Summit Financial Group Reports 37% Increase In Q3 2020 EPS Versus Q2 2020

Summit Financial Group, Inc.
·26 min read

Q3 2020 Diluted EPS $0.74 compared to $0.54 for Q2 2020 and $0.65 for Q3 2019

MOOREFIELD, W.V., Oct. 22, 2020 (GLOBE NEWSWIRE) -- Summit Financial Group, Inc. (Company or Summit) (NASDAQ: SMMF) today reported third quarter 2020 net income of $9.62 million, or $0.74 per diluted share. In comparison, earnings for second quarter 2020 were $6.95 million, or $0.54 per diluted share, and for third quarter 2019 were $8.06 million, or $0.65 per diluted share.

For the nine months ended September 30, 2020, Summit recorded net income of $21.1 million, or $1.62 per diluted share, compared with $23.7 million, or $1.88 per diluted share, for the comparable 2019 nine-month period, representing a decrease of 11.1 percent or 13.8 percent per diluted share.

I am very pleased to report Summit continues to rise to meet the unique challenges posed by 2020 and deliver well for our stakeholders, commented H. Charles Maddy, III, President and Chief Executive Officer. We posted another quarter of strong core operating performance, highlighted by record levels of net revenue resulting from continuing good growth in net interest income, a relatively stable net interest margin and well-controlled noninterest expenses. These results validate not only our core strategies but also our ability to remain disciplined in trying times. This is a tribute to our management and employees as they continue to put forth consistent, high levels of client service assisting our clients and communities.

Highlights for Q 3 20 20

  • Net interest income increased 29.5 percent (annualized) compared to Q2 2020 and increased 27.5 percent versus the same period in 2019, primarily due to loan growth and lower funding costs.

  • Net interest margin in Q3 2020 decreased 4 basis points to 3.64 percent as compared to the linked quarter, as yield on interest earning assets and cost of deposits and other funding each declined 16 basis points.

  • Excluding mortgage warehouse lines of credit, loan balances increased $40.8 million during the quarter.

  • Provision for credit losses of $3.25 million in Q3 2020 compared to $3.00 million in Q2 2020 and $500,000 in Q3 2019; our increased credit provisions in 2020 are principally due to the estimated potential future economic impact of the COVID-19 crisis. Since year end 2019, Summits allowances for credit losses on loans and unfunded loan commitments have increased a combined 151 percent.

  • Efficiency ratio improved to 48.95 percent compared to 51.97 percent in the linked quarter and 52.91 percent for Q3 2019.

  • Net foreclosed properties expenses increased to $607,000 in Q3 2020 compared to $240,000 in Q2 2020 and $305,000 in Q3 2019; this is primarily the result of write downs of foreclosed properties to estimated fair values totaling $555,000 in Q3 2020 compared to $218,000 in Q2 2020 and $133,000 in Q3 2019, while realized net gains on sales of foreclosed properties were $44,000 and $61,000 during Q3 and Q2 2020, respectively and realized net losses of $66,000 during Q3 2019.

  • Realized $1.52 million securities gains in Q3 2020 compared to no realized securities gains or losses in the linked quarter and realized securities gains of $453,000 in Q3 2019.

  • Merger expenses were $28,000 in Q3 2020 compared to $637,000 in the linked quarter, and $74,000 in Q3 2019.

  • Nonperforming assets as a percentage of total assets improved to 0.94 percent compared to 1.07 percent for the linked quarter and 1.28 percent at year end 2019.

  • We announced our entering into a definitive merger agreement to acquire WinFirst Financial Corp. (WinFirst) and its wholly-owned subsidiary, WinFirst Bank, headquartered in Winchester, Kentucky.

Merger & Acquisition Activity

On September 28, 2020, Summit announced the signing of a definitive merger agreement between Summit Community Bank, Inc., a wholly-owned subsidiary of Summit, and WinFirst Corp., pursuant to which Summit Community Bank will acquire all of the outstanding shares of common stock of WinFirst in exchange for cash.   This transaction is expected to close by year end 2020. WinFirst, a savings and loan holding company reported approximately $146 million in assets as of September 30, 2020 and operates two community banking offices in Winchester, Kentucky through its subsidiary, WinFirst Bank. Following the consummation of the merger, Summit Community Bank expects to consolidate WinFirst Bank with Summit Community Bank.

Further, on April 24, 2020, Summit Community Bank completed its acquisition of four branch banking offices located in the Eastern Panhandle of West Virginia from MVB Bank, Inc., a bank subsidiary of MVB Financial Corp. Summit assumed approximately $195.0 million in deposits and acquired approximately $35.3 million in loans in conjunction with this purchase. Also, Summit completed its acquisition of Cornerstone Financial Services, Inc. (Cornerstone) and its subsidiary, Cornerstone Bank, headquartered in West Union, West Virginia on January 1, 2020. At consummation, Cornerstone had total assets of $195.0 million, loans of $39.8 million, and deposits of $173.0 million.

Accordingly, the results of operations of Cornerstone and acquired MVB Bank branches are included in Summits consolidated results of operations from the dates of acquisition, and therefore Summits third quarter and first nine months of 2020 results reflect increased levels of average balances, income and expenses compared to comparable prior year periods.

Results from Operations

Total revenue for third quarter 2020, consisting of net interest income and noninterest income, increased 33.6 percent to $31.0 million, which included $1.52 million realized securities gains, compared to $23.2 million for third quarter 2019. For the year-to-date period ended September 30, 2020, total revenue was $83.6 million compared to $72.1 million for the same period of 2019, representing a 16.0 percent increase primarily as a result of higher net interest income.

For the third quarter of 2020, net interest income was $24.8 million, an increase of 27.5 percent from the $19.4 million reported in the prior-year third quarter and a 7.4 percent increase compared to the linked quarter. The net interest margin for third quarter 2020 was 3.64 percent compared to 3.68 percent for the linked quarter and 3.63 percent for the year-ago quarter. Excluding the impact of accretion and amortization of fair value acquisition accounting adjustments, Summits net interest margin would have been 3.59 percent for Q3 2020, 3.61 percent for Q2 2020 and 3.59 percent for Q3 2019.

Noninterest income, consisting primarily of service fee income from community banking activities and trust and wealth management fees, for third quarter 2020 was $6.21 million compared to $3.60 million for the linked quarter and $3.76 million for the comparable period of 2019, which included $1.52 million realized securities gains. Excluding realized securities gains, noninterest income was $4.69 million for third quarter 2020 and $3.3 million for third quarter 2019. Mortgage origination revenue increased to $780,000 for Q3 2020 compared to $77,000 in Q3 2019 due to higher volumes of secondary market loans driven primarily by historically low interest rates. Also included in Q3 2020 noninterest income is one-time income approximating $475,000 earned in conjunction with the recent investment in $9.3 million of annuities.

We recorded a $3.25 million provision for credit losses during third quarter 2020 compared to $3.0 million for the linked quarter and $500,000 in Q3 2019. As result of the adoption of CECL, the provision for credit losses now represents an estimate of the full amount of expected credit losses relative to loans, whereas under the pre-CECL incurred loss accounting method, the provision was only an estimate of probable existing loan losses.

Q3 2020 total noninterest expense increased 21.1 percent to $15.5 million compared to $12.8 million for the prior-year third quarter. This year-over-year increase resulted primarily due to the acquisition of Cornerstone and MVB Bank branches during 2020. Additionally, other significant factors contributing to the changes in total noninterest expense period over period are as follows: higher FDIC premiums, as we fully utilized in prior periods our FDICs Small Bank Assessment Credits, increased write downs of foreclosed properties to estimated fair values totaling $555,000 in Q3 2020 compared to $218,000 in Q2 2020 and $133,000 in Q3 2019 and deferred director compensation expense totaling $325,000 in Q3 2020, compared to $6,000 in Q2 2020 and $432,000 in Q3 2019. Also, merger expenses have declined to $28,000 in Q3 2020 compared to $637,000 in Q2 2020 and $74,000 in Q3 2019.

Balance Sheet

At September 30, 2020, total assets were $2.95 billion, an increase of $543.4 million, or 22.6 percent since December 31, 2019. Total loans, net of unearned fees and allowance for loan losses, were $2.22 billion at September 30, 2020, up $322.0 million, or 16.9 percent, from the $1.90 billion reported at year-end 2019. Loans, excluding mortgage warehouse lines of credit, increased $40.8 million during the quarter, or 8.3 percent (annualized). Loans, excluding mortgage warehouse lines of credit, PPP loans and acquired Cornerstone and MVB loans, have increased $44.4 million, or 3.3 percent (on an annualized basis) since year-end 2019.

At September 30, 2020, core deposits were $2.30 billion, an increase of $618.5 million, or 36.8 percent, since year end 2019. During the first nine months of 2020, checking deposits increased $396.6 million or 44.5 percent, core time deposits grew by $41.4 million or 11.1 percent and savings deposits increased $180.5 million or 43.2 percent. Excluding acquired deposits (of both Cornerstone and MVB branches), core deposits have increased $250.5 million, or 14.9 percent, since year end 2019.  

Shareholders equity was $272.0 million as of September 30, 2020 compared to $247.8 million at December 31, 2019. In conjunction with the acquisition of Cornerstone on January 1, 2020, Summit issued 570,000 shares of common stock valued at $15.4 million to the former Cornerstone shareholders.

Tangible book value per common share increased to $17.31 at September 30, 2020 compared to $16.63 at June 30, 2020, although it decreased from $18.11 at December 31, 2019 as result of the somewhat dilutive impacts of the Cornerstone and MVB Branches acquisitions. Summit had 12,932,415 outstanding common shares at Q3 2020 quarter end compared to 12,408,542 at year end 2019.

As announced in Q1 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 Q3 2020, no shares of our common stock were repurchased under the Plan.

Asset Quality

We incurred net loan charge-offs of $1,014,000 in third quarter 2020 (0.18 percent of average loans annualized), which included an $880,000 charge-off of a commercial real estate relationship which had previously been fully reserved and exhibited weakness prior to the COVID-19 pandemic, compared to second quarter 2020 net loan recoveries of $51,000 while $3.20 million and $2.51 million were added to the allowance for loan credit losses through the provision for credit losses during Q3 2020 and Q2 2020, respectively. The allowance for loan credit losses stood at 1.30 percent of total loans as of September 30, 2020, compared to 0.68 percent at year-end 2019.

Similarly, during Q3 2020 and Q2 2020, we also added $48,000 and $493,000, respectively, to the allowance for credit losses on unfunded loan commitments through the provision for credit losses.

As of September 30, 2020, nonperforming assets (NPAs), consisting of nonperforming loans, foreclosed properties and repossessed assets, totaled $27.8 million, or 0.94 percent of assets. This compares to $30.5 million, or 1.07 percent of assets at the linked quarter-end and $33.7 million, or 1.45 percent of assets at the end of Q3 2019.

Our actions to identify and assess our COVID-19 related credit exposures by asset classes and borrower types continue, as does our loan modification program to assist both consumer and business borrowers that are experiencing financial hardships due to COVID-19 related challenges. Accordingly, the following tables summarize the aggregate balances of loans the Company has modified as result of COVID-19 as of September 30, 2020 and June 30, 2020 classified by types of loans and impacted borrowers.

 

 

Loan Balances Modified Due to COVID-19 as of 9/30/2020

Dollars in thousands

Total Loan Balance as of 9/30/2020

 Loans Modified to Interest Only Payments

Loans Modified to Payment Deferral

Total Loans Modified

Percentage of Loans Modified

Hospitality Industry

$

120,324

$

36,803

$

11,466

$

48,269

40.1

%

Non-Owner Occupied Retail Stores

 

108,326

 

19,497

 

-

 

19,497

18.0

%

Owner-Occupied Retail Stores

 

100,926

 

1,601

 

1,409

 

3,010

3.0

%

Restaurants

 

7,968

 

-

 

-

 

-

0.0

%

Oil & Gas Industry

 

24,404

 

914

 

-

 

914

3.7

%

Other Commercial Loans

 

1,084,385

 

40,846

 

-

 

40,846

3.8

%

Total Commercial Loans

 

1,446,333

 

99,661

 

12,875

 

112,536

7.8

%

Residential 1-4 Family Personal

 

263,315

 

195

 

991

 

1,186

0.5

%

Residential 1-4 Family Rentals

 

178,529

 

3,567

 

336

 

3,903

2.2

%

Home Equity Loans

 

82,991

 

-

 

-

 

-

0.0

%

Total Residential Real Estate Loans

 

524,835

 

3,762

 

1,327

 

5,089

1.0

%

Consumer Loans

 

34,655

 

34

 

22

 

56

0.2

%

Mortgage Warehouse Loans

 

243,730

 

-

 

-

 

-

0.0

%

Credit Cards and Overdrafts

 

2,251

 

-

 

-

 

-

0.0

%

Total Loans

$

2,251,804

$

103,457

$

14,224

$

117,681

5.2

%

 

 

 

 

 

 


 

 

Loan Balances Modified Due to COVID-19 as of 6/30/2020

Dollars in thousands

Total Loan Balance as of 6/30/2020

 Loans Modified to Interest Only Payments

Loans Modified to Payment Deferral

Total Loans Modified

Percentage of Loans Modified

Hospitality Industry

$

119,204

$

55,849

$

43,030

$

98,879

82.9

%

Non-Owner Occupied Retail Stores

 

109,078

 

38,354

 

13,802

 

52,156

47.8

%

Owner-Occupied Retail Stores

 

119,794

 

21,956

 

9,372

 

31,328

26.2

%

Restaurants

 

8,126

 

2,392

 

1,877

 

4,269

52.5

%

Oil & Gas Industry

 

31,977

 

914

 

4,378

 

5,292

16.5

%

Other Commercial Loans

 

1,005,740

 

88,285

 

34,634

 

122,919

12.2

%

Total Commercial Loans

 

1,393,919

 

207,750

 

107,093

 

314,843

22.6

%

Residential 1-4 Family Personal

 

267,170

 

3,933

 

13,404

 

17,337

6.5

%

Residential 1-4 Family Rentals

 

180,415

 

20,348

 

6,032

 

26,380

14.6

%

Home Equity Loans

 

88,929

 

-

 

569

 

569

0.6

%

Total Residential Real Estate Loans

 

536,514

 

24,281

 

20,005

 

44,286

8.3

%

Consumer Loans

 

34,640

 

595

 

605

 

1,200

3.5

%

Mortgage Warehouse Loans

 

252,472

 

-

 

-

 

-

0.0

%

Credit Cards and Overdrafts

 

2,162

 

-

 

-

 

-

0.0

%

Total Loans

$

2,219,707

$

232,626

$

127,703

$

360,329

16.2

%

 

 

 

 

 

 

About the Company

Summit Financial Group, Inc. is a $2.95 billion financial holding company headquartered in Moorefield, West Virginia. Summit provides community banking services primarily in the Eastern Panhandle, Southern and North Central regions of West Virginia and the Northern, Shenandoah Valley and Southwestern regions of Virginia, through its bank subsidiary, Summit Community Bank, Inc., which operates 41 banking locations.

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 crisis , 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)

 

 

 

Q3 2020 vs Q3 2019

 

 

 

 

 

 

 

For the Quarter Ended

Percent

Dollars in thousands

9/30/2020

 

9/30/2019

Change

Statements of Income

 

 

 

 

 

 

 

Interest income

 

 

 

 

 

 

 

Loans, including fees

$

26,807

 

$

24,940

7.5

%

Securities

 

2,382

 

 

2,184

9.1

%

Other

 

57

 

 

125

-54.4

%

Total interest income

 

29,246

 

 

27,249

7.3

%

Interest expense

 

 

 

 

 

 

 

Deposits

 

3,552

 

 

6,214

-42.8

%

Borrowings

 

928

 

 

1,615

-42.5

%

Total interest expense

 

4,480

 

 

7,829

-42.8

%

Net interest income

 

24,766

 

 

19,420

27.5

%

Provision for credit losses

 

3,250

 

 

500

n/m

 

Net interest income after provision for credit losses

 

21,516

 

 

18,920

13.7

%

 

 

 

 

 

 

 

 

Noninterest income

 

 

 

 

 

 

 

Insurance commissions

 

44

 

 

40

10.0

%

Trust and wealth management fees

 

622

 

 

632

-1.6

%

Mortgage origination revenue

 

780

 

 

77

n/m

 

Service charges on deposit accounts

 

1,138

 

 

1,312

-13.3

%

Bank card revenue

 

1,237

 

 

924

33.9

%

Realized securities gains

 

1,522

 

 

453

236.0

%

Bank owned life insurance and annuity income

 

795

 

 

247

221.9

%

Other income

 

69

 

 

74

-6.8

%

Total noninterest income

 

6,207

 

 

3,759

65.1

%

Noninterest expense

 

 

 

 

 

 

 

Salaries and employee benefits

 

8,108

 

 

7,044

15.1

%

Net occupancy expense

 

1,057

 

 

799

32.3

%

Equipment expense

 

1,474

 

 

1,296

13.7

%

Professional fees

 

364

 

 

388

-6.2

%

Advertising and public relations

 

145

 

 

177

-18.1

%

Amortization of intangibles

 

412

 

 

404

2.0

%

FDIC premiums

 

320

 

 

-

n/a

 

Bank card expense

 

589

 

 

455

29.5

%

Foreclosed properties expense, net

 

607

 

 

305

99.0

%

Merger-related expense

 

28

 

 

74

-62.2

%

Other expenses

 

2,405

 

 

1,864

29.0

%

Total noninterest expense

 

15,509

 

 

12,806

21.1

%

Income before income taxes

 

12,214

 

 

9,873

23.7

%

Income taxes

 

2,594

 

 

1,812

43.2

%

Net income

$

9,620

 

$

8,061

19.3

%

 

 

 

 

 

 

 

 


SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)

 

 

Quarterly Performance Summary (unaudited)

 

 

Q3 2020 vs Q3 2019

 

 

 

 

 

 

 

For the Quarter Ended

Percent

 

9/30/2020

9/30/2019

Change

Per Share Data

 

 

 

Earnings per common share

 

 

 

Basic

$

0.74

 

$

0.65

 

13.8

%

Diluted

$

0.74

 

$

0.65

 

13.8

%

 

 

 

 

Cash dividends

$

0.17

 

$

0.15

 

13.3

%

Dividend payout ratio

 

22.9

%

 

23.0

%

-0.4

%

 

 

 

 

Average common shares outstanding

 

 

 

Basic

 

12,922,158

 

 

12,412,982

 

4.1

%

Diluted

 

12,949,584

 

 

12,467,777

 

3.9

%

 

 

 

 

Common shares outstanding at period end

 

12,932,415

 

 

12,400,804

 

4.3

%

 

 

 

 

Performance Ratios

 

 

 

Return on average equity

 

14.38

%

 

13.51

%

6.4

%

Return on average tangible equity

 

18.12

%

 

15.55

%

16.5

%

Return on average assets

 

1.31

%

 

1.41

%

-7.1

%

Net interest margin (A)

 

3.64

%

 

3.63

%

0.3

%

Efficiency ratio (B)

 

48.95

%

 

52.91

%

-7.5

%

 

 

 

 

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

NOTE (B) Computed on a tax equivalent basis excluding merger-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)

 

 

Nine Month Performance Summary (unaudited)

 

 

 

2020 vs 2019

 

 

 

 

 

 

 

 

For the Nine Months Ended

Percent

Dollars in thousands

9/30/2020

 

9/30/2019

Change

Statements of Income

 

 

 

Interest income

 

 

 

Loans, including fees

$

77,666

 

$

72,344

7.4

%

Securities

 

6,944

 

 

7,166

-3.1

%

Other

 

216

 

 

490

-55.9

%

Total interest income

 

84,826

 

 

80,000

6.0

%

Interest expense

 

 

 

 

 

 

 

Deposits

 

13,088

 

 

17,745

-26.2

%

Borrowings

 

2,463

 

 

4,998

-50.7

%

Total interest expense

 

15,551

 

 

22,743

-31.6

%

Net interest income

 

69,275

 

 

57,257

21.0

%

Provision for credit losses

 

11,500

 

 

1,050

n/m

 

Net interest income after provision for credit losses

 

57,775

 

 

56,207

2.8

%

 

 

 

 

 

 

 

 

Noninterest income

 

 

 

 

 

 

 

Insurance commissions

 

75

 

 

1,821

-95.9

%

Trust and wealth management fees

 

1,870

 

 

1,830

2.2

%

Mortgage origination revenue

 

1,636

 

 

392

n/m

Service charges on deposit accounts

 

3,283

 

 

3,716

-11.7

%

Bank card revenue

 

3,257

 

 

2,631

23.8

%

Realized securities gains

 

2,560

 

 

1,535

66.8

%

Gain on sale of Summit Insurance Services, LLC

 

-

 

 

1,906

n/a

 

Bank owned life insurance and annuity income

 

1,334

 

 

733

82.0

%

Other income

 

292

 

 

235

24.3

%

Total noninterest income

 

14,307

 

 

14,799

-3.3

%

Noninterest expense

 

 

 

 

 

 

 

Salaries and employee benefits

 

23,709

 

 

21,966

7.9

%

Net occupancy expense

 

2,917

 

 

2,602

12.1

%

Equipment expense

 

4,263

 

 

3,694

15.4

%

Professional fees

 

1,168

 

 

1,266

-7.7

%

Advertising and public relations

 

389

 

 

484

-19.6

%

Amortization of intangibles

 

1,251

 

 

1,300

-3.8

%

FDIC premiums

 

595

 

 

88

576.1

%

Bank card expense

 

1,652

 

 

1,367

20.8

%

Foreclosed properties expense, net

 

1,815

 

 

2,236

-18.8

%

Merger-related expense

 

1,453

 

 

519

180.0

%

Other expenses

 

6,493

 

 

6,473

0.3

%

Total noninterest expense

 

45,705

 

 

41,995

8.8

%

Income before income taxes

 

26,377

 

 

29,011

-9.1

%

Income taxes

 

5,302

 

 

5,293

0.2

%

Net income

$

21,075

 

$

23,718

-11.1

%

 

 

 

 

 

 

 


SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)

 

 

Nine Month Performance Summary (unaudited)

 

 

 

2020 vs 2019

 

 

 

 

 

 

 

For the Nine Months Ended

Percent

 

9/30/2020

9/30/2019

Change

Per Share Data

 

 

 

Earnings per common share

 

 

 

Basic

$

1.63

 

$

1.89

 

-13.8

%

Diluted

$

1.62

 

$

1.88

 

-13.8

%

 

 

 

 

Cash dividends

$

0.51

 

$

0.44

 

15.9

%

Dividend payout ratio

 

31.4

%

 

23.2

%

35.3

%

 

 

 

 

Average common shares outstanding

 

 

 

Basic

 

12,934,401

 

 

12,555,411

 

3.0

%

Diluted

 

12,971,792

 

 

12,614,382

 

2.8

%

 

 

 

 

Common shares outstanding at period end

 

12,932,415

 

 

12,400,804

 

4.3

%

 

 

 

 

Performance Ratios

 

 

 

Return on average equity

 

10.72

%

 

13.48

%

-20.5

%

Return on average tangible equity

 

13.36

%

 

15.80

%

-15.4

%

Return on average assets

 

1.04

%

 

1.40

%

-25.7

%

Net interest margin (A)

 

3.69

%

 

3.67

%

0.5

%

Efficiency ratio (B)

 

50.70

%

 

55.34

%

-8.4

%

 

 

 

 

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

NOTE (B) Computed on a tax equivalent basis excluding merger-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

9/30/2020

 

6/30/2020

 

3/31/2020

 

12/31/2019

 

9/30/2019

Statements of Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

$

26,807

 

$

25,624

 

$

25,235

 

$

24,772

 

$

24,940

Securities

 

2,382

 

 

2,253

 

 

2,310

 

 

2,195

 

 

2,184

Other

 

57

 

 

60

 

 

98

 

 

105

 

 

125

Total interest income

 

29,246

 

 

27,937

 

 

27,643

 

 

27,072

 

 

27,249

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

3,552

 

 

4,186

 

 

5,351

 

 

5,952

 

 

6,214

Borrowings

 

928

 

 

685

 

 

849

 

 

1,292

 

 

1,615

Total interest expense

 

4,480

 

 

4,871

 

 

6,200

 

 

7,244

 

 

7,829

Net interest income

 

24,766

 

 

23,066

 

 

21,443

 

 

19,828

 

 

19,420

Provision for credit losses

 

3,250

 

 

3,000

 

 

5,250

 

 

500

 

 

500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income after provision for credit losses

 

21,516

 

 

20,066

 

 

16,193

 

 

19,328

 

 

18,920

Noninterest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Insurance commissions

 

44

 

 

24

 

 

7

 

 

90

 

 

40

Mortgage origination revenue

 

780

 

 

641

 

 

214

 

 

379

 

 

77

Trust and wealth management fees

 

622

 

 

582

 

 

665

 

 

734

 

 

632

Service charges on deposit accounts

 

1,138

 

 

882

 

 

1,263

 

 

1,377

 

 

1,312

Bank card revenue

 

1,237

 

 

1,087

 

 

933

 

 

906

 

 

924

Realized securities gains (losses)

 

1,522

 

 

-

 

 

1,038

 

 

403

 

 

453

Bank owned life insurance and annuity income

 

795

 

 

275

 

 

264

 

 

310

 

 

247

Other income

 

69

 

 

107

 

 

118

 

 

205

 

 

74

Total noninterest income

 

6,207

 

 

3,598

 

 

4,502

 

 

4,404

 

 

3,759

Noninterest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

8,108

 

 

7,930

 

 

7,672

 

 

7,099

 

 

7,044

Net occupancy expense

 

1,057

 

 

977

 

 

883

 

 

815

 

 

799

Equipment expense

 

1,474

 

 

1,360

 

 

1,429

 

 

1,278

 

 

1,296

Professional fees

 

364

 

 

417

 

 

387

 

 

412

 

 

388

Advertising and public relations

 

145

 

 

93

 

 

152

 

 

214

 

 

177

Amortization of intangibles

 

412

 

 

410

 

 

429

 

 

401

 

 

404

FDIC premiums

 

320

 

 

110

 

 

165

 

 

-

 

 

-

Bank card expense

 

589

 

 

560

 

 

503

 

 

454

 

 

455

Foreclosed properties expense, net

 

607

 

 

240

 

 

966

 

 

262

 

 

305

Merger-related expenses

 

28

 

 

637

 

 

788

 

 

98

 

 

74

Other expenses

 

2,405

 

 

2,463

 

 

1,625

 

 

2,126

 

 

1,864

Total noninterest expense

 

15,509

 

 

15,197

 

 

14,999

 

 

13,159

 

 

12,806

Income before income taxes

 

12,214

 

 

8,467

 

 

5,696

 

 

10,573

 

 

9,873

Income tax expense

 

2,594

 

 

1,518

 

 

1,190

 

 

2,424

 

 

1,812

Net income

$

9,620

 

$

6,949

 

$

4,506

 

$

8,149

 

$

8,061

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)

 

 

 

 

Five Quarter Performance Summary (unaudited)

 

 

 

 

 

 

 

 

 

 

 

For the Quarter Ended

 

9/30/2020

6/30/2020

3/31/2020

12/31/2019

9/30/2019

Per Share Data

 

 

 

 

 

Earnings per common share

 

 

 

 

 

Basic

$

0.74

 

$

0.54

 

$

0.35

 

$

0.66

 

$

0.65

 

Diluted

$

0.74

 

$

0.54

 

$

0.35

 

$

0.65

 

$

0.65

 

 

 

 

 

 

 

Cash dividends

$

0.17

 

$

0.17

 

$

0.17

 

$

0.15

 

$

0.15

 

Dividend payout ratio

 

22.9

%

 

31.7

%

 

49.1

%

 

22.3

%

 

23.0

%

 

 

 

 

 

 

Average common shares outstanding

 

 

 

 

 

Basic

 

12,922,158

 

 

12,911,979

 

 

12,975,429

 

 

12,400,932

 

 

12,412,982

 

Diluted

 

12,949,584

 

 

12,943,804

 

 

13,028,409

 

 

12,458,702

 

 

12,467,777

 

 

 

 

 

 

 

Common shares outstanding at period end

 

12,932,415

 

 

12,922,045

 

 

12,920,244

 

 

12,408,542

 

 

12,400,804

 

 

 

 

 

 

 

Performance Ratios

 

 

 

 

 

Return on average equity

 

14.38

%

 

10.75

%

 

6.92

%

 

13.32

%

 

13.51

%

Return on average tangible equity

 

18.12

%

 

13.57

%

 

8.55

%

 

15.25

%

 

15.55

%

Return on average assets

 

1.31

%

 

1.02

%

 

0.73

%

 

1.39

%

 

1.41

%

Net interest margin (A)

 

3.64

%

 

3.68

%

 

3.76

%

 

3.63

%

 

3.63

%

Efficiency ratio (B)

 

48.95

%

 

51.97

%

 

51.41

%

 

52.25

%

 

52.91

%

 

 

 

 

 

 

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

NOTE (B) Computed on a tax equivalent basis excluding merger-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

9/30/2020

 

6/30/2020

 

3/31/2020

 

12/31/2019

 

9/30/2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

$

16,257

 

 

$

16,572

 

 

$

18,633

 

 

$

28,137

 

 

$

12,374

 

Interest bearing deposits other banks

 

92,729

 

 

 

26,218

 

 

 

22,821

 

 

 

33,751

 

 

 

40,296

 

Securities, available for sale

 

297,989

 

 

 

322,539

 

 

 

305,045

 

 

 

276,355

 

 

 

265,347

 

Securities, held to maturity

 

91,600

 

 

 

80,497

 

 

 

-

 

 

 

-

 

 

 

-

 

Loans, net

 

2,222,450

 

 

 

2,192,541

 

 

 

1,982,661

 

 

 

1,900,425

 

 

 

1,838,891

 

Property held for sale

 

17,831

 

 

 

17,954

 

 

 

18,287

 

 

 

19,276

 

 

 

20,979

 

Premises and equipment, net

 

52,880

 

 

 

51,847

 

 

 

47,078

 

 

 

44,168

 

 

 

43,592

 

Goodwill and other intangible assets

 

48,101

 

 

 

48,513

 

 

 

34,132

 

 

 

23,022

 

 

 

23,182

 

Cash surrender value of life insurance policies and annuities

 

57,029

 

 

 

55,315

 

 

 

46,497

 

 

 

43,603

 

 

 

43,216

 

Other assets

 

49,996

 

 

 

49,355

 

 

 

38,168

 

 

 

34,755

 

 

 

35,732

 

Total assets

$

2,946,862

 

 

$

2,861,351

 

 

$

2,513,322

 

 

$

2,403,492

 

 

$

2,323,609

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

$

2,451,891

 

 

$

2,451,769

 

 

$

2,044,914

 

 

$

1,913,237

 

 

$

1,832,285

 

Short-term borrowings

 

140,145

 

 

 

90,945

 

 

 

161,745

 

 

 

199,345

 

 

 

206,694

 

Long-term borrowings and subordinated debentures

 

50,292

 

 

 

20,297

 

 

 

20,301

 

 

 

20,306

 

 

 

20,311

 

Other liabilities

 

32,571

 

 

 

34,909

 

 

 

30,337

 

 

 

22,840

 

 

 

21,897

 

Shareholders' equity

 

271,963

 

 

 

263,431

 

 

 

256,025

 

 

 

247,764

 

 

 

242,422

 

Total liabilities and shareholders' equity

$

2,946,862

 

 

$

2,861,351

 

 

$

2,513,322

 

 

$

2,403,492

 

 

$

2,323,609

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per common share

$

21.03

 

 

$

20.39

 

 

$

19.82

 

 

$

19.97

 

 

$

19.55

 

Tangible book value per common share

$

17.31

 

 

$

16.63

 

 

$

17.17

 

 

$

18.11

 

 

$

17.68

 

Tangible common equity to tangible assets

 

7.7

%

 

 

7.6

%

 

 

9.0

%

 

 

9.4

%

 

 

9.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)

 

 

 

Regulatory Capital Ratios (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

9/30/2020

 

6/30/2020

 

3/31/2020

 

12/31/2019

 

9/30/2019

 

Summit Financial Group, Inc.

 

 

 

 

 

CET1 Risk-based Capital

9.9

%

9.7

%

10.8

%

11.1

%

11.2

%

Tier 1 Risk-based Capital

10.7

%

10.5

%

11.7

%

12.1

%

12.2

%

Total Risk-based Capital

12.9

%

11.3

%

12.5

%

12.7

%

12.8

%

Tier 1 Leverage

8.7

%

9.0

%

10.2

%

10.5

%

10.4

%

 

 

 

 

 

 

Summit Community Bank, Inc.

 

 

 

 

 

CET1 Risk-based Capital

11.8

%

10.5

%

11.7

%

12.1

%

12.2

%

Tier 1 Risk-based Capital

11.8

%

10.5

%

11.7

%

12.1

%

12.2

%

Total Risk-based Capital

12.7

%

11.4

%

12.5

%

12.7

%

12.9

%

Tier 1 Leverage

9.6

%

9.0

%

10.2

%

10.6

%

10.4

%

 

 

 

 

 

 


SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)

 

 

 

Loan Composition (unaudited)

 

 

 

 

 

 

 

 

 

 

 

Dollars in thousands

9/30/2020

 

6/30/2020

 

3/31/2020

 

12/31/2019

 

9/30/2019

 

 

 

 

 

 

Commercial

$

338,685

 

$

311,755

 

$

224,659

 

$

207,138

 

$

199,391

Mortgage warehouse lines

 

243,730

 

 

252,472

 

 

166,826

 

 

126,237

 

 

145,039

Commercial real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Owner occupied

 

312,502

 

 

336,143

 

 

331,486

 

 

276,218

 

 

255,828

Non-owner occupied

 

618,624

 

 

593,168

 

 

580,619

 

 

629,206

 

 

567,670

Construction and development

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Land and development

 

97,343

 

 

92,706

 

 

92,332

 

 

84,112

 

 

69,589

Construction

 

66,878

 

 

48,115

 

 

43,121

 

 

37,523

 

 

56,255

Residential real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conventional

 

368,008

 

 

371,225

 

 

378,540

 

 

354,963

 

 

359,399

Jumbo

 

73,836

 

 

76,360

 

 

64,944

 

 

70,947

 

 

69,815

Home equity

 

82,991

 

 

88,929

 

 

75,170

 

 

76,568

 

 

78,493

Consumer

 

35,905

 

 

35,781

 

 

36,611

 

36,470 36,982Other 13,302 13,053 12,961 14,117 13,371Total loans, net of unearned fees 2,251,804 2,219,707 2,007,269 1,913,499 1,851,832Less allowance for credit losses 29,354 27,166 24,608 13,074 12,941Loans, net$2,222,450 $2,192,541 $1,982,661 $1,900,425 $1,838,891


SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)

Deposit Composition (unaudited)

Dollars in thousands

9/30/2020

6/30/2020

3/31/2020

12/31/2019

9/30/2019

Core deposits

Non-interest bearing checking

$

420,070

$

443,190

$

337,446

$

260,553

$

241,999

Interest bearing checking

867,442

830,258

648,214

630,352

602,059

Savings

598,564

561,029

457,010

418,096

305,891

Time deposits

414,542

422,286

384,062

373,125

371,178

Total core deposits

2,300,618

2,256,763

1,826,732

1,682,126

1,521,127

Brokered time deposits

64,120

90,279

111,156

150,554

227,369

Other non-core time deposits

87,153

104,727

107,026

80,557

83,789

Total deposits

$

2,451,891

$

2,451,769

$

2,044,914

$

1,913,237

$

1,832,285


SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)

Asset Quality Information (unaudited)

For the Quarter Ended

Dollars in thousands

9/30/2020

6/30/2020

3/31/2020

12/31/2019

9/30/2019

Gross loan charge-offs

$

1,259

$

218

$

698

$

455

$

843

Gross loan recoveries

(245

)

(269

)

(197

)

(88

)

(132

)

Net loan charge-offs/(recoveries)

$

1,014

$

(51

)

$

501

$

367

$

711

Net loan charge-offs to average loans (annualized)

0.18

%

-0.01

%

0.10

%

0.08

%

0.16

%

Allowance for loan credit losses

$

29,354

$

27,166

$

24,608

$

13,074

$

12,941

Allowance for loan credit losses as a percentage of period end loans

1.30

%

1.22

%

1.23

%

0.68

%

0.70

%

Allowance for credit losses on unfunded loan commitments

$

3,525

$

3,477

$

2,984

$

-

$

-

Nonperforming assets:

Nonperforming loans

Commercial

$

553

$

754

$

560

$

764

$

835

Commercial real estate

4,313

5,822

5,644

5,800

7,037

Residential construction and development

2

14

11

326

191

Residential real estate

5,104

5,873

4,343

4,404

4,461

Consumer

31

29

65

116

115

Other

-

35

100

100

100

Total nonperforming loans

10,003

12,527

10,723

11,510

12,739

Foreclosed properties

Commercial real estate

2,500

1,774

1,866

1,930

1,514

Commercial construction and development

4,154

4,511

4,511

4,601

4,909

Residential construction and development

10,330

10,645

10,774

11,169

12,847

Residential real estate

847

1,024

1,136

1,576

1,709

Total foreclosed properties

17,831

17,954

18,287

19,276

20,979

Other repossessed assets

-

-

49

17

16

Total nonperforming assets

$

27,834

$

30,481

$

29,059

$

30,803

$

33,734

Nonperforming loans to period end loans

0.44

%

0.56

%

0.53

%

0.60

%

0.69

%

Nonperforming assets to period end assets

0.94

%

1.07

%

1.16

%

1.28

%

1.45

%

Troubled debt restructurings

Performing

$

22,232

$

22,117

$

22,966

$

23,339

$

23,420

Nonperforming

2,988

3,003

2,831

2,337

2,443

Total troubled debt restructurings

$

25,220

$

25,120

$

25,797

$

25,676

$

25,863


Loans Past Due 30-89 Days (unaudited)

For the Quarter Ended

Dollars in thousands

9/30/2020

6/30/2020

3/31/2020

12/31/2019

9/30/2019

Commercial

$

147

$

196

$

160

$

111

$

390

Commercial real estate

1,740

1,231

2,106

1,196

312

Construction and development

422

8

53

236

65

Residential real estate

4,464

2,763

5,178

4,775

5,573

Consumer

160

164

222

269

365

Other

2

3

7

25

63

Total

$

6,935

$

4,365

$

7,726

$

6,612

$

6,768


SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)

Average Balance Sheet, Interest Earnings & Expenses and Average Rates

Q3 2020 vs Q2 2020 vs Q3 2019 (unaudited)

Q3 2020

Q2 2020

Q3 2019

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

$

2,251,722

$

26,656

4.71

%

$

2,118,158

$

25,466

4.84

%

$

1,813,555

$

24,786

5.42

%

Tax-exempt (2)

16,245

191

4.68

%

17,244

200

4.66

%

15,903

195

4.86

%

Securities

Taxable

261,231

1,445

2.20

%

248,792

1,453

2.35

%

203,288

1,566

3.06

%

Tax-exempt (2)

150,350

1,186

3.17

%

120,385

1,012

3.38

%

79,387

782

3.91

%

Interest bearing deposits other banks and Federal funds sold

60,639

57

0.37

%

41,776

60

0.58

%

35,214

125

1.41

%

Total interest earning assets

2,740,187

29,535

4.29

%

2,546,355

28,191

4.45

%

2,147,347

27,454

5.07

%

Noninterest earning assets

Cash & due from banks

16,603

16,672

12,815

Premises & equipment

52,329

50,457

43,160

Other assets

154,578

140,355

104,789

Allowance for credit losses

(28,144

)

(25,799

)

(13,276

)

Total assets

$

2,935,553

$

2,728,040

$

2,294,835

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities

Interest bearing liabilities

Interest bearing demand deposits

$

850,281

$

380

0.18

%

$

764,852

$

369

0.19

%

$

594,772

$

1,621

1.08

%

Savings deposits

588,085

925

0.63

%

512,634

1,200

0.94

%

302,331

949

1.25

%

Time deposits

585,092

2,247

1.53

%

625,717

2,617

1.68

%

674,869

3,644

2.14

%

Short-term borrowings

165,555

734

1.76

%

95,744

499

2.10

%

202,425

1,372

2.69

%

Long-term borrowings and subordinated debentures

23,230

194

3.32

%

20,299

186

3.69

%

20,312

243

4.75

%

Total interest bearing liabilities

2,212,243

4,480

0.81

%

2,019,246

4,871

0.97

%

1,794,709

7,829

1.73

%

Noninterest bearing liabilities

Demand deposits

421,741

417,992

240,193

Other liabilities

33,978

32,238

21,320

Total liabilities

2,667,962

2,469,476

2,056,222

Shareholders' equity

267,591

258,564

238,613

Total liabilities and shareholders' equity

$

2,935,553

$

2,728,040

$

2,294,835

NET INTEREST EARNINGS

$

25,055

$

23,320

$

19,625

NET INTEREST MARGIN

3.64

%

3.68

%

3.63

%

(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 $289,000, $254,000, and $205,000 for Q3 2020, Q2 2020 and Q3 2019, respectively.


SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)

Average Balance Sheet, Interest Earnings & Expenses and Average Rates

YTD 2020 vs YTD 2019 (unaudited)

YTD 2020

YTD 2019

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

$

2,102,331

$

77,211

4.91

%

$

1,758,645

$

71,877

5.46

%

Tax-exempt (2)

16,121

576

4.77

%

15,172

591

5.21

%

Securities

Taxable

256,322

4,657

2.43

%

200,947

4,858

3.23

%

Tax-exempt (2)

113,793

2,897

3.40

%

98,084

2,920

3.98

%

Interest bearing deposits other banks and Federal funds sold

46,074

215

0.62

%

41,642

490

1.57

%

Total interest earning assets

2,534,641

85,556

4.51

%

2,114,490

80,736

5.10

%

Noninterest earning assets

Cash & due from banks

15,901

12,941

Premises & equipment

49,655

40,983

Other assets

138,651

108,984

Allowance for loan losses

(25,618

)

(13,283

)

Total assets

$

2,713,230

$

2,264,115

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities

Interest bearing liabilities

Interest bearing demand deposits

$

753,384

$

1,830

0.32

%

$

575,817

$

5,016

1.16

%

Savings deposits

516,841

3,462

0.89

%

306,083

2,768

1.21

%

Time deposits

608,551

7,796

1.71

%

667,565

9,960

1.99

%

Short-term borrowings

127,109

1,863

1.96

%

196,622

4,241

2.88

%

Long-term borrowings and subordinated debentures

21,284

600

3.77

%

20,317

757

4.98

%

2,027,169

15,551

1.02

%

1,766,404

22,742

1.72

%

Noninterest bearing liabilities

Demand deposits

393,128

243,356

Other liabilities

30,741

19,669

Total liabilities

2,451,038

2,029,429

Shareholders' equity

262,192

234,686

Total liabilities and shareholders' equity

$

2,713,230

$

2,264,115

NET INTEREST EARNINGS

$

70,005

$

57,994

NET INTEREST MARGIN

3.69

%

3.67

%

(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 $730,000 and $737,000 for the YTD 2020 and YTD 2019 periods, respectively.


Contact:
Telephone:
Email:

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