Summit Financial Group Inc.

07/29/2021 | Press release | Distributed by Public on 07/29/2021 04:04

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

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 thousands Total Loan Balance as of 6/30/2021 Loans Modified to Interest Only Payments Loans Modified to Payment Deferral Total Loans
Modified 		Percentage of Loans Modified
Hospitality Industry $ 116,745 $ 866 $ - $ 866 0.7 %
Non-Owner Occupied Retail Stores 143,931 7,223 - 7,223 5.0 %
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 - 581 0.0 %
Total Commercial Loans 1,746,506 8,670 - 8,670 0.5 %
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 $ - $ 8,670 0.4 %

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 Ended Percent
Dollars in thousands 6/30/2021 6/30/2020 Change
Statements of Income
Interest income
Loans, including fees $ 27,697 $ 25,624 8.1 %
Securities 2,202 2,253 -2.3 %
Other 56 60 -6.7 %
Total interest income 29,955 27,937 7.2 %
Interest expense
Deposits 2,136 4,186 -49.0 %
Borrowings 1,008 685 47.2 %
Total interest expense 3,144 4,871 -35.5 %
Net interest income 26,811 23,066 16.2 %
Provision for credit losses 1,000 3,000 n/m
Net interest income after provision
for credit losses 25,811 20,066 28.6 %
Noninterest income
Trust and wealth management fees 683 582 17.4 %
Mortgage origination revenue 898 641 40.1 %
Service charges on deposit accounts 1,093 882 23.9 %
Bank card revenue 1,519 1,087 39.7 %
Realized securities gains 127 - n/a
Bank owned life insurance and annuity income 275 275 0.0 %
Other income 120 131 -8.4 %
Total noninterest income 4,715 3,598 31.0 %
Noninterest expense
Salaries and employee benefits 8,230 7,655 7.5 %
Net occupancy expense 1,131 977 15.8 %
Equipment expense 1,598 1,360 17.5 %
Professional fees 428 417 2.6 %
Advertising and public relations 138 93 48.4 %
Amortization of intangibles 382 410 -6.8 %
FDIC premiums 488 110 343.6 %
Bank card expense 685 560 22.3 %
Foreclosed properties expense, net of losses 746 240 210.8 %
Acquisition-related expense 454 637 -28.7 %
Other expenses 2,756 2,738 0.7 %
Total noninterest expense 17,036 15,197 12.1 %
Income before income taxes 13,490 8,467 59.3 %
Income taxes 2,930 1,518 93.0 %
Net income 10,560 6,949 52.0 %
Preferred stock dividends 139 - n/a
Net income applicable to common shares $ 10,421 $ 6,949 50.0 %
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary (unaudited)
Q2 2021 vs Q2 2020
For the Quarter Ended Percent
6/30/2021 6/30/2020 Change
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 Ended Percent
Dollars in thousands 6/30/2021 6/30/2020 Change
Statements of Income
Interest income
Loans, including fees $ 55,234 $ 50,859 8.6 %
Securities 4,359 4,563 -4.5 %
Other 123 158 -22.2 %
Total interest income 59,716 55,580 7.4 %
Interest expense
Deposits 4,632 9,537 -51.4 %
Borrowings 2,022 1,534 31.8 %
Total interest expense 6,654 11,071 -39.9 %
Net interest income 53,062 44,509 19.2 %
Provision for credit losses 2,500 8,250 n/m
Net interest income after provision
for credit losses 50,562 36,259 39.4 %
Noninterest income
Trust and wealth management fees 1,321 1,247 5.9 %
Mortgage origination revenue 1,896 855 121.8 %
Service charges on deposit accounts 2,193 2,145 2.2 %
Bank card revenue 2,860 2,020 41.6 %
Realized securities gains 602 1,038 -42.0 %
Bank owned life insurance and annuity income 573 539 6.3 %
Other income 244 255 -4.3 %
Total noninterest income 9,689 8,099 19.6 %
Noninterest expense
Salaries and employee benefits 16,665 15,160 9.9 %
Net occupancy expense 2,305 1,860 23.9 %
Equipment expense 3,180 2,789 14.0 %
Professional fees 766 804 -4.7 %
Advertising and public relations 228 244 -6.6 %
Amortization of intangibles 787 839 -6.2 %
FDIC premiums 765 275 178.2 %
Bank card expense 1,259 1,063 18.4 %
Foreclosed properties expense, net of losses 972 1,207 -19.5 %
Acquisition-related expense 893 1,425 -37.3 %
Other expenses 5,649 4,529 24.7 %
Total noninterest expense 33,469 30,195 10.8 %
Income before income taxes 26,782 14,163 89.1 %
Income taxes 5,863 2,708 116.5 %
Net income 20,919 11,455 82.6 %
Preferred stock dividends 139 - n/a
Net income applicable to common shares $ 20,780 $ 11,455 81.4 %
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Six Month Performance Summary (unaudited)
2021 vs 2020
For the Six Months Ended Percent
6/30/2021 6/30/2020 Change
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 thousands 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020
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
6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020
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 amounts 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020
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)
6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020
Summit Financial Group, Inc.
CET1 Risk-based Capital 9.6% 9.3% 9.3% 9.9% 9.7%
Tier 1 Risk-based Capital 10.9% 10.1% 10.0% 10.7% 10.5%
Total Risk-based Capital 13.0% 12.1% 12.1% 12.9% 11.3%
Tier 1 Leverage 8.9% 8.5% 8.6% 8.7% 9.0%
Summit Community Bank, Inc.
CET1 Risk-based Capital 11.9% 11.1% 11.1% 11.8% 10.5%
Tier 1 Risk-based Capital 11.9% 11.1% 11.1% 11.8% 10.5%
Total Risk-based Capital 12.9% 12.0% 12.0% 12.7% 11.4%
Tier 1 Leverage 9.7% 9.3% 9.5% 9.6% 9.0%
SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Loan Composition (unaudited)
Dollars in thousands 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020
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 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020
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 thousands 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020
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 thousands 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020
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
Average Earnings / Yield / Average Earnings / Yield / Average Earnings / Yield /
Dollars in thousands Balances Expense Rate Balances Expense Rate Balances Expense Rate
ASSETS
Interest earning assets
Loans, net of unearned interest (1)
Taxable $ 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
Average Earnings / Yield / Average Earnings / Yield /
Dollars in thousands Balances Expense Rate Balances Expense Rate
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.

Source: Summit Financial Group, Inc.