Summit Financial Group Reports Second Quarter 2021 EPS of $0.80, Growth in Loans and Revenue, and Lower Credit Costs

Moorefield, West Virginia, UNITED STATES


MOOREFIELD, W.Va., July 29, 2021 (GLOBE NEWSWIRE) -- Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ: SMMF) today reported financial results for the second quarter of 2021, including continued strong earnings on growth in loans and total revenue, as well as lower credit costs.

Second quarter 2021 net income applicable to common shares totaled $10.4 million, or $0.80 per diluted share. Net income applicable to common shares were $10.4 million or $0.80 per diluted share in the first quarter of 2021 and $6.9 million or $0.54 per diluted share in the second quarter of 2020. For the six months ended June 30, 2021, Summit recorded net income applicable to common shares of $20.8 million, or $1.60 per diluted share, compared with $11.5 million, or $0.88 per diluted share, for the comparable 2020 six-month period, representing an increase of 81.4 percent or 81.8 percent per diluted share.  

“Summit’s performance in the second quarter and first half of this year gives us even greater confidence in our loan growth goals for 2021 and beyond,” said H. Charles Maddy, III, President and Chief Executive Officer. “We expect to continue benefitting from production and pipelines that reflect our success in growing commercial relationships in our existing markets, particularly in the D.C., Northern Virginia, Charleston and Huntington, West Virginia regions, complemented by recent acquisitions. We intend to continue creating significant organic growth opportunities, while leveraging Summit’s operational efficiencies and core deposits in strong legacy locations, as well as our high-performing bankers in every community we serve.”

Highlights for Q2 2021

  • Total loans, excluding mortgage warehouse lines of credit and PPP loans, increased 3.7 percent (14.8 percent annualized) during the quarter, 9.6 percent (19.2 percent annualized) year-to-date and 22.0 percent since June 30, 2020.
  • Net interest income increased 2.1 percent compared to the linked quarter, and increased 16.2 percent from the year-ago period, primarily due to loan growth and lower funding costs.
  • Net interest margin (“NIM”) decreased 10 basis points to 3.55 percent from the linked quarter, as yield on interest earning assets decreased 16 basis points while the cost of deposits and other funding declined 8 basis points.
  • Recorded an efficiency ratio of 49.09 percent and maintained non-interest expense at 2.09 percent of average assets.
  • Provision for credit losses declined to $1.0 million. Allowance for loan credit losses at period end equaled $33.9 million, or 1.39 percent of total loans and 148.2 percent of nonperforming loans.
  • Announced the acquisition of substantially all of MVB Bank’s Southern West Virginia community banking operations including four full-service branches and two drive-up locations in and around the state’s largest cities of Charleston and Huntington, approximately $163.1 million in deposits, and $53.9 million in loans, with an accretive transaction that closed earlier this month.
  • Raised $15.0 million in growth capital through a previously disclosed private placement of 6% Fixed-Rate Non-Cumulative Perpetual Preferred Stock to provide flexibility for executing our strategic plan.

Results from Operations

Net interest income grew to $26.8 million in the second quarter of 2021, an increase of 2.1 percent from the linked quarter and 16.2 percent from the prior-year second quarter. NIM for second quarter 2021 was 3.55 percent compared to 3.65 percent for the linked quarter and 3.68 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 3.50 percent for the second quarter of 2021, 3.60 percent for the linked quarter and 3.61 percent for the year-ago period.

Noninterest income, consisting primarily of service fee income from community banking activities and trust and wealth management fees, for second quarter 2021 was $4.7 million compared to $5.0 million for the linked quarter and $3.6 million for the comparable period of 2020. The Company recorded securities gains of $127,000 in the second quarter of 2021 and $476,000 in the linked quarter. Excluding securities gains, noninterest income was $4.6 million for second quarter 2021 and $4.5 million for the linked quarter. Mortgage origination revenue was $898,000 in the second quarter of 2021 compared to $998,000 for the linked quarter and $641,000 for the year-ago period, due to higher volumes of secondary market loans driven primarily by historically low interest rates.

Revenue from net interest income and noninterest income, excluding securities gains, grew to $31.4 million, up 2.1 percent from $30.8 million in the linked quarter and 17.8 percent from $26.7 million in the year-ago quarter. Revenue, excluding securities gains, for the first half of 2021, grew to $62.1 million, up 20.5 percent from the first half of 2020 and outpacing the 10.8 percent noninterest expense increase recorded for the comparable six-month periods.

Total noninterest expense increased to $17.0 million in the second quarter of 2021, up 3.7 percent from $16.4 million in the linked quarter and 12.1 percent from $15.2 million for the prior-year second quarter, reflecting acquisition-related expenses primarily from Summit’s recently completed Southern West Virginia branch acquisition, as well as ongoing operating costs for its April 2020 branch acquisitions in West Virginia’s Eastern Panhandle and its December 2020 purchase of Kentucky’s WinFirst Bank.

Salary and benefit expenses of $8.2 million in the second quarter of 2021 declined from $8.4 million in the linked quarter, while acquisitions closed in April and December 2020 contributed to an increase from $7.7 million in the year-ago period. Additionally, other significant factors contributing to the changes in total noninterest expense in the second quarter of 2021 were:   FDIC assessments of $488,000 compared to $277,000 for the linked quarter and $110,000 for the year-ago period, as well as foreclosed properties expense of $746,000 compared to $227,000 in the linked quarter and $240,000 in the year-ago period. Summit’s efficiency ratio improved to 49.09 percent in the second quarter of 2021 from 49.79 percent in the linked quarter and 51.97 percent for the year-ago period. Non-interest expense was 2.09 percent of average assets in the second quarter of 2021, unchanged from the linked quarter and improved from 2.23 percent in the year-ago period.

Balance Sheet

At June 30, 2021, total assets were $3.27 billion, an increase of $166.1 million, or 5.3 percent since December 31, 2020.

Total loans net of unearned fees and excluding PPP and mortgage warehouse lending grew to $2.28 billion on June 30, 2021, increasing 3.7 percent during the second quarter, 9.6 percent year-to-date and 22.0 percent since June 30, 2020.

Total commercial loans, including commercial and industrial (C&I) and commercial real estate (CRE) and excluding PPP lending, grew to $1.5 billion on June 30, 2021, increasing 5.9 percent during the second quarter, 15.3 percent year-to-date and 26.4 percent since June 30, 2020. Residential real estate and consumer lending totaled $576.8 million on June 30, 2021, down 2.0 percent during the second quarter and 6.4 percent year-to-date, while increasing 0.8 percent from June 30, 2020.

PPP balances paid down to $40.4 million on June 30, 2021 from a peak of $98.5 million on September 30, 2020. Mortgage warehouse lines of credit, sourced solely from a participation arrangement with a large regional bank, have paid down to $105.3 million on June 30, 2021 from a peak of $252.5 million on June 30, 2020.

Total deposits grew to $2.73 billion on June 30, 2021, increasing 0.2 percent during the second quarter, 5.1 percent year-to-date and 11.3 percent since June 30, 2020. Core deposits grew to $2.63 billion on June 30, 2021, increasing 0.8 percent during the second quarter, 6.9 percent year-to-date and 16.4 percent June 30, 2020.

Total shareholders’ equity was $315.2 million as of June 30, 2021 compared to $281.6 million at December 31, 2020. During the second quarter of 2021, Summit raised $15.0 million in growth capital through a previously disclosed private placement of 6% Fixed-Rate Non-Cumulative Perpetual Preferred Stock.

Tangible book value per common share increased to $19.01 as of June 30, 2021 compared to $17.50 at December 31, 2020 and $16.63 at June 30, 2020. Summit had 12,963,057 outstanding common shares at the end of the second quarter of 2021 compared to 12,942,004 at year end 2020.

As announced in the first quarter of 2020, the Board of Directors authorized the open market repurchase of up to 750,000 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. During the second quarter of 2021, no shares of our common stock were repurchased under the Plan.

Asset Quality

Net loan charge-offs (“NCOs”) were $202,000, or 0.03 percent of average loans annualized, in the second quarter of 2021. NCOs of $189,000 represented 0.03 percent of average loan annualized in the linked quarter, and the Company recorded net recoveries of $51,000 in the year-ago period.

Summit’s provision for credit losses was $1.0 million in the second quarter of 2021, while its allowance for loan credit losses was $33.9 million, representing 1.39 percent of total loans and 148.2 percent of nonperforming loans, as of June 30, 2021. The provision for credit losses was $1.5 million and $3.0 million for the linked and year-ago quarters, respectively. The allowance for loan credit losses stood at $34.0 million or 1.39 percent of total loans on March 31, 2021 and $27.2 million or 1.22 percent at June 30, 2020.

As of June 30, 2021, nonperforming assets (“NPAs”), consisting of nonperforming loans, foreclosed properties and repossessed assets, totaled $36.0 million, or 1.10 percent of assets, compared to NPAs of $39.3 million, or 1.21 percent of assets at the linked quarter-end and $30.5 million, or 1.07 percent of assets at the end of second quarter 2020. A loan relationship totaling $9.5 million impacted by the COVID-19 pandemic and on nonaccrual at June 30, 2021 was restored to full accrual status in July 2021.

The aggregate balances of loans the Company has modified as result of the COVID-19 pandemic continued to decline to $8.7 million or 0.4 percent of total loans on June 30, 2021, down from $33.9 million, or 1.4 percent on March 31, 2021, as summarized in the following table.

  Loan Balances Modified Due to COVID-19 as of 6/30/2021
Dollars in thousandsTotal Loan Balance as of 6/30/2021 Loans Modified to Interest Only PaymentsLoans Modified to Payment DeferralTotal Loans
Modified
Percentage of Loans Modified
Hospitality Industry$116,745$866$-$8660.7%
Non-Owner Occupied Retail Stores 143,931 7,223 - 7,2235.0%
Owner-Occupied Retail Stores 141,703 - - -0.0%
Restaurants 11,895 - - -0.0%
Oil & Gas Industry 17,158 - - -0.0%
Other Commercial Loans 1,315,074 581 - 5810.0%
Total Commercial Loans 1,746,506 8,670 - 8,6700.5%
Residential 1-4 Family Personal 279,970 - - -0.0%
Residential 1-4 Family Rentals 189,963 - - -0.0%
Home Equity Loans 72,956 - - -0.0%
Total Residential Real Estate Loans 542,889 - - -0.0%
Consumer Loans 32,731 - - -0.0%
Mortgage Warehouse Loans 105,288 - - -0.0%
Credit Cards and Overdrafts 2,356 - - -0.0%
Total Loans$ 2,429,770$ 8,670$ -$ 8,6700.4%
      

About the Company

Summit Financial Group, Inc. is the $3.27 billion financial holding company for Summit Community Bank, Inc. Its talented bankers serve commercial and individual clients throughout West Virginia, the Washington, D.C. metropolitan area, Virginia, and Kentucky. Summit’s focus on in-market commercial lending and providing other business banking services in dynamic markets is designed to leverage its highly efficient operations and core deposits in strong legacy locations. Residential and consumer lending, trust and wealth management, and other retail financial services are offered through convenient digital and mobile banking platforms, including MySummit.bank, and 46 full-service branch locations. More information on Summit Financial Group, Inc. (NASDAQ: SMMF), headquartered in West Virginia’s Eastern Panhandle in Moorefield, is available at SummitFGI.com.

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: the effect of the COVID-19 pandemic, including the negative impacts and disruptions on the communities we serve, and the domestic and global economy, which may have an adverse effect on our business; current and future economic and market conditions, including the effects of declines in housing prices, high unemployment rates, U.S. fiscal debt, budget and tax matters, geopolitical matters, and any slowdown in global economic growth; fiscal and monetary policies of the Federal Reserve; future provisions for credit losses on loans and debt securities; changes in nonperforming assets; changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; the successful integration of operations of our acquisitions; 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 2021 vs Q2 2020   
    
  For the Quarter EndedPercent
Dollars in thousands6/30/20216/30/2020Change
Statements of Income   
 Interest income   
 Loans, including fees$27,697 $25,6248.1%
 Securities 2,202  2,253-2.3%
 Other 56  60-6.7%
 Total interest income 29,955  27,9377.2%
 Interest expense   
 Deposits 2,136  4,186-49.0%
 Borrowings 1,008  68547.2%
 Total interest expense 3,144  4,871-35.5%
 Net interest income 26,811  23,06616.2%
 Provision for credit losses 1,000  3,000n/m
 Net interest income after provision   
 for credit losses 25,811  20,06628.6%
     
 Noninterest income   
 Trust and wealth management fees 683  58217.4%
 Mortgage origination revenue 898  64140.1%
 Service charges on deposit accounts 1,093  88223.9%
 Bank card revenue 1,519  1,08739.7%
 Realized securities gains 127  -n/a
 Bank owned life insurance and annuity income 275  2750.0%
 Other income 120  131-8.4%
 Total noninterest income 4,715  3,59831.0%
 Noninterest expense   
 Salaries and employee benefits 8,230  7,6557.5%
 Net occupancy expense 1,131  97715.8%
 Equipment expense 1,598  1,36017.5%
 Professional fees 428  4172.6%
 Advertising and public relations 138  9348.4%
 Amortization of intangibles 382  410-6.8%
 FDIC premiums 488  110343.6%
 Bank card expense 685  56022.3%
 Foreclosed properties expense, net of losses 746  240210.8%
 Acquisition-related expense 454  637-28.7%
 Other expenses 2,756  2,7380.7%
 Total noninterest expense 17,036  15,19712.1%
 Income before income taxes 13,490  8,46759.3%
 Income taxes 2,930  1,51893.0%
      Net income 10,560  6,94952.0%
 Preferred stock dividends 139  -n/a
     
 Net income applicable to common shares$10,421 $6,94950.0%


SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)  
Quarterly Performance Summary (unaudited)  
Q2 2021 vs Q2 2020  
     
  For the Quarter EndedPercent
  6/30/20216/30/2020Change
Per Share Data   
 Earnings per common share   
 Basic$0.80 $0.54 48.1%
 Diluted$0.80 $0.54 48.1%
     
 Cash dividends per common share$0.17 $0.17 0.0%
 Common stock dividend payout ratio 21.2% 31.7%-33.1%
     
 Average common shares outstanding   
 Basic 12,952,357  12,911,979 0.3%
 Diluted 13,013,714  12,943,804 0.5%
     
 Common shares outstanding at period end 12,963,057  12,922,045 0.3%
     
Performance Ratios   
 Return on average equity 13.67% 10.75%27.2%
 Return on average tangible equity 17.03% 13.57%25.5%
 Return on average tangible common equity 17.59% 13.57%29.6%
 Return on average assets 1.29% 1.02%26.5%
 Net interest margin (A) 3.55% 3.68%-3.5%
 Efficiency ratio (B) 49.09% 51.97%-5.5%
     

NOTE (A) – Presented on a tax-equivalent basis assuming a federal tax rate of 21%.

NOTE (B) – Computed on a tax equivalent basis excluding acquisition-related expenses, 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)   
2021 vs 2020   
     
  For the Six Months EndedPercent
Dollars in thousands6/30/20216/30/2020Change
Statements of Income   
 Interest income   
 Loans, including fees$55,234 $50,8598.6%
 Securities 4,359  4,563-4.5%
 Other 123  158-22.2%
 Total interest income 59,716  55,5807.4%
 Interest expense   
 Deposits 4,632  9,537-51.4%
 Borrowings 2,022  1,53431.8%
 Total interest expense 6,654  11,071-39.9%
 Net interest income 53,062  44,50919.2%
 Provision for credit losses 2,500  8,250n/m
 Net interest income after provision   
 for credit losses 50,562  36,25939.4%
     
 Noninterest income   
 Trust and wealth management fees 1,321  1,2475.9%
 Mortgage origination revenue 1,896  855121.8%
 Service charges on deposit accounts 2,193  2,1452.2%
 Bank card revenue 2,860  2,02041.6%
 Realized securities gains 602  1,038-42.0%
 Bank owned life insurance and annuity income 573  5396.3%
 Other income 244  255-4.3%
 Total noninterest income 9,689  8,09919.6%
 Noninterest expense   
 Salaries and employee benefits 16,665  15,1609.9%
 Net occupancy expense 2,305  1,86023.9%
 Equipment expense 3,180  2,78914.0%
 Professional fees 766  804-4.7%
 Advertising and public relations 228  244-6.6%
 Amortization of intangibles 787  839-6.2%
 FDIC premiums 765  275178.2%
 Bank card expense 1,259  1,06318.4%
 Foreclosed properties expense, net of losses 972  1,207-19.5%
 Acquisition-related expense 893  1,425-37.3%
 Other expenses 5,649  4,52924.7%
 Total noninterest expense 33,469  30,19510.8%
 Income before income taxes 26,782  14,16389.1%
 Income taxes 5,863  2,708116.5%
        Net income 20,919  11,45582.6%
 Preferred stock dividends 139  -n/a
     
 Net income applicable to common shares$20,780 $11,45581.4%


SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)  
Six Month Performance Summary (unaudited)   
2021 vs 2020  
     
  For the Six Months EndedPercent
  6/30/20216/30/2020Change
Per Share Data   
 Earnings per common share   
 Basic$1.61 $0.89 80.9%
 Diluted$1.60 $0.88 81.8%
     
 Cash dividends per common share$0.34 $0.34 0.0%
 Common stock dividend payout ratio 21.3% 38.6%-44.9%
     
 Average common shares outstanding   
 Basic 12,947,228  12,940,590 0.1%
 Diluted 13,007,889  12,983,146 0.2%
     
 Common shares outstanding at period end 12,963,057  12,922,045 0.3%
     
Performance Ratios   
 Return on average equity 14.09% 8.83%59.6%
 Return on average tangible equity 17.75% 10.99%61.5%
 Return on average tangible common equity 18.06% 10.99%64.3%
 Return on average assets 1.30% 0.78%66.7%
 Net interest margin (A) 3.60% 3.72%-3.2%
 Efficiency ratio (B) 49.44% 51.70%-4.4%
     

NOTE (A) – Presented on a tax-equivalent basis assuming a federal tax rate of 21%.

NOTE (B) – Computed on a tax equivalent basis excluding acquisition-related expenses, 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 thousands6/30/20213/31/202112/31/20209/30/20206/30/2020
Statements of Income     
 Interest income     
 Loans, including fees$27,697 $27,538 $27,897 $26,807 $25,624
 Securities 2,202  2,157  2,228  2,382  2,253
 Other 56  67  51  57  60
 Total interest income 29,955  29,762  30,176  29,246  27,937
 Interest expense     
 Deposits 2,136  2,496  2,956  3,552  4,186
 Borrowings 1,008  1,014  1,014  928  685
 Total interest expense 3,144  3,510  3,970  4,480  4,871
 Net interest income 26,811  26,252  26,206  24,766  23,066
 Provision for credit losses 1,000  1,500  3,000  3,250  3,000
 Net interest income after provision     
 for credit losses 25,811  24,752  23,206  21,516  20,066
 Noninterest income     
 Trust and wealth management fees 683  638  626  622  582
 Mortgage origination revenue 898  998  1,163  780  641
 Service charges on deposit accounts 1,093  1,100  1,305  1,138  882
 Bank card revenue 1,519  1,341  1,237  1,237  1,087
 Realized securities gains 127  476  912  1,522  -
 Bank owned life insurance and annuity income 275  298  233  795  275
 Other income 120  123  301  113  131
 Total noninterest income 4,715  4,974  5,777  6,207  3,598
 Noninterest expense     
 Salaries and employee benefits 8,230  8,435  8,250  7,869  7,655
 Net occupancy expense 1,131  1,174  1,046  1,057  977
 Equipment expense 1,598  1,581  1,502  1,474  1,360
 Professional fees 428  338  370  364  417
 Advertising and public relations 138  90  207  145  93
 Amortization of intangibles 382  405  409  412  410
 FDIC premiums 488  277  261  320  110
 Bank card expense 685  573  573  589  560
 Foreclosed properties expense, net 746  227  676  607  240
 Acquisition-related expenses 454  440  218  28  637
 Other expenses 2,756  2,893  3,094  2,644  2,738
 Total noninterest expense 17,036  16,433  16,606  15,509  15,197
 Income before income taxes 13,490  13,293  12,377  12,214  8,467
 Income tax expense 2,930  2,933  2,126  2,594  1,518
        Net income 10,560  10,360  10,251  9,620  6,949
 Preferred stock dividends 139  -  -  -  -
       
 Net income applicable to common shares$10,421 $10,360 $10,251 $9,620 $6,949


SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)     
Five Quarter Performance Summary (unaudited)      
       
  For the Quarter Ended 
  6/30/20213/31/202112/31/20209/30/20206/30/2020 
Per Share Data      
 Earnings per common share      
 Basic$0.80 $0.80 $0.79 $0.74 $0.54  
 Diluted$0.80 $0.80 $0.79 $0.74 $0.54  
        
 Cash dividends per common share$0.17 $0.17 $0.17 $0.17 $0.17  
 Common stock dividend payout ratio 21.2% 20.6% 21.5% 22.9% 31.7% 
        
 Average common shares outstanding      
 Basic 12,952,357  12,942,099  12,932,768  12,922,158  12,911,979  
 Diluted 13,013,714  13,002,062  12,980,041  12,949,584  12,943,804  
        
 Common shares outstanding at period end 12,963,057  12,950,714  12,942,004  12,932,415  12,922,045  
        
Performance Ratios      
 Return on average equity 13.67% 14.51% 14.90% 14.38% 10.75% 
 Return on average tangible equity 17.03% 18.49% 18.70% 18.12% 13.57% 
 Return on average tangible common equity 17.59% 18.49% 18.70% 18.12% 13.57% 
 Return on average assets 1.29% 1.31% 1.37% 1.31% 1.02% 
 Net interest margin (A) 3.55% 3.65% 3.76% 3.64% 3.68% 
 Efficiency ratio (B) 49.09% 49.79% 49.38% 48.95% 51.97% 

NOTE (A) – Presented on a tax-equivalent basis assuming a federal tax rate of 21%.

NOTE (B) – Computed on a tax equivalent basis excluding acquisition-related expenses, 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 amounts6/30/20213/31/202112/31/20209/30/20206/30/2020
       
Assets     
 Cash and due from banks$18,707 $20,732 $19,522 $16,257 $16,572 
 Interest bearing deposits other banks 176,282  155,865  80,265  92,729  26,218 
 Debt securities, available for sale 345,742  311,384  286,127  297,989  322,539 
 Debt securities, held to maturity 98,995  99,457  99,914  91,600  80,497 
 Loans, net 2,395,885  2,418,029  2,379,907  2,222,450  2,192,541 
 Property held for sale 13,170  13,918  15,588  17,831  17,954 
 Premises and equipment, net 53,104  53,289  52,537  52,880  51,847 
 Goodwill and other intangible assets 53,858  54,239  55,123  48,101  48,513 
 Cash surrender value of life insurance policies and annuities 60,087  59,740  59,438  57,029  55,315 
 Other assets 56,703  61,482  57,963  49,996  49,355 
 Total assets$3,272,533 $3,248,135 $3,106,384 $2,946,862 $2,861,351 
       
Liabilities and Shareholders' Equity     
 Deposits$2,729,205 $2,725,010 $2,595,651 $2,451,891 $2,451,769 
 Short-term borrowings 140,146  140,145  140,146  140,145  90,945 
 Long-term borrowings and     
 subordinated debentures 49,710  49,681  49,652  50,292  20,297 
 Other liabilities 38,265  39,854  39,355  32,571  34,909 
 Shareholders' equity - preferred 14,920  -  -  -  - 
 Shareholders' equity - common 300,287  293,445  281,580  271,963  263,431 
 Total liabilities and shareholders' equity$3,272,533 $3,248,135 $3,106,384 $2,946,862 $2,861,351 
       
 Book value per common share$23.16 $22.66 $21.76 $21.03 $20.39 
 Tangible book value per common share$19.01 $18.47 $17.50 $17.31 $16.63 
 Tangible common equity to tangible assets 7.7% 7.5% 7.4% 7.7% 7.6%
       


SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)    
Regulatory Capital Ratios (unaudited)      
        
  6/30/20213/31/202112/31/20209/30/20206/30/2020 
Summit Financial Group, Inc.      
 CET1 Risk-based Capital9.6%9.3%9.3%9.9%9.7% 
 Tier 1 Risk-based Capital10.9%10.1%10.0%10.7%10.5% 
 Total Risk-based Capital13.0%12.1%12.1%12.9%11.3% 
 Tier 1 Leverage8.9%8.5%8.6%8.7%9.0% 
        
Summit Community Bank, Inc.      
 CET1 Risk-based Capital11.9%11.1%11.1%11.8%10.5% 
 Tier 1 Risk-based Capital11.9%11.1%11.1%11.8%10.5% 
 Total Risk-based Capital12.9%12.0%12.0%12.7%11.4% 
 Tier 1 Leverage9.7%9.3%9.5%9.6%9.0% 
        


SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)    
Loan Composition (unaudited)      
        
Dollars in thousands6/30/20213/31/202112/31/20209/30/20206/30/2020 
        
Commercial $326,468 $348,022 $306,885 $350,985 $323,788 
Mortgage warehouse lines 105,288  187,995  251,810  243,730  252,472 
Commercial real estate      
Owner occupied 392,164  358,200  351,860  312,502  336,143 
Non-owner occupied 784,415  735,594  685,565  618,624  593,167 
Construction and development      
Land and development 102,670  106,312  107,342  97,343  92,706 
Construction 140,788  126,011  91,100  66,878  48,116 
Residential real estate      
Conventional 398,239  411,103  425,519  368,009  371,225 
Jumbo  71,694  65,851  74,185  73,836  76,360 
Home equity 72,956  77,684  81,588  82,991  88,929 
Consumer  32,732  32,924  33,906  34,655  34,640 
Other  2,356  2,375  2,393  2,251  2,161 
Total loans, net of unearned fees 2,429,770  2,452,071  2,412,153  2,251,804  2,219,707 
Less allowance for credit losses 33,885  34,042  32,246  29,354  27,166 
Loans, net$2,395,885 $2,418,029 $2,379,907 $2,222,450 $2,192,541 
        


SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)    
Deposit Composition (unaudited)     
        
Dollars in thousands 6/30/20213/31/202112/31/20209/30/20206/30/2020 
Core deposits       
Non-interest bearing checking$503,097 $505,264 $440,819 $420,070 $443,190 
Interest bearing checking 1,005,725  988,204  934,185  867,442  830,258 
Savings  677,000  656,514  621,168  598,564  561,029 
Time deposits  441,139  456,431  460,443  414,542  422,286 
Total core deposits 2,626,961  2,606,413  2,456,615  2,300,618  2,256,763 
        
Brokered time deposits 23,521  39,125  55,454  64,120  90,279 
Other non-core time deposits 78,723  79,472  83,582  87,153  104,727 
Total deposits$2,729,205 $2,725,010 $2,595,651 $2,451,891 $2,451,769 
        


SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)    
Asset Quality Information (unaudited)     
  For the Quarter Ended
Dollars in thousands6/30/20213/31/202112/31/20209/30/20206/30/2020
       
 Gross loan charge-offs$343  $354  $434  $1,259  $218 
 Gross loan recoveries (141)  (165)  (195)  (245)  (269)
 Net loan charge-offs/(recoveries)$202  $189  $239  $1,014  $(51)
       
 Net loan charge-offs to average loans (annualized) 0.03%  0.03%  0.04%  0.18%  -0.01%
 Allowance for loan credit losses$33,885  $34,042  $32,246  $29,354  $27,166 
 Allowance for loan credit losses as a percentage     
 of period end loans 1.39%  1.39%  1.34%  1.30%  1.22%
 Allowance for credit losses on     
 unfunded loan commitments$4,660  $3,705  $4,190  $3,525  $3,477 
 Nonperforming assets:     
 Nonperforming loans     
 Commercial$968  $848  $525  $553  $754 
 Commercial real estate 14,430   17,137   14,237   4,313   5,822 
 Residential construction and development 621   626   235   2   14 
 Residential real estate 6,800   6,667   5,264   5,104   5,873 
 Consumer 38   54   74   31   29 
 Other -   -   -   -   35 
 Total nonperforming loans 22,857   25,332   20,335   10,003   12,527 
 Foreclosed properties     
 Commercial real estate 2,281   2,281   2,581   2,500   1,774 
 Commercial construction and development 3,146   3,884   4,154   4,154   4,511 
 Residential construction and development 6,859   7,129   7,791   10,330   10,645 
 Residential real estate 884   624   1,062   847   1,024 
 Total foreclosed properties 13,170   13,918   15,588   17,831   17,954 
 Other repossessed assets -   -   -   -   - 
 Total nonperforming assets$36,027  $39,250  $35,923  $27,834  $30,481 
       
 Nonperforming loans to period end loans 0.94%  1.03%  0.84%  0.44%  0.56%
 Nonperforming assets to period end assets 1.10%  1.21%  1.16%  0.94%  1.07%
       
 Troubled debt restructurings     
 Performing$20,799  $20,462  $21,375  $22,232  $22,117 
 Nonperforming 1,235   3,828   3,127   2,988   3,003 
 Total troubled debt restructurings$22,034  $24,290  $24,502  $25,220  $25,120 


Loans Past Due 30-89 Days (unaudited)     
  For the Quarter Ended
Dollars in thousands6/30/20213/31/202112/31/20209/30/20206/30/2020
       
 Commercial$414 $335 $1 $147 $196
 Commercial real estate 733  508  274  1,740  1,231
 Construction and development 1,911  330  47  422  8
 Residential real estate 3,594  2,146  4,405  4,464  2,763
 Consumer 404  96  233  160  164
 Other -  3  5  2  3
 Total$7,056 $3,418 $4,965 $6,935 $4,365
       


SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)           
Average Balance Sheet, Interest Earnings & Expenses and Average Rates        
Q2 2021 vs Q1 2021 vs Q2 2020 (unaudited)           
              
 Q2 2021 Q1 2021 Q2 2020  
 AverageEarnings /Yield / AverageEarnings /Yield / AverageEarnings /Yield /  
Dollars in thousandsBalancesExpenseRate BalancesExpenseRate BalancesExpenseRate  
              
ASSETS             
Interest earning assets             
Loans, net of unearned interest (1)            
Taxable$2,455,757 $27,593 4.51% $2,355,705 $27,419 4.72% $2,118,158 $25,466 4.84%  
Tax-exempt (2) 11,370  132 4.66%  12,679  151 4.83%  17,244  200 4.66%  
Securities             
Taxable 285,092  1,351 1.90%  266,289  1,295 1.97%  248,792  1,453 2.35%  
Tax-exempt (2) 147,703  1,078 2.93%  144,880  1,091 3.05%  120,385  1,012 3.38%  
Interest bearing deposits other banks            
        and Federal funds sold 154,677  56 0.15%  166,531  67 0.16%  41,776  60 0.58%  
Total interest earning assets 3,054,599  30,210 3.97%  2,946,084  30,023 4.13%  2,546,355  28,191 4.45%  
              
Noninterest earning assets             
Cash & due from banks 19,095     17,961     16,672     
Premises & equipment 53,210     53,317     50,457     
Other assets 170,470     167,343     140,355     
Allowance for credit losses (34,674)    (32,706)    (25,799)    
Total assets$3,262,700    $3,151,999    $2,728,040     
              
 LIABILITIES AND SHAREHOLDERS' EQUITY           
              
Liabilities             
Interest bearing liabilities             
Interest bearing             
demand deposits$995,673 $371 0.15% $960,190 $394 0.17% $764,852 $369 0.19%  
Savings deposits 665,735  634 0.38%  642,241  645 0.41%  512,634  1,200 0.94%  
Time deposits 562,605  1,131 0.81%  583,723  1,457 1.01%  625,717  2,617 1.68%  
Short-term borrowings 140,146  464 1.33%  140,146  469 1.36%  95,744  499 2.10%  
Long-term borrowings and             
subordinated debentures 49,694  544 4.39%  49,664  545 4.45%  20,299  186 3.69%  
Total interest bearing liabilities 2,413,853  3,144 0.52%  2,375,964  3,510 0.60%  2,019,246  4,871 0.97%  
              
Noninterest bearing liabilities             
Demand deposits 503,116     451,957     417,992     
Other liabilities 36,842     38,393     32,238     
Total liabilities 2,953,811     2,866,314     2,469,476     
              
Shareholders' equity - preferred 11,254     -     -     
Shareholders' equity - common 297,635     285,685     258,564     
Total liabilities and             
shareholders' equity$3,262,700    $3,151,999    $2,728,040     
              
NET INTEREST EARNINGS $27,066   $26,513   $23,320   
              
NET INTEREST MARGIN   3.55%    3.65%    3.68%  
              
(1) -For purposes of this table, nonaccrual loans are included in average loan balances.       
(2) - Interest income on tax-exempt securities and loans has been adjusted assuming a Federal tax rate of 21% for all periods presented. 
The tax equivalent adjustment resulted in an increase in interest income of $255,000, $261,000, and $254,000 for Q2 2021,  
Q1 2021 and Q2 2020, respectively.            
              


SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)      
Average Balance Sheet, Interest Earnings & Expenses and Average Rates     
YTD 2021 vs YTD 2020 (unaudited)        
   
 YTD 2021 YTD 2020 
 AverageEarnings /Yield / AverageEarnings /Yield / 
Dollars in thousandsBalancesExpenseRate BalancesExpenseRate 
         
ASSETS        
Interest earning assets        
Loans, net of unearned interest (1)        
Taxable$2,406,007 $55,012 4.61% $2,026,814 $50,555 5.02% 
Tax-exempt (2) 12,021  281 4.71%  16,059  385 4.82% 
Securities        
Taxable 275,742  2,646 1.94%  253,840  3,211 2.54% 
Tax-exempt (2) 146,300  2,168 2.99%  95,313  1,710 3.61% 
Interest bearing deposits other banks       
and Federal funds sold 160,592  123 0.15%  38,712  159 0.83% 
Total interest earning assets 3,000,662  60,230 4.05%  2,430,738  56,020 4.63% 
         
Noninterest earning assets        
Cash & due from banks 18,592     15,548    
Premises & equipment 53,263     48,303    
Other assets 168,510     130,604    
Allowance for loan losses (33,696)    (24,342)   
Total assets$3,207,331    $2,600,851    
         
 LIABILITIES AND SHAREHOLDERS' EQUITY       
         
Liabilities        
Interest bearing liabilities        
Interest bearing        
demand deposits$978,029 $765 0.16% $704,404 $1,449 0.41% 
Savings deposits 654,053  1,279 0.39%  480,827  2,537 1.06% 
Time deposits 573,107  2,588 0.91%  620,409  5,550 1.80% 
Short-term borrowings 140,146  933 1.34%  107,675  1,129 2.11% 
Long-term borrowings and        
subordinated debentures 49,679  1,089 4.42%  20,301  405 4.01% 
  2,395,014  6,654 0.56%  1,933,616  11,070 1.15% 
Noninterest bearing liabilities        
Demand deposits 477,766     378,667    
Other liabilities 37,614     29,106    
Total liabilities 2,910,394     2,341,389    
         
Shareholders' equity - preferred 5,658     -    
Shareholders' equity - common 291,279     259,462    
Total liabilities and        
shareholders' equity$3,207,331    $2,600,851    
         
NET INTEREST EARNINGS $53,576   $44,950  
         
NET INTEREST MARGIN   3.60%    3.72% 
         
(1) -For purposes of this table, nonaccrual loans are included in average loan balances.   
(2) - Interest income on tax-exempt securities and loans has been adjusted assuming a Federal tax rate of 21%.  
The tax equivalent adjustment resulted in an increase in interest income of $514,000 and $440,000 for the  
YTD 2021 and YTD 2020 periods, respectively.