 938,552 923,556
Less allowance
for loan losses 9,192 8,727 8,768 7,783 7,511
---------- --------- --------- --------- ---------
Loans, net $1,052,489 $ 986,437 $ 949,175 $ 930,769 $ 916,045
========== ========= ========= ========= =========
SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Retail Deposit Composition
Dollars in thousands
12/31/2007 9/30/2007 6/30/2007 3/31/2007 12/31/2006
---------------------------------------------------------------------
Non interest
bearing
checking $ 65,727 $ 65,230 $ 64,373 $ 60,645 $ 62,591
Interest bearing
checking 222,825 230,491 230,509 230,634 220,167
Savings 40,845 39,596 41,910 44,713 47,984
Time deposits 322,899 303,316 289,825 287,439 278,322
-------- -------- -------- -------- --------
Total retail
deposits $652,296 $638,633 $626,617 $623,431 $609,064
======== ======== ======== ======== ========
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Asset Quality Information
Dollars in thousands
For the Quarter Ended
---------------------------------------------
12/31/07 9/30/07 6/30/07 3/31/07 12/31/06
---------------------------------------------------------------------
Gross loan charge-offs $ 332 $ 599 $ 141 $ 206 $ 313
Gross loan recoveries (47) (33) (45) (87) (50)
------- ------ ------ ------ ------
Net loan charge-offs $ 285 $ 566 $ 96 $ 119 $ 263
======= ====== ====== ====== ======
Net loan charge-offs to
average loans
(annualized) 0.11% 0.23% 0.04% 0.05% 0.11%
Allowance for loan losses $ 9,192 $8,727 $8,768 $7,783 $7,511
Allowance for loan losses
as a percentage of
period end loans 0.86% 0.88% 0.91% 0.83% 0.81%
Nonperforming assets:
Nonperforming loans $10,333 $6,916 $7,307 $4,474 $5,276
Foreclosed properties
and other repossessed
assets 2,058 815 851 43 77
------- ------ ------ ------ ------
Total $12,391 $7,731 $8,158 $4,517 $5,353
======= ====== ====== ====== ======
Nonperforming loans to
period end loans 0.97% 0.69% 0.76% 0.48% 0.57%
======= ====== ====== ====== ======
Nonperforming assets to
period end assets 0.86% 0.58% 0.64% 0.36% 0.43%
======= ====== ====== ====== ======
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q4 2007 vs Q4 2006
Dollars in thousands
Q4 2007 Q4 2006
--------------------------- ---------------------------
Average Earnings/ Yield/ Average Earnings/ Yield/
Balances Expense Rate Balances Expense Rate
----------------------------------------- ---------------------------
ASSETS
Interest earning
assets
Loans, net of
unearned
interest
Taxable $1,015,397 $ 20,075 7.84% $ 914,050 $18,735 8.13%
Tax-exempt 9,259 188 8.06% 8,591 166 7.67%
Securities
Taxable 234,444 3,008 5.09% 202,758 2,566 5.02%
Tax-exempt 49,760 870 6.94% 47,666 842 7.01%
Interest
bearing de-
posits other
banks and
Federal funds
sold 479 9 7.45% 517 11 8.44%
---------- -------- ---- ---------- ------- ----
Total interest
earning
assets 1,309,339 24,150 7.32% 1,173,582 22,320 7.55%
Noninterest
earning assets
Cash & due
from banks 14,391 12,393
Premises &
equipment 22,092 23,309
Other assets 35,362 26,786
Allowance for
loan losses (9,033) (7,339)
---------- ----------
Total
assets $1,372,151 $1,228,731
========== ==========
LIABILITIES AND
SHAREHOLDERS'
EQUITY
Liabilities
Interest bearing
liabilities
Interest bear-
ing demand
deposits $ 225,686 $ 1,575 2.77% $ 221,943 $ 2,066 3.69%
Savings
deposits 38,706 145 1.49% 46,804 243 2.06%
Time deposits 487,609 6,039 4.91% 549,785 6,679 4.82%
Short-term
borrowings 147,144 1,724 4.65% 77,044 1,040 5.36%
Long-term
borrowings
and sub-
ordinated
debentures 299,420 3,973 5.26% 176,932 2,478 5.56%
---------- -------- ---- ---------- ------- ----
1,198,565 13,456 4.45% 1,072,508 12,506 4.63%
Noninterest
bearing
liabilities
Demand
deposits 68,123 63,671
Other
liabilities 10,131 10,307
---------- ----------
Total lia-
bilities 1,276,819 1,146,486
Shareholders'
equity 95,332 82,245
---------- ----------
Total liabili-
ties and
shareholders'
equity $1,372,151 $1,228,731
========== ==========
NET INTEREST
EARNINGS $ 10,694 $ 9,814
======== =======
NET INTEREST
YIELD ON
EARNING ASSETS 3.24% 3.32%
==== ====
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
YTD 2007 vs YTD 2006
Dollars in thousands
For the Years Ended December 31,
---------------------------------------------------------------------
2007 2006
--------------------------- --------------------------
Average Earnings/ Yield/ Average Earnings/ Yield/
Balances Expense Rate Balances Expense Rate
----------------------------------------- --------------------------
ASSETS
Interest earning
assets
Loans, net of
unearned
interest
Taxable $ 963,116 $ 77,510 8.05% $ 872,017 $68,915 7.90%
Tax-exempt 9,270 738 7.96% 8,428 642 7.62%
Securities
Taxable 219,605 11,224 5.11% 193,046 9,403 4.87%
Tax-exempt 47,645 3,289 6.90% 46,382 3,227 6.96%
Interest
bearing de-
posits other
banks and
Federal funds
sold 1,011 51 5.04% 1,216 62 5.10%
---------- -------- ---- ---------- ------- ----
Total interest
earning
assets 1,240,647 92,812 7.48% 1,121,089 82,249 7.34%
Noninterest
earning assets
Cash & due
from banks 14,104 13,417
Premises &
equipment 22,179 23,496
Other assets 30,795 26,422
Allowance for
loan losses (8,683) (6,849)
---------- ----------
Total
assets $1,299,042 $1,177,575
========== ==========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Liabilities
Interest bearing
liabilities
Interest
bearing
demand
deposits $ 227,014 $ 7,695 3.39% $ 215,642 $ 7,476 3.47%
Savings
deposits 42,254 706 1.67% 42,332 554 1.31%
Time deposits 524,389 25,895 4.94% 458,864 20,282 4.42%
Short-term
borrowings 95,437 4,822 5.05% 130,771 6,612 5.06%
Long-term
borrowings
and sub-
ordinated
debentures 245,937 13,199 5.37% 176,422 9,455 5.36%
---------- -------- ---- ---------- ------- ----
1,135,031 52,317 4.61% 1,024,031 44,379 4.33%
Noninterest
bearing
liabilities
Demand
deposits 65,060 64,380
Other
liabilities 11,000 10,106
---------- ----------
Total lia-
bilities 1,211,091 1,098,517
Shareholders'
equity 87,951 79,058
---------- ----------
Total liabili-
ties and
shareholders'
equity $1,299,042 $1,177,575
========== ==========
NET INTEREST
EARNINGS $ 40,495 $37,870
======== =======
NET INTEREST
YIELD ON
EARNING ASSETS 3.26% 3.38%
==== ====
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Reconciliation of Non-GAAP Financial Measures
to GAAP Financial Measures
Dollars in thousands
For the Quarter Ended For the Year Ended
-------------------- --------------------
12/31/07 12/31/06 12/31/07 12/31/06
--------------------------------------------- --------------------
Income from continuing
operations - excluding
changes in fair value
of interest rate swaps $ 3,375 $ 2,718 $ 12,606 $ 11,117
Changes in fair value of
interest rate swaps 783 49 1,478 (91)
Applicable income tax
effect (290) (18) (547) 34
-------- -------- -------- --------
493 31 931 (57)
-------- -------- -------- --------
GAAP income from
continuing operations $ 3,868 $ 2,749 $ 13,537 $ 11,060
======== ======== ======== ========