Summit Financial Group Reports Fourth Quarter 2021 EPS of $0.95 on Continued Loan Growth and Record Net Interest Income, Total Revenue and Net Income

Moorefield, West Virginia, UNITED STATES


MOOREFIELD, W.Va., Jan. 27, 2022 (GLOBE NEWSWIRE) -- Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ: SMMF) today reported continued strong financial results for the fourth quarter of 2021, including growth in earnings, net interest income, revenue, and commercial and total loans to new record levels, while maintaining sustained asset quality strength and expense discipline.

The Company, which serves commercial and individual clients across West Virginia, the Washington metropolitan area, Virginia and Kentucky through Summit Community Bank, Inc., grew fourth quarter 2021 net income applicable to common shares to $12.4 million, or $0.95 per diluted share. Earnings increased 2.8 percent from $12.0 million, or $0.92 per diluted share, in the third quarter of 2021 and 20.5 percent from $10.3 million, or $0.79 per share, in the fourth quarter of 2020. For the year ended December 31, 2021, Summit grew earnings by 44.1 percent to $45.1 million, or $3.47 per share, from $31.3 million, or $2.41 per share in 2020.  

“We believe we have some of the best bankers in the markets we serve, which has been key to our ability to accelerate organic loan growth through the fourth quarter and position us well with significant commercial new business pipelines heading into 2022,” said H. Charles Maddy, III, President and Chief Executive Officer. “We also continued to manage the balance sheet to maximize profitability while maintaining our low operating expense advantage relative to peers.”

Highlights for Q4 2021

  • Total loans, excluding mortgage warehouse lines of credit and Paycheck Protection Program (“PPP”) lending, increased 6.4 percent, or 25.7 percent annualized, during the quarter and 20.9 percent during the year.
  • Commercial loans excluding PPP lending increased 8.6 percent (34.4 percent annualized) during the quarter and 34.3 percent during 2021.
  • Net interest income increased 2.8 percent from the linked quarter and 10.0 percent from the year-ago period, primarily due to loan growth and lower funding costs.
  • Net interest margin (“NIM”) increased 2 basis points to 3.49 percent from the linked quarter, as yield on interest earning assets increased 3 basis points while the cost of funds increased 1 basis point. Summit remains strategically well positioned for a rising rate environment.
  • Revenue from net interest income and noninterest income, excluding gains and losses on debt securities and equity investments, grew 6.2 percent from the linked quarter and 11.7 percent from the year-ago quarter.
  • Incurred $1.5 million provision for credit losses in the quarter compared to none in the linked quarter and $3.0 million in the year-ago quarter; period-end allowance for loan credit losses equaled $32.3 million, or 1.17 percent of total loans and 254.4 percent of nonperforming loans.
  • Grew pre-tax, pre-provision earnings 10.5 percent from the linked quarter and 9.6 percent from the year-ago quarter.
  • Achieved an efficiency ratio of 49.04 percent and annualized non-interest expense of 2.02 percent of average assets.
  • Reduced property held for sale by 20.8 percent during the quarter and 36.8 percent from December 31, 2020.
  • Reduced nonperforming assets (“NPAs”) to 0.63 percent of total assets, excluding restructured assets, down 4 basis points during the quarter and 53 basis points from December 31, 2020.
  • Issued $75 million of growth capital through the private placement of 3.25% Fixed-to-Floating Rate Subordinated Notes due 2031.

Results from Operations

Net interest income grew to $28.8 million in the fourth quarter of 2021, an increase of 2.8 percent from the linked quarter and 10.0 percent from the prior-year fourth quarter. NIM for fourth quarter of 2021 was 3.49 percent compared to 3.47 percent for the linked quarter and 3.76 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 3.45 percent for the fourth quarter of 2021, 3.41 percent for the linked quarter and 3.70 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 fourth quarter 2021 was $6.0 million compared to $4.6 million for the linked quarter and $5.8 million for the comparable period of 2020. The Company recorded realized securities losses on debt securities of $109,000 and $68,000 in the fourth quarter and linked quarter of 2021, respectively, and gains of $912,000 in the year-ago quarter. In addition, we recognized a gain on equity investments of $202,000 in Q4 2021.

Mortgage origination revenue was $1.4 million in the fourth quarter of 2021, including an $879,000 increase in the fair value of mortgage servicing rights, compared to $742,000 for the linked quarter and $1.2 million for the year-ago period, including a positive $284,000 mortgage servicing rights fair value adjustment. Year-to-date, mortgage origination revenue grew to $4.0 million, increasing 42.9 percent from 2020.

Excluding gains and losses on debt securities and equity investments and mortgage servicing rights fair value adjustments, noninterest income was $5.0 million in fourth quarter 2021 compared to $4.6 million in the linked quarter and $4.6 million in the year-ago quarter.

Revenue from net interest income and noninterest income, excluding gains and losses on debt securities and equity investments and mortgage servicing rights fair value adjustments, grew to $33.8 million, up 3.5 percent from $32.7 million in the linked quarter and 9.8 percent from $30.8 million in the year-ago quarter. Revenue, excluding gains and losses on debt securities and equity investments and mortgage servicing rights fair value adjustments, for the full year 2021, grew to $128.6 million, up 15.0 percent from 2020 and outpacing the 10.3 percent noninterest expense increase.

Total noninterest expense increased to $17.9 million in the fourth quarter of 2021, up 3.3 percent from $17.3 million in the linked quarter and 8.0 percent from $16.6 million for the prior-year fourth quarter, reflecting acquisition-related expenses primarily from Summit’s recently completed branch acquisitions, as well as ongoing operating costs for its December 2020 purchase of Kentucky’s WinFirst Bank.

Salary and benefit expenses of $9.0 million in the fourth quarter of 2021 increased from $8.7 million in the linked quarter, while acquisitions closed in December 2020 and July 2021 contributed to an increase from $8.3 million in the year-ago period.

Additionally, other significant factors contributing to the changes in total noninterest expense in the fourth quarter of 2021 were:   equipment expense of $1.9 million compared to $1.9 million for the linked quarter and $1.5 million for the year-ago period, foreclosed properties expense of $403,000 compared to $370,000 in the linked quarter and $676,000 in the year-ago period, as well as other expenses of $3.3 million compared to $2.7 million for the linked quarter and $3.1 million in the year-ago period. The changes in these other expenses include:

  • Fraud and robbery losses of $190,000 during Q4 2021 compared to $36,000 and $86,000 in the linked and year-ago quarters, respectively;
  • Virginia franchise tax of $228,000 during Q4 2021 compared to $137,000 and $95,000 in the linked and year-ago quarters, respectively;
  • Debit card processing expenses of $340,000 during Q4 2021 compared to $343,000 and $259,000 in the linked and year-ago quarters, respectively; and
  • Internet banking expenses of $322,000 during Q4 2021 compared to $306,000 and $279,000 in the linked and year-ago quarters, respectively.

Summit’s efficiency ratio was 49.04 percent in the fourth quarter of 2021 compared to 49.53 percent in the linked quarter and 48.93 percent for the year-ago period. Non-interest expense was 2.02 percent of average assets in the fourth quarter of 2021, compared to 2.01 percent during the linked quarter and 2.22 percent in the year-ago period.

Balance Sheet

At December 31, 2021, total assets were $3.58 billion, an increase of $67.8 million, or 1.9 percent, during the fourth quarter and $470.3 million, or 15.1 percent since December 31, 2020.

Total loans net of unearned fees grew to $2.76 billion on December 31, 2021, increasing 8.1 percent during the fourth quarter and 14.5 percent year-to-date. Excluding PPP and mortgage warehouse lending, total loans grew to $2.52 billion on December 31, 2021, increasing 6.4 percent during the fourth quarter and 20.9 percent year-to-date.

Total commercial loans, including commercial and industrial (C&I) and commercial real estate (CRE) and excluding PPP lending, grew to $1.7 billion on December 31, 2021, increasing 8.6 percent during the fourth quarter and 34.3 percent year-to-date. Residential real estate and consumer lending totaled $567.9 million on December 31, 2021, down 0.5 percent during the fourth quarter and 7.7 percent year-to-date.

PPP balances paid down to $12.8 million on December 31, 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, were $227.9 million on December 31, 2021 compared to a peak of $252.5 million on June 30, 2020.

As Summit deployed excess liquidity to enhance profitability and fund continued loan growth, it lowered total deposits to $2.94 billion on December 31, 2021, down 0.4 percent during the fourth quarter.   Total deposits grew 13.4 percent year-to-date. Core deposits decreased to $2.85 billion on December 31, 2021 compared to the linked quarter, decreasing 0.4 percent during the fourth quarter and grew 15.9 percent year-to-date.

Total shareholders’ equity was $327.5 million as of December 31, 2021 compared to $323.3 million at September 30, 2021 and $281.6 million at December 31, 2020. During the fourth quarter of 2021, Summit raised $75 million of growth capital through the private placement of 3.25% Fixed-to-Floating Rate Subordinated Notes due 2031.

Tangible book value per common share increased to $19.54 as of December 31, 2021 compared to $18.83 at September 30, 2021 and $17.50 at December 31, 2020. Summit had 12,743,125 outstanding common shares at the end of the fourth quarter of 2021 compared to 12,976,693 at the end of the linked quarter and 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 fourth quarter of 2021, 248,244 shares of Summit’s common stock were repurchased under the Plan at an average price of $26.95 per share.

Asset Quality

Net loan charge-offs (“NCOs”) were $193,000, or 0.03 percent of average loans annualized, in the fourth quarter of 2021. NCOs of $370,000 represented 0.06 percent of average loans annualized in the linked quarter, and $239,000 or 0.04 percent of average loans annualized for fourth quarter 2020.

Summit recorded $1.5 million provision for credit losses in the fourth quarter of 2021, reflecting reserve build to support our substantial growth in both loans and unfunded loan commitments, partially offset by reserve reductions due to improving forecasted economic factors. The provision for credit losses was zero and $3.0 million for the linked and year-ago quarters, respectively.

Summit’s allowance for loan credit losses and allowance for credit losses on unfunded loan commitments were $32.3 million and $7.28 million, respectively, as of December 31, 2021, compared to $32.4 million and $5.86 million, respectively, at the end of the linked quarter. The allowance for loan credit losses declined just slightly in Q4 2021 as the impact of improving forecasted economic factors served to offset fully the additional provisions for credit losses resulting from the significant volumes of new loans. The allowance for credit losses on unfunded loan commitments increased $1.42 million during the most recent quarter, principally as result of the recent strong volumes of construction loan commitments having a higher historical loss ratio than do our other loans as a whole.

The allowance for loan credit losses stood at 1.17 percent of total loans at year-end 2021 compared to1.27 percent at September 30, 2021 and 1.34 percent at December 31, 2020.

As of December 31, 2021, NPAs consisting of nonperforming loans, foreclosed properties and repossessed assets, totaled $22.6 million, or 0.63 percent of assets, compared to $23.6 million, or 0.67 percent of assets at the linked quarter-end and $35.9 million, or 1.16 percent of assets at the end 2020. During January 2022, we closed on the sale of a foreclosed residential land development project carried on the balance sheet at $2.00 million in property held for sale at year-end 2021 and realized a gain of $201,000 as a result of the sale.

About the Company

Summit Financial Group, Inc. is the $3.58 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 45 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)   
Q4 2021 vs Q4 2020   
    
  For the Quarter EndedPercent
Dollars in thousands12/31/202112/31/2020Change
Statements of Income   
 Interest income   
 Loans, including fees$28,979 $27,8973.9%
 Securities 2,763  2,22824.0%
 Other 75  5147.1%
 Total interest income 31,817  30,1765.4%
 Interest expense   
 Deposits 1,718  2,956-41.9%
 Borrowings 1,267  1,01425.0%
 Total interest expense 2,985  3,970-24.8%
 Net interest income 28,832  26,20610.0%
 Provision for credit losses 1,500  3,000n/m
 Net interest income after provision   
 for credit losses 27,332  23,20617.8%
     
 Noninterest income   
 Trust and wealth management fees 847  62635.3%
 Mortgage origination revenue 1,361  1,16317.0%
 Service charges on deposit accounts 1,501  1,30515.0%
 Bank card revenue 1,528  1,23723.5%
 Gains on equity investments 202  -n/a
 Realized gains/(losses) on debt securities, net (109) 912-112.0%
 Bank owned life insurance and annuity income 293  23325.8%
 Other income 330  3019.6%
 Total noninterest income 5,953  5,7773.0%
 Noninterest expense   
 Salaries and employee benefits 8,977  8,2508.8%
 Net occupancy expense 1,265  1,04620.9%
 Equipment expense 1,902  1,50226.6%
 Professional fees 438  37018.4%
 Advertising and public relations 216  2074.3%
 Amortization of intangibles 387  409-5.4%
 FDIC premiums 330  26126.4%
 Bank card expense 703  57322.7%
 Foreclosed properties expense, net 403  676-40.4%
 Acquisition-related expense 57  218-73.9%
 Other expenses 3,250  3,0945.0%
 Total noninterest expense 17,928  16,6068.0%
 Income before income taxes 15,357  12,37724.1%
 Income taxes 2,777  2,12630.6%
 Net income 12,580  10,25122.7%
 Preferred stock dividends 225  -n/a
     
 Net income applicable to common shares$12,355 $10,25120.5%
         


SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)  
Quarterly Performance Summary (unaudited)   
Q4 2021 vs Q4 2020  
     
  For the Quarter EndedPercent
  12/31/202112/31/2020Change
Per Share Data   
 Earnings per common share   
 Basic$0.96 $0.79 21.5%
 Diluted$0.95 $0.79 20.3%
     
 Cash dividends per common share$0.18 $0.17 5.9%
 Common stock dividend payout ratio 18.3%  21.5% -15.1%
     
 Average common shares outstanding   
 Basic 12,916,555  12,932,768 -0.1%
 Diluted 12,976,181  12,980,041 -0.0%
     
 Common shares outstanding at period end 12,743,125  12,942,004 -1.5%
     
Performance Ratios   
 Return on average equity 15.48%  14.90% 3.9%
 Return on average tangible equity (C) 19.72%  18.70% 5.5%
 Return on average tangible common equity (D) 20.91%  18.70% 11.8%
 Return on average assets 1.42%  1.37% 3.6%
 Net interest margin (A) 3.49%  3.76% -7.2%
 Efficiency ratio (B) 49.04%  48.93% 0.2%
     

NOTES

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

(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.

(C) – Return on average tangible equity = (Net income – Amortization of intangibles [after-tax]) / (Average shareholders’ equity – Average intangible assets).

(D) – Return on average tangible common equity = (Net income – Amortization of intangibles [after-tax]) / (Average common shareholders’ equity – Average intangible assets).

   
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)  
Annual Performance Summary (unaudited)   
2021 vs 2020   
     
  For the Year EndedPercent
Dollars in thousands12/31/202112/31/2020Change
Statements of Income   
 Interest income   
 Loans, including fees$112,630 $105,564 6.7%
 Securities 9,470  9,173 3.2%
 Other 316  266 18.8%
 Total interest income 122,416  115,003 6.4%
 Interest expense   
 Deposits 8,182  16,044 -49.0%
 Borrowings 4,302  3,477 23.7%
 Total interest expense 12,484  19,521 -36.0%
 Net interest income 109,932  95,482 15.1%
 Provision for credit losses 4,000  14,500 n/m
 Net interest income after provision   
 for credit losses 105,932  80,982 30.8%
     
 Noninterest income   
 Trust and wealth management fees 2,886  2,495 15.7%
 Mortgage origination revenue 3,999  2,799 42.9%
 Service charges on deposit accounts 5,032  4,588 9.7%
 Bank card revenue 5,896  4,494 31.2%
 Gains on equity investments 202  - n/a
 Realized gains on debt securities, net 425  3,472 -87.8%
 Bank owned life insurance and annuity income 1,026  1,567 -34.5%
 Other income 742  668 11.1%
 Total noninterest income 20,208  20,083 0.6%
 Noninterest expense   
 Salaries and employee benefits 34,386  32,211 6.8%
 Net occupancy expense 4,824  3,963 21.7%
 Equipment expense 6,990  5,765 21.2%
 Professional fees 1,578  1,538 2.6%
 Advertising and public relations 697  596 16.9%
 Amortization of intangibles 1,563  1,659 -5.8%
 FDIC premiums 1,449  856 69.3%
 Bank card expense 2,668  2,225 19.9%
 Foreclosed properties expense, net 1,745  2,490 -29.9%
 Acquisition-related expense 1,224  1,671 -26.8%
 Other expenses 11,615  9,337 24.4%
 Total noninterest expense 68,739  62,311 10.3%
 Income before income taxes 57,401  38,754 48.1%
 Income taxes 11,663  7,428 57.0%
 Net income 45,738  31,326 46.0%
 Preferred stock dividends 589  - n/a
     
 Net income applicable to common shares$45,149 $31,326 44.1%

    

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)  
Annual Performance Summary (unaudited)   
2021 vs 2020  
     
  For the Year EndedPercent
  12/31/202112/31/20020Change
Per Share Data   
 Earnings per common share   
 Basic$3.49 $2.42 44.2%
 Diluted$3.47 $2.41 44.0%
     
 Cash dividends per common share$0.70 $0.68 2.9%
 Common stock dividend payout ratio 19.9%  28.2% -29.6%
     
 Average common shares outstanding   
 Basic 12,943,883  12,935,430 0.1%
 Diluted 13,003,428  12,975,385 0.2%
     
 Common shares outstanding at period end 12,743,125  12,942,004 -1.5%
     
Performance Ratios   
 Return on average equity 14.76%  11.80% 25.1%
 Return on average tangible equity (C) 18.71%  14.73% 27.0%
 Return on average tangible common equity (D) 19.51%  14.73% 32.5%
 Return on average assets 1.36%  1.13% 20.4%
 Net interest margin (A) 3.54%  3.71% -4.6%
 Efficiency ratio (B) 49.22%  50.00% -1.6%
     

NOTES

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

(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.

(C) – Return on average tangible equity = (Net income – Amortization of intangibles [after-tax]) / (Average shareholders’ equity – Average intangible assets).

(D) – Return on average tangible common equity = (Net income – Amortization of intangibles [after-tax]) / (Average common shareholders’ equity – Average intangible assets).

     
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)    
Five Quarter Performance Summary (unaudited)     
      
  For the Quarter Ended
Dollars in thousands12/31/20219/30/20216/30/20213/31/202112/31/2020
Statements of Income     
 Interest income     
 Loans, including fees$28,979 $28,416 $27,697 $27,538 $27,897
 Securities 2,763  2,348  2,202  2,157  2,228
 Other 75  118  56  67  51
 Total interest income 31,817  30,882  29,955  29,762  30,176
 Interest expense     
 Deposits 1,718  1,832  2,136  2,496  2,956
 Borrowings 1,267  1,013  1,008  1,014  1,014
 Total interest expense 2,985  2,845  3,144  3,510  3,970
 Net interest income 28,832  28,037  26,811  26,252  26,206
 Provision for credit losses 1,500  -  1,000  1,500  3,000
 Net interest income after provision     
 for credit losses 27,332  28,037  25,811  24,752  23,206
 Noninterest income     
 Trust and wealth management fees 847  718  683  638  626
 Mortgage origination revenue 1,361  742  898  998  1,163
 Service charges on deposit accounts 1,501  1,338  1,093  1,100  1,305
 Bank card revenue 1,528  1,509  1,519  1,341  1,237
 Gains on equity investments 202  -  -  -  -
 Realized gains/(losses) on debt securities, net (109) (68) 127  476  912
 Bank owned life insurance and annuity income 293  160  275  298  233
 Other income 330  168  120  123  301
 Total noninterest income 5,953  4,567  4,715  4,974  5,777
 Noninterest expense     
 Salaries and employee benefits 8,977  8,745  8,230  8,435  8,250
 Net occupancy expense 1,265  1,254  1,131  1,174  1,046
 Equipment expense 1,902  1,908  1,598  1,581  1,502
 Professional fees 438  374  428  338  370
 Advertising and public relations 216  254  138  90  207
 Amortization of intangibles 387  390  382  405  409
 FDIC premiums 330  354  488  277  261
 Bank card expense 703  705  685  573  573
 Foreclosed properties expense, net 403  370  746  227  676
 Acquisition-related expenses 57  273  454  440  218
 Other expenses 3,250  2,716  2,756  2,893  3,094
 Total noninterest expense 17,928  17,343  17,036  16,433  16,606
 Income before income taxes 15,357  15,261  13,490  13,293  12,377
 Income tax expense 2,777  3,023  2,930  2,933  2,126
 Net income 12,580  12,238  10,560  10,360  10,251
 Preferred stock dividends 225  225  139  -  -
       
 Net income applicable to common shares$12,355 $12,013 $10,421 $10,360 $10,251
                


SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)    
Five Quarter Performance Summary (unaudited)     
      
  For the Quarter Ended
  12/31/20219/30/20216/30/20213/31/202112/31/2020
Per Share Data     
 Earnings per common share     
 Basic$0.96 $0.93 $0.80 $0.80 $0.79 
 Diluted$0.95 $0.92 $0.80 $0.80 $0.79 
       
 Cash dividends per common share$0.18 $0.18 $0.17 $0.17 $0.17 
 Common stock dividend payout ratio 18.5%  19.1%  21.2%  20.6%  21.5% 
       
 Average common shares outstanding     
 Basic 12,916,555  12,964,575  12,952,357  12,942,099  12,932,768 
 Diluted 12,976,181  13,018,672  13,013,714  13,002,062  12,980,041 
       
 Common shares outstanding at period end 12,743,125  12,976,693  12,963,057  12,950,714  12,942,004 
       
Performance Ratios     
 Return on average equity 15.48%  15.30%  13.67%  14.51%  14.90% 
 Return on average tangible equity (C) 19.72%  19.51%  17.03%  18.49%  18.70% 
 Return on average tangible common equity (D) 20.91%  20.71%  17.59%  18.49%  18.70% 
 Return on average assets 1.42%  1.42%  1.29%  1.31%  1.37% 
 Net interest margin (A) 3.49%  3.47%  3.55%  3.65%  3.76% 
 Efficiency ratio (B) 49.04%  49.53%  48.82%  49.50%  48.93% 

NOTES

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

(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.

(C) – Return on average tangible equity = (Net income – Amortization of intangibles [after-tax]) / (Average shareholders’ equity – Average intangible assets).

(D) – Return on average tangible common equity = (Net income – Amortization of intangibles [after-tax]) / (Average common shareholders’ equity – Average intangible assets).

      
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)     
Selected Balance Sheet Data (unaudited)     
Dollars in thousands, except per share amounts12/31/20219/30/20216/30/20213/31/202112/31/2020
Assets     
 Cash and due from banks$21,006 $21,247 $18,707 $20,732 $19,522 
 Interest bearing deposits other banks 57,452  189,862  176,282  155,865  80,265 
 Debt securities, available for sale 401,103  424,741  345,742  311,384  286,127 
 Debt securities, held to maturity 98,060  98,528  98,995  99,457  99,914 
 Equity investments 20,202  -  -  -  - 
 Other investments 11,304  10,649  10,661  10,776  14,185 
 Loans, net 2,729,093  2,521,704  2,395,885  2,418,029  2,379,907 
 Property held for sale 9,858  12,450  13,170  13,918  15,588 
 Premises and equipment, net 56,371  56,818  53,104  53,289  52,537 
 Goodwill and other intangible assets 63,590  63,977  53,858  54,239  55,123 
 Cash surrender value of life insurance policies and annuities 60,613  60,241  60,087  59,740  59,438 
 Other assets 48,067  48,734  46,042  50,706  43,778 
 Total assets$3,576,719 $3,508,951 $3,272,533 $3,248,135 $3,106,384 
Liabilities and Shareholders' Equity     
 Deposits$2,943,089 $2,955,940 $2,729,205 $2,725,010 $2,595,651 
 Short-term borrowings 140,146  140,146  140,146  140,145  140,146 
 Long-term borrowings and     
 subordinated debentures 123,159  49,739  49,710  49,681  49,652 
 Other liabilities 42,852  39,837  38,265  39,854  39,355 
 Shareholders' equity - preferred 14,920  14,920  14,920  -  - 
 Shareholders' equity - common 312,553  308,369  300,287  293,445  281,580 
 Total liabilities and shareholders' equity$3,576,719 $3,508,951 $3,272,533 $3,248,135 $3,106,384 
       
 Book value per common share$24.53 $23.76 $23.16 $22.66 $21.76 
 Tangible book value per common share (A)$19.54 $18.83 $19.01 $18.47 $17.50 
 Tangible common equity to tangible assets (B) 7.1%  7.1%  7.7%  7.5%  7.4% 
       

NOTES
(A) – Tangible book value per share = (Common shareholders’ equity – Intangible assets) / Common shares outstanding.
(B) – Tangible common equity to tangible assets = (Common shareholders’ equity – Intangible assets) / (Total assets – Intangible assets).

    
SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)   
Regulatory Capital Ratios (unaudited)     
       
  12/31/20219/30/20216/30/20213/31/202112/31/2020
Summit Financial Group, Inc.     
 CET1 Risk-based Capital8.4%9.0%9.6%9.3%9.3%
 Tier 1 Risk-based Capital9.5%10.2%10.9%10.1%10.0%
 Total Risk-based Capital13.8%12.1%13.0%12.1%12.1%
 Tier 1 Leverage8.3%8.4%8.9%8.5%8.6%
       
Summit Community Bank, Inc.     
 CET1 Risk-based Capital11.9%11.2%11.9%11.1%11.1%
 Tier 1 Risk-based Capital11.9%11.2%11.9%11.1%11.1%
 Total Risk-based Capital12.8%12.1%12.9%12.0%12.0%
 Tier 1 Leverage10.4%9.2%9.7%9.3%9.5%
       


SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)    
Loan Composition (unaudited)      
        
Dollars in thousands12/31/20219/30/20216/30/20213/31/202112/31/2020 
        
Commercial $365,301 $317,855 $326,468 $348,022 $306,885 
Mortgage warehouse lines 227,869  161,628  105,288  187,995  251,810 
Commercial real estate      
Owner occupied 484,708  439,202  392,164  358,200  351,860 
Non-owner occupied 866,031  835,071  784,415  735,594  685,565 
Construction and development      
Land and development 100,805  99,718  102,670  106,312  107,342 
Construction 146,038  127,432  140,788  126,011  91,100 
Residential real estate      
Conventional 384,794  394,889  398,239  411,103  425,519 
Jumbo  79,108  71,977  71,694  65,851  74,185 
Home equity 72,112  71,496  72,956  77,684  81,588 
Consumer  31,923  32,284  32,732  32,924  33,906 
Other  2,702  2,558  2,356  2,375  2,393 
Total loans, net of unearned fees 2,761,391  2,554,110  2,429,770  2,452,071  2,412,153 
Less allowance for credit losses 32,298  32,406  33,885  34,042  32,246 
Loans, net$2,729,093 $2,521,704 $2,395,885 $2,418,029 $2,379,907 
        
Unfunded loan commitments$688,493 $627,461 $535,587 $556,910 $534,256 
        


SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)    
Deposit Composition (unaudited)     
        
Dollars in thousands 12/31/20219/30/20216/30/20213/31/202112/31/2020 
Core deposits       
Non-interest bearing checking$568,986 $575,542 $503,097 $505,264 $440,819 
Interest bearing checking 1,127,298  1,121,028  1,005,725  988,204  934,185 
Savings  698,156  693,686  677,000  656,514  621,168 
Time deposits  451,713  467,024  441,139  456,431  460,443 
Total core deposits 2,846,153  2,857,280  2,626,961  2,606,413  2,456,615 
        
Brokered time deposits 14,677  14,671  23,521  39,125  55,454 
Other non-core time deposits 82,259  83,989  78,723  79,472  83,582 
Total deposits$2,943,089 $2,955,940 $2,729,205 $2,725,010 $2,595,651 
        


SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)    
Asset Quality Information (unaudited)     
       
  For the Quarter Ended
Dollars in thousands12/31/20219/30/20216/30/20213/31/202112/31/2020
       
 Gross loan charge-offs$282 $528 $343 $354 $434 
 Gross loan recoveries (89) (158) (141) (165) (195)
 Net loan charge-offs$193 $370 $202 $189 $239 
       
 Net loan charge-offs to average loans (annualized) 0.03%  0.06%  0.03%  0.03%  0.04% 
       
 Allowance for loan credit losses$32,298 $32,406 $33,885 $34,042 $32,246 
 Allowance for loan credit losses as a percentage     
 of period end loans 1.17%  1.27%  1.39%  1.39%  1.34% 
       
 Allowance for credit losses on     
 unfunded loan commitments ("ULC")$7,275 $5,860 $4,660 $3,705 $4,190 
 Allowance for credit losses on ULC     
 as a percentage of peiod end ULC 1.06%  0.93%  0.87%  0.67%  0.78% 
       
 Nonperforming assets:     
 Nonperforming loans     
 Commercial$740 $459 $968 $848 $525 
 Commercial real estate 4,603  4,643  14,430  17,137  14,237 
 Residential construction and development 1,560  448  621  626  235 
 Residential real estate 5,772  5,514  6,800  6,667  5,264 
 Consumer 21  48  38  54  74 
 Other -  -  -  -  - 
 Total nonperforming loans 12,696  11,112  22,857  25,332  20,335 
 Foreclosed properties     
 Commercial real estate 1,389  2,192  2,281  2,281  2,581 
 Commercial construction and development 2,332  2,925  3,146  3,884  4,154 
 Residential construction and development 5,561  6,712  6,859  7,129  7,791 
 Residential real estate 576  621  884  624  1,062 
 Total foreclosed properties 9,858  12,450  13,170  13,918  15,588 
 Other repossessed assets -  -  -  -  - 
 Total nonperforming assets$22,554 $23,562 $36,027 $39,250 $35,923 
       
 Nonperforming loans to period end loans 0.46%  0.44%  0.94%  1.03%  0.84% 
 Nonperforming assets to period end assets 0.63%  0.67%  1.10%  1.21%  1.16% 
       
 Troubled debt restructurings     
 Performing$18,887 $20,535 $20,799 $20,462 $21,375 
 Nonperforming 2,039  1,141  1,235  3,828  3,127 
 Total troubled debt restructurings$20,926 $21,676 $22,034 $24,290 $24,502 


SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)    
Loans Past Due 30-89 Days (unaudited)     
       
Dollars in thousands12/31/20219/30/20216/30/20213/31/202112/31/2020
       
 Commercial$751 $304 $414 $335 $1
 Commercial real estate 683  281  733  508  274
 Construction and development 45  1,215  1,911  330  47
 Residential real estate 3,552  2,643  3,594  2,146  4,405
 Consumer 190  193  404  96  233
 Other 22  1  -  3  5
 Total$5,243 $4,637 $7,056 $3,418 $4,965
       


SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)         
Average Balance Sheet, Interest Earnings & Expenses and Average Rates      
Q4 2021 vs Q3 2021 vs Q4 2020 (unaudited)         
            
 Q4 2021 Q3 2021 Q4 2020
 AverageEarnings /Yield / AverageEarnings /Yield / AverageEarnings /Yield /
Dollars in thousandsBalancesExpenseRate BalancesExpenseRate BalancesExpenseRate
            
ASSETS           
Interest earning assets           
Loans, net of unearned interest (1)          
Taxable$2,640,975 $28,916 4.34% $2,495,880 $28,340 4.50% $2,292,797 $27,774 4.82%
Tax-exempt (2) 6,888  81 4.67%  7,871  96 4.84%  13,062  156 4.75%
Securities           
Taxable 349,541  1,806 2.05%  315,082  1,432 1.80%  258,594  1,341 2.06%
Tax-exempt (2) 177,757  1,212 2.71%  166,285  1,159 2.77%  147,979  1,122 3.02%
Interest bearing deposits other banks          
and Federal funds sold 132,471  75 0.22%  248,315  118 0.19%  87,151  51 0.23%
Total interest earning assets 3,307,632  32,090 3.85%  3,233,433  31,145 3.82%  2,799,583  30,444 4.33%
            
Noninterest earning assets           
Cash & due from banks 21,037     20,077     16,846   
Premises & equipment 56,566     55,908     52,688   
Other assets 190,445     175,975     157,436   
Allowance for credit losses (32,691)    (33,911)    (30,778)  
Total assets$3,542,989    $3,451,482    $2,995,775   
            
 LIABILITIES AND SHAREHOLDERS' EQUITY         
            
Liabilities           
Interest bearing liabilities           
Interest bearing           
demand deposits 1,128,637  319 0.11% $1,092,392 $325 0.12% $895,325 $357 0.16%
Savings deposits 692,893  590 0.34%  691,411  602 0.35%  607,481  716 0.47%
Time deposits 560,140  809 0.57%  571,445  905 0.63%  566,917  1,883 1.32%
Short-term borrowings 140,146  365 1.03%  140,146  470 1.33%  140,243  467 1.32%
Long-term borrowings and           
subordinated debentures 86,509  902 4.14%  49,724  543 4.33%  49,637  547 4.38%
Total interest bearing liabilities 2,608,325  2,985 0.45%  2,545,118  2,845 0.44%  2,259,603  3,970 0.70%
            
Noninterest bearing liabilities           
Demand deposits 568,764     547,627     426,441   
Other liabilities 40,905     38,789     34,558   
Total liabilities 3,217,994     3,131,534     2,720,602   
            
Shareholders' equity - preferred 14,920     14,920     -   
Shareholders' equity - common 310,075     305,028     275,173   
Total liabilities and           
shareholders' equity$3,542,989    $3,451,482    $2,995,775   
            
NET INTEREST EARNINGS $29,105    $28,300    $26,474  
            
NET INTEREST MARGIN  3.49%   3.47%   3.76%
            
(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 $273,000, $263,000, and $268,000 for Q4 2021,
Q3 2021 and Q4 2020.           
            


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$2,487,885 $112,269 4.51% $2,150,294 $104,986 4.88% 
Tax-exempt (2) 9,681  458 4.73%  15,352  732 4.77% 
Securities        
Taxable 301,446  5,883 1.95%  256,893  5,996 2.33% 
Tax-exempt (2) 159,266  4,541 2.85%  122,386  4,020 3.28% 
Interest bearing deposits other banks       
and Federal funds sold 175,615  315 0.18%  56,399  266 0.47% 
Total interest earning assets 3,133,893  123,466 3.94%  2,601,324  116,000 4.46% 
         
Noninterest earning assets        
Cash & due from banks 19,582     16,139    
Premises & equipment 54,762     50,418    
Other assets 178,535     143,284    
Allowance for loan losses (33,491)    (26,915)   
Total assets$3,353,281    $2,784,250    
         
 LIABILITIES AND SHAREHOLDERS' EQUITY       
         
Liabilities        
Interest bearing liabilities        
Interest bearing        
demand deposits$1,044,817 $1,408 0.13% $789,064 $2,187 0.28% 
Savings deposits 673,259  2,471 0.37%  539,625  4,178 0.77% 
Time deposits 569,420  4,302 0.76%  598,085  9,679 1.62% 
Short-term borrowings 140,146  1,768 1.26%  130,411  2,330 1.79% 
Long-term borrowings and        
subordinated debentures 58,974  2,535 4.30%  28,396  1,147 4.04% 
  2,486,616  12,484 0.50%  2,085,581  19,521 0.94% 
Noninterest bearing liabilities        
Demand deposits 518,311     401,502    
Other liabilities 38,545     31,712    
Total liabilities 3,043,472     2,518,795    
         
Shareholders' equity - preferred 10,327     -    
Shareholders' equity - common 299,482     265,455    
Total liabilities and        
shareholders' equity$3,353,281    $2,784,250    
         
NET INTEREST EARNINGS $110,982    $96,479   
         
NET INTEREST MARGIN  3.54%   3.71% 
         
(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 $1,050,000 and $997,000 for the 
YTD 2021 and YTD 2020 periods, respectively.      
         


Contact:Robert S. Tissue, Executive Vice President & CFO
Telephone:(304) 530-0552
Email: rtissue@summitfgi.com