Summit Financial Group Reports Fourth Quarter & Full Year 2012 Results

MOOREFIELD, W.Va., Jan. 30, 2013 (GLOBE NEWSWIRE) -- Summit Financial Group, Inc. ("Company" or "Summit") (Nasdaq:SMMF) today reported fourth quarter 2012 net income applicable to common shares of $1,911,000, or $0.22 per diluted share, compared to $1,331,000, or $0.16 per diluted share, for the fourth quarter of 2011.

Excluding from fourth quarter 2012 nonrecurring items (on a pre-tax basis) consisting of realized securities gains of $103,000, losses on sales of assets of $94,000, charges for other-than-temporary impairment ("OTTI") of securities of $76,000 and write-downs of foreclosed properties of $748,000, pro forma fourth quarter 2012 earnings were approximately $2.4 million, or $0.28 per diluted share. Excluding from fourth quarter 2011 nonrecurring realized securities gains of $542,000, gains on sales of assets of $19,000, OTTI of securities of $401,000, and write-downs of foreclosed properties of $882,000, pro forma earnings of $1.8 million would have resulted, or $0.21 per diluted share.

For the full-year 2012, Summit recorded net income applicable to common shares of $4.94 million, or $0.60 per diluted share, compared with $3.70 million, or $0.49 per diluted share, for 2011.

Excluding from the full-year 2012 nonrecurring items (on a pre-tax basis) of realized securities gains of $2.35 million, losses on sales of assets of $677,000, OTTI charges of $451,000 and write-downs of foreclosed properties of $6.86 million, and from the full-year 2011 realized securities gains of $4.01 million, gains on sales of assets of $295,000, OTTI charges of $2.65 million, and write-downs of foreclosed properties of $6.65 million, pro forma earnings for 2012 were approximately $8.49 million, or $0.97 per diluted share, compared to $6.85 million, or $0.86 per diluted share, for 2011.

Highlights for Q4 2012 include:
  • Achieved seventh consecutive quarter of positive quarterly earnings.
  • Nonperforming assets continued to decline, reaching its lowest level since Q1 2011.
  • Net interest margin increased 2 basis points quarter over quarter and 16 basis points compared to Q4 2011.
  • Recorded charges of $748,000 and $76,000, respectively, to write-down foreclosed properties and to recognize OTTI of securities, which were partially offset by $103,000 in realized securities gains.
  • Noninterest expenses remained well-controlled, declining 5.3% compared to Q4 2012 and 0.6% compared to Q3 2012.
  • Summit's leverage capital ratio is at its highest level in six years and its total risk-based capital ratio is at highest level in twelve years.

H. Charles Maddy III, President and Chief Executive Officer of Summit, commented, "We are pleased by our continued improved earnings performance, progress in reducing our portfolio of problem assets, and strengthened capital levels. I am particularly pleased that during 2012: net interest income remained stable, despite a decline in average earning assets; the net interest margin improved; core noninterest income increased, while noninterest expenses declined; and OTTI of securities charges were very modest compared to prior-year amounts, and are expected to remain at relatively low levels. Reducing our portfolio of problem assets remains our top priority, and we reduced nonperforming assets in each of the four most recent quarters. However, dispositions of foreclosed properties remain frustratingly slow -- particularly with respect to commercial and residential development properties. Further, we anticipate earnings may remain choppy quarter-to-quarter in the near term as our foreclosed properties are re-appraised and written-down to estimated fair values on an ongoing basis."

Results from Operations

Total revenue for full-year 2012, consisting of net interest income and noninterest income, was $45.2 million compared to $45.4 million for the full-year 2011. For the quarter ended December 31, 2012, total revenue was $11.9 million compared to $11.7 million for the same period in 2011.

Total revenue excluding nonrecurring items (as enumerated above) was $12.7 million for fourth quarter 2012 compared to $12.4 million in the prior-year quarter. For the full-year 2012, total revenue excluding nonrecurring items was $50.8 million versus $50.4 million for the same period in 2011.

For the fourth quarter of 2012, net interest income was $9.9 million, an increase of 2.4 percent from the $9.7 million reported in the prior-year fourth quarter and remained relatively unchanged compared to the linked quarter. The net interest margin for fourth quarter 2012 was 3.19 percent compared to 3.03 percent for the year-ago quarter, and 3.17 percent for the linked quarter.

Noninterest income, consisting primarily of insurance commissions from Summit's insurance agency subsidiary and service fee income from community banking activities, for fourth quarter 2012 was $2.00 million compared to $1.99 million for the comparable period of 2011. Excluding nonrecurring items (as enumerated above), noninterest income was $2.82 million for fourth quarter 2012, up $107,000 or 3.95 percent from the $2.71 million reported for fourth quarter 2011.

The provision for loan losses was $2.5 million for the fourth quarter of 2012 compared to $2.0 million for the linked and year-ago quarters.

Noninterest expense continues to be well-controlled. Total noninterest expense decreased 5.3% to $7.42 million compared to $7.83 million for the prior-year fourth quarter. Noninterest expense for full-year 2012 was $557,000 or 1.8 percent, less than during 2011. Our cost-saving initiatives continue and their impact remains beneficial.

Balance Sheet

At December 31, 2012, total assets were $1.39 billion, a decrease of $63.0 million, or 4.4 percent since December 31, 2011. Total loans, net of unearned fees, were $937.2 million at December 31, 2012, down $28.3 million, or 2.9 percent, from the $965.5 million reported at year-end 2011.

All loan categories have declined since year-end 2011, except for commercial real estate ("CRE"), the largest component of Summit's loan portfolio, which increased $1.4 million, or 0.3 percent. The second largest component of Summit's loan portfolio, residential real estate, declined $2.6 million, or 0.8 percent, while construction and development ("C&D") loans declined $12.9 million, or 13.4 percent and commercial ("C&I") loans declined $13.2 million, or 13.3 percent.

At year end, 2012, retail deposits were $757.4 million, a decrease of $26.6 million, or 3.4 percent, since year end 2011. During 2012, retail checking deposits grew $29.2 million, or 11.8 percent, to $276.3 million, while retail savings and time deposits declined during the same period by $15.8 million and $40.0 million, respectively, or 7.6 percent and 12.2 percent, respectively. This reflects management's ongoing effort to enhance Summit's cost of funds by improving its deposit mix by attracting lower-cost checking deposits to replace higher-cost savings and time deposits.

Long-term borrowings and subordinated debentures declined by 21.8 percent since year end 2011, as the Company paid down $67.0 million in maturing borrowings during this period.

Asset Quality

As of December 31, 2012, nonperforming assets ("NPAs"), consisting of nonperforming loans, foreclosed properties, and repossessed assets, were $94.0 million, or 6.77 percent of assets. This compares to $99.8 million, or 7.11 percent of assets at the linked quarter, and $116.6 million, or 8.04 percent of assets, at year-end 2011.

Fourth quarter 2012 net loan charge-offs were $2.4 million, or 0.99 percent of average loans annualized; for full year 2012, Summit's net loan charge-offs were $8.3 million, while adding $8.5 million to its allowance for loan losses. The allowance for loan losses stood at $17.9 million, or 1.88 percent of total loans at December 31, 2012, compared to 1.80 percent at year-end 2011.

Capital Adequacy

Shareholders' equity was $108.6 million as of December 31, 2012 compared to $102.6 million December 31, 2011.

Summit's depository institution, Summit Community Bank, Inc. (the "Bank"), remains well in excess of regulatory requirements for a "well capitalized" institution at December 31, 2012. The Bank's total risk-based capital ratio improved to 15.0 percent at December 31, 2012 compared to 13.6 percent at December 31, 2011, while its Tier 1 leverage capital ratio improved to 9.8 from the 8.9 percent reported at December 31, 2011. Total common shares outstanding as of December 31, 2012 were 7,425,472.

About the Company

Summit Financial Group, Inc. is a $1.39 billion financial holding company headquartered in Moorefield, West Virginia. Summit provides community banking services primarily in the Eastern Panhandle and South Central regions of West Virginia and the Northern and Shenandoah Valley regions of Virginia, through its bank subsidiary, Summit Community Bank, Inc., which operates fifteen banking locations. Summit also operates Summit Insurance Services, LLC in Moorefield, West Virginia and Leesburg, Virginia.

The Summit Financial Group, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=2990

FORWARD-LOOKING STATEMENTS

This press release contains comments or information that constitute forward-looking statements (within the meaning of the Private Securities Litigation Act of 1995) that are based on current expectations that involve a number of risks and uncertainties. Words such as "expects", "anticipates", "believes", "estimates" and other similar expressions or future or conditional verbs such as "will", "should", "would" and "could" are intended to identify such forward-looking statements.

Although we believe the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially. Factors that might cause such a difference include changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking laws and regulations; changes in tax laws; the impact of technological advances; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; and changes in the national and local economies. We undertake no obligation to revise these statements following the date of this press release.

NON-GAAP FINANCIAL MEASURES

This press release contains financial information determined by methods other than in accordance with generally accepted accounting principles in the United States of America ("GAAP"). Specifically, Summit adjusted GAAP performance measures to exclude the effects of realized and unrealized securities gains and losses, gains/losses on sales of assets, and write-downs of foreclosed properties to estimated fair value included in its Statements of Income . Management deems these items to be unusual in nature and believes presentations of financial measures excluding the impact of these items provide useful supplemental information that is important for a proper understanding of the operating results of Summit's core business. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.
     
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)    
Quarterly Performance Summary --- Q4 2012 vs Q4 2011    
       
     
   For the Quarter Ended   Percent 
Dollars in thousands  12/31/2012 12/31/2011  Change 
Condensed Statements of Income       
Interest income       
Loans, including fees   $ 13,512  $ 14,362 -5.9%
Securities   1,703  2,711 -37.2%
Other   5  13 -61.5%
Total interest income   15,220  17,086 -10.9%
Interest expense       
Deposits   3,017  4,302 -29.9%
Borrowings   2,307  3,123 -26.1%
Total interest expense   5,324  7,425 -28.3%
Net interest income   9,896  9,661 2.4%
Provision for loan losses   2,498  1,999 25.0%
Net interest income after provision for loan losses   7,398  7,662 -3.4%
       
Noninterest income       
Insurance commissions   1,082  1,003 7.9%
Service fees related to deposit accounts   1,092  1,102 -0.9%
Realized securities gains   103  542 -81.0%
Gain (loss) on sale of assets   (94)  18 -622.2%
Other-than-temporary impairment of securities   (76)  (401) -81.0%
Write-downs of foreclosed properties   (748)  (882) -15.2%
Other income   644  607 6.1%
Total noninterest income  2,003  1,989 0.7%
Noninterest expense       
Salaries and employee benefits  3,799  3,846 -1.2%
Net occupancy expense  495  472 4.9%
Equipment expense  576  593 -2.9%
Professional fees  314  565 -44.4%
FDIC premiums  535  564 -5.1%
Foreclosed properties expense  269  377 -28.6%
Other expenses  1,434  1,417 1.2%
Total noninterest expense  7,422  7,834 -5.3%
Income before income taxes   1,979  1,817 8.9%
Income taxes   (126)  337 -137.4%
Net income   2,105  1,480 42.2%
Preferred stock dividends   194  149 30.2%
       
Net income applicable to common shares  $ 1,911  $ 1,331 43.6%
       
       
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)    
Quarterly Performance Summary --- Q4 2012 vs Q4 2011    
     
  For the Quarter Ended  Percent 
  12/31/2012 12/31/2011  Change 
Per Share Data       
Earnings per common share       
Basic   $ 0.26  $ 0.18 44.4%
Diluted   $ 0.22  $ 0.16 37.5%
       
Average shares outstanding       
Basic   7,425,472  7,425,472 0.0%
Diluted   9,601,435  9,044,976 6.2%
       
Performance Ratios       
Return on average equity (A)  7.76% 5.87% 32.2%
Return on average assets  0.60% 0.41% 46.3%
Net interest margin  3.19% 3.03% 5.3%
Efficiency ratio (B)  54.00% 57.17% -5.5%
       
NOTE (A) – Net income divided by total shareholders' equity.
 
NOTE (B) – Computed on a tax equivalent basis excluding nonrecurring income and expense items and amortization of intangibles.
       
       
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)    
Annual Performance Summary --- 2012 vs 2011      
       
       
   For the Years Ended   Percent 
Dollars in thousands  12/31/2012 12/31/2011  Change 
Condensed Statements of Income       
Interest income       
Loans, including fees   $ 55,567  $ 59,176 -6.1%
Securities   8,282  11,799 -29.8%
Other   35  72 -51.4%
Total interest income   63,884  71,047 -10.1%
Interest expense       
Deposits   13,158  18,273 -28.0%
Borrowings   10,906  12,930 -15.7%
Total interest expense   24,064  31,203 -22.9%
Net interest income   39,820  39,844 -0.1%
Provision for loan losses   8,500  10,000 -15.0%
Net interest income after provision for loan losses   31,320  29,844 4.9%
       
Noninterest income       
Insurance commissions   4,433  4,460 -0.6%
Service fees related to deposit accounts   4,255  4,125 3.2%
Realized securities gains   2,348  4,006 -41.4%
Gain (loss) on sale of assets   (677)  295 -329.5%
Other-than-temporary impairment of securities   (451)  (2,646) -83.0%
Write-downs of foreclosed properties   (6,862)  (6,651) 3.2%
Other income   2,294  1,961 17.0%
Total noninterest income  5,340  5,550 -3.8%
Noninterest expense       
Salaries and employee benefits  15,532  15,833 -1.9%
Net occupancy expense  1,939  1,935 0.2%
Equipment expense  2,349  2,342 0.3%
Professional fees  1,161  1,373 -15.4%
FDIC premiums  2,067  2,423 -14.7%
Foreclosed properties expense  1,221  1,458 -16.3%
Other expenses  5,459  4,921 10.9%
Total noninterest expense  29,728  30,285 -1.8%
Income before income taxes   6,932  5,109 35.7%
Income taxes   1,219  1,035 17.8%
Net income   5,713  4,074 40.2%
Preferred stock dividends   777  371 109.4%
       
Net income applicable to common shares  $ 4,936  $ 3,703 33.3%
       
       
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)    
Annual Month Performance Summary --- 2012 vs 2011    
     
   For the Years Ended   Percent 
  12/31/2012 12/31/2011  Change 
Per Share Data       
Earnings per common share       
Basic   $ 0.66  $ 0.50 32.0%
Diluted   $ 0.60  $ 0.49 22.4%
       
Average shares outstanding       
Basic   7,425,472  7,425,472 0.0%
Diluted   9,601,169  8,338,199 15.1%
       
Performance Ratios       
Return on average equity (A)  5.36% 4.32% 24.1%
Return on average assets  0.40% 0.28% 42.9%
Net interest margin  3.19% 3.08% 3.6%
Efficiency ratio (B)  53.78% 55.73% -3.5%
       
NOTE (A) – Net income divided by total shareholders' equity.
       
NOTE (B) – Computed on a tax equivalent basis excluding nonrecurring income and expense items and amortization of intangibles.
 
           
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)        
Five Quarter Performance Summary          
          
   For the Quarter Ended 
Dollars in thousands  12/31/2012 9/30/2012 6/30/2012 3/31/2012 12/31/2011
Condensed Statements of Income           
Interest income           
Loans, including fees   $ 13,512  $ 13,648  $ 14,041  $ 14,365  $ 14,362
Securities   1,703  1,934  2,225  2,421  2,711
Other   5  7  12  11  13
Total interest income   15,220  15,589  16,278  16,797  17,086
Interest expense           
Deposits   3,017  3,067  3,360  3,713  4,302
Borrowings   2,307  2,587  2,947  3,066  3,123
Total interest expense   5,324  5,654  6,307  6,779  7,425
Net interest income   9,896  9,935  9,971  10,018  9,661
Provision for loan losses   2,498  2,000  2,001  2,001  1,999
Net interest income after provision  for loan losses   7,398  7,935  7,970  8,017  7,662
           
Noninterest income           
Insurance commissions   1,082  1,052  1,141  1,158  1,003
Service fees related to deposit accounts   1,092  1,074  1,075  1,014  1,102
Gain (loss) on sale of assets   (94)  760  320  1,165  18
Realized securities gains (losses)   103  16  (523)  (77)  542
Other-than-temporary impairment of securities   (76)  (39)  (106)  (229)  (401)
Write-downs of foreclosed properties   (748)  (2,571)  (1,631)  (1,912)  (882)
Other income   644  514  552  584  607
Total noninterest income  2,003  806  828  1,703  1,989
Noninterest expense           
Salaries and employee benefits  3,799  3,940  3,892  3,901  3,846
Net occupancy expense  495  476  490  479  472
Equipment expense  576  576  603  594  593
Professional fees  314  289  242  316  565
FDIC premiums  535  510  500  522  564
Foreclosed properties expense  269  356  233  362  377
Other expenses  1,434  1,325  1,335  1,365  1,417
Total noninterest expense  7,422  7,472  7,295  7,539  7,834
Income before income taxes   1,979  1,269  1,503  2,181  1,817
Income taxes   (126)  272  590  483  337
Net income   2,105  997  913  1,698  1,480
Preferred stock dividends   194  194  194  194  149
Net income applicable to common shares  $ 1,911  $ 803  $ 719  $ 1,504  $ 1,331
           
           
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)      
Five Quarter Performance Summary        
         
   For the Quarter Ended 
  12/31/2012 9/30/2012 6/30/2012 3/31/2012 12/31/2011
Per Share Data           
Earnings per common share           
Basic   $ 0.26  $ 0.11  $ 0.10  $ 0.20  $ 0.18
Diluted   $ 0.22  $ 0.10  $ 0.09  $ 0.18  $ 0.16
           
Average shares outstanding           
Basic   7,425,472  7,425,472  7,425,472  7,425,472  7,425,472
Diluted   9,601,435  9,601,278  8,927,802  9,600,017  9,044,976
           
Performance Ratios           
Return on average equity (A)  7.76% 3.71% 3.44% 6.49% 5.87%
Return on average assets  0.60% 0.28% 0.25% 0.47% 0.41%
Net interest margin  3.19% 3.17% 3.20% 3.20% 3.03%
Efficiency ratio (B)  54.00% 54.37% 53.13% 53.71% 57.17%
           
NOTE (A) – Net income divided by average total shareholders' equity.
           
NOTE (B) – Computed on a tax equivalent basis excluding nonrecurring income and expense items and amortization of intangibles.
           
           
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)        
Selected Balance Sheet Data          
           
  For the Quarter Ended 
Dollars in thousands, except per share amounts  12/31/2012 9/30/2012 6/30/2012 3/31/2012 12/31/2011
           
Assets           
Cash and due from banks  $ 3,833  $ 3,752  $ 4,266  $ 4,059  $ 4,398
Interest bearing deposits other banks  10,969  13,441  14,288  26,855  28,294
Securities  281,539  291,992  289,151  292,002  286,599
Loans, net  937,168  940,933  948,294  957,797  965,516
Property held for sale  56,172  56,033  60,069  61,584  63,938
Premises and equipment, net  21,129  21,265  21,470  21,756  22,084
Intangible assets  8,300  8,387  8,475  8,563  8,651
Cash surrender value of life insurance policies  29,553  30,065  29,808  29,559  29,284
Other assets  38,441  38,218  40,620  42,190  41,357
Total assets  $ 1,387,104  $ 1,404,086  $ 1,416,441  $ 1,444,365  $ 1,450,121
           
Liabilities and Shareholders' Equity           
Retail deposits  $ 757,429  $ 766,555  $ 767,413  $ 785,283  $ 784,029
Wholesale deposits  269,696  260,752  234,256  225,856  232,471
Short-term borrowings  3,958  20,957  10,957  15,956  15,956
Long-term borrowings and subordinated debentures  239,657  240,133  290,024  303,510  306,643
Other liabilities  7,809  8,361  8,084  9,361  8,456
Shareholders' equity  108,555  107,328  105,707  104,399  102,566
Total liabilities and shareholders' equity  $ 1,387,104  $ 1,404,086  $ 1,416,441  $ 1,444,365  $ 1,450,121
           
Book value per common share (A)  $ 11.31  $ 11.20  $ 11.01  $ 10.87  $ 10.68
Tangible book value per common share (A)  $ 10.44  $ 10.33  $ 10.13  $ 9.98  $ 9.78
Tangible equity / Tangible assets 7.3% 7.1% 6.9% 6.7% 6.5%
           
NOTE (A) – Assumes conversion of convertible preferred stock
           
           
SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)      
Regulatory Capital Ratios          
           
  12/31/2012 9/30/2012 6/30/2012 3/31/2012 12/31/2011
Summit Financial Group, Inc.          
Total Risk Based Capital 14.0% 13.8% 13.6% 13.3% 13.0%
Tier 1 Risk Based Capital 11.6% 11.3% 11.1% 10.8% 10.5%
Tier 1 Leverage Ratio 8.3% 8.0% 7.9% 7.8% 7.6%
           
Summit Community Bank, Inc.          
Total Risk Based Capital 15.0% 14.6% 14.3% 14.0% 13.6%
Tier 1 Risk Based Capital 13.7% 13.3% 13.1% 12.7% 12.3%
Tier 1 Leverage Ratio 9.8% 9.5% 9.3% 9.1% 8.9%
           
           
SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)          
Loan Composition          
           
Dollars in thousands 12/31/2012 9/30/2012 6/30/2012 3/31/2012 12/31/2011
           
Commercial  $ 85,829  $ 88,997  $ 92,060  $ 99,386  $ 99,024
Commercial real estate          
Owner occupied  154,252  150,090  152,347  153,528  158,754
Non-owner occupied  276,082  279,132  280,891  275,727  270,226
Construction and development          
Land and development  79,335  82,857  84,383  88,212  93,035
Construction  3,772  2,087  1,793  2,148  2,936
Residential real estate          
Non-jumbo  216,714  215,584  217,321  219,485  221,733
Jumbo  61,567  62,748  61,962  62,836  61,535
Home equity  53,263  53,455  51,692  50,884  50,898
Consumer  20,586  21,290  21,212  21,573  22,325
Other  3,701  2,513  2,523  2,540  2,762
Total loans, net of unearned fees  955,101  958,753  966,184  976,319  983,228
Less allowance for loan losses  17,933  17,820  17,890  18,522  17,712
Loans, net  $ 937,168  $ 940,933  $ 948,294  $ 957,797  $ 965,516
           
           
SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)          
Retail Deposit Composition          
           
Dollars in thousands 12/31/2012 9/30/2012 6/30/2012 3/31/2012 12/31/2011
Non interest bearing checking  $ 100,592  $ 96,764  $ 96,172  $ 87,916  $ 88,655
Interest bearing checking  175,706  177,236  164,867  172,506  158,483
Savings  193,039  197,610  204,509  212,402  208,809
Time deposits  288,092  294,945  301,865  312,459  328,082
Total retail deposits  $ 757,429  $ 766,555  $ 767,413  $ 785,283  $ 784,029
           
           
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)        
Asset Quality Information          
           
  For the Quarter Ended 
Dollars in thousands  12/31/2012 9/30/2012 6/30/2012 3/31/2012 12/31/2011
Gross loan charge-offs  $ 2,545  $ 2,142  $ 2,790  $ 1,340  $ 2,368
Gross loan recoveries  (160)  (73)  (156)  (149)  (133)
Net loan charge-offs  $ 2,385  $ 2,069  $ 2,634  $ 1,191  $ 2,235
           
Net loan charge-offs to average loans (annualized) 0.99% 0.86% 1.08% 0.49% 0.91%
Allowance for loan losses  $ 17,933  $ 17,820  $ 17,890  $ 18,523  $ 17,712
Allowance for loan losses as a percentage          
of period end loans 1.88% 1.86% 1.85% 1.89% 1.80%
Nonperforming assets:          
Nonperforming loans          
Commercial  $ 5,002  $ 5,343  $ 6,476  $ 2,477  $ 3,259
Commercial real estate  2,556  2,803  3,536  4,282  7,163
Commercial construction and development  --  428  662  799  1,052
Residential construction and development  13,641  16,333  16,735  21,375  22,634
Residential real estate  16,522  18,809  18,550  17,754  18,187
Consumer  55  88  78  81  145
Total nonperforming loans  37,776  43,804  46,037  46,768  52,440
Foreclosed properties          
Commercial  --  --  --  --  --
Commercial real estate  11,835  11,802  12,029  14,703  15,721
Commercial construction and development  17,597  17,683  18,632  17,377  17,101
Residential construction and development  23,074  23,769  26,014  25,724  27,877
Residential real estate  3,666  2,779  3,393  3,780  3,239
Total foreclosed properties  56,172  56,033  60,068  61,584  63,938
Other repossessed assets  6  --  --  266  263
Total nonperforming assets  $ 93,954  $ 99,837  $ 106,105  $ 108,618  $ 116,641
           
Nonperforming loans to period end loans 3.96% 4.57% 4.76% 4.79% 5.33%
Nonperforming assets to period end assets 6.77% 7.11% 7.49% 7.52% 8.04%
           
           
Loans Past Due 30-89 Days          
  For the Quarter Ended 
In thousands  12/31/2012 9/30/2012 6/30/2012 3/31/2012 12/31/2011
           
Commercial  $ 180  $ 874  $ 300  $ 689  $ 533
Commercial real estate  437  1,264  1,787  2,776  5,746
Construction and development  --  56  293  518  1,756
Residential real estate  6,170  4,346  5,763  5,509  6,633
Consumer  326  313  408  242  466
Total  $ 7,113  $ 6,853  $ 8,551  $ 9,734  $ 15,134
           
             
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)        
Average Balance Sheet, Interest Earnings & Expenses and Average Rates      
Q4 2012 vs Q4 2011            
  Q4 2012 Q4 2011
  Average Earnings / Yield / Average Earnings / Yield /
Dollars in thousands Balances Expense Rate Balances Expense Rate
             
ASSETS            
Interest earning assets            
Loans, net of unearned interest            
Taxable  $ 956,864  $ 13,436 5.59%  $ 985,496  $ 14,287 5.75%
Tax-exempt  6,184  117 7.53%  6,115  114 7.40%
Securities            
Taxable  226,629  1,097 1.93%  225,089  1,817 3.20%
Tax-exempt  75,466  912 4.81%  86,389  1,353 6.21%
Interest bearing deposits other banks and Federal funds sold  10,779  4 0.15%  25,926  13 0.20%
Total interest earning assets  1,275,922  15,566 4.85%  1,329,015  17,584 5.25%
             
Noninterest earning assets            
Cash & due from banks  4,166      4,229    
Premises & equipment  21,266      22,274    
Other assets  113,952      121,215    
Allowance for loan losses  (18,053)      (18,211)    
Total assets  $ 1,397,253      $ 1,458,522    
             
LIABILITIES AND SHAREHOLDERS' EQUITY          
             
Liabilities            
Interest bearing liabilities            
Interest bearing demand deposits  $ 179,198  $ 78 0.17%  $ 156,751  $ 94 0.24%
Savings deposits  194,839  307 0.63%  208,772  427 0.81%
Time deposits  556,748  2,632 1.88%  573,798  3,781 2.61%
Short-term borrowings  10,263  7 0.27%  11,879  6 0.20%
Long-term borrowings and subordinated debentures  239,722  2,300 3.82%  307,937  3,117 4.02%
Total interest bearing liabilities  1,180,770  5,324 1.79%  1,259,137  7,425 2.34%
             
Noninterest bearing liabilities            
Demand deposits  99,845      89,640    
Other liabilities  8,198      8,958    
Total liabilities  1,288,813      1,357,735    
             
Shareholders' equity - preferred  9,326      8,315    
Shareholders' equity - common  99,114      92,472    
             
Total liabilities and shareholders' equity  $ 1,397,253      $ 1,458,522    
             
NET INTEREST EARNINGS    $ 10,242      $ 10,159  
             
NET INTEREST MARGIN     3.19%     3.03%
             
             
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)        
Average Balance Sheet, Interest Earnings & Expenses and Average Rates      
YTD 2012 vs YTD 2011            
             
  YTD 2012 YTD 2011
  Average Earnings / Yield / Average Earnings / Yield /
Dollars in thousands Balances Expense Rate Balances Expense Rate
             
ASSETS            
Interest earning assets            
Loans, net of unearned interest            
Taxable  $ 963,209  $ 55,248 5.74%  $ 987,315  $ 58,911 5.97%
Tax-exempt  6,628  483 7.29%  5,105  402 7.87%
Securities            
Taxable  233,560  5,689 2.44%  252,901  9,106 3.60%
Tax-exempt  71,937  3,929 5.46%  63,894  4,080 6.39%
Interest bearing deposits other banks and Federal funds sold  19,731  35 0.18%  33,690  72 0.21%
Total interest earning assets  1,295,065  65,384 5.05%  1,342,905  72,571 5.40%
             
Noninterest earning assets            
Cash & due from banks  4,188      4,022    
Premises & equipment  21,578      22,620    
Other assets  118,427      118,408    
Allowance for loan losses  (18,157)      (18,161)    
Total assets  $ 1,421,101      $ 1,469,794    
             
LIABILITIES AND SHAREHOLDERS' EQUITY          
             
Liabilities            
Interest bearing liabilities            
Interest bearing demand deposits  $ 170,698  $ 325 0.19%  $ 152,552  $ 391 0.26%
Savings deposits  203,908  1,361 0.67%  207,226  1,899 0.92%
Time deposits  548,044  11,472 2.09%  601,925  15,983 2.66%
Short-term borrowings  13,248  31 0.23%  4,238  8 0.19%
Long-term borrowings and subordinated debentures  276,092  10,875 3.94%  315,900  12,921 4.09%
   1,211,990  24,064 1.99%  1,281,841  31,202 2.43%
Noninterest bearing liabilities            
Demand deposits  94,243      85,247    
Other liabilities  8,256      8,474    
Total liabilities  1,314,489      1,375,562    
             
Shareholders' equity - preferred  9,326      4,738    
Shareholders' equity - common  97,286      89,494    
Total liabilities and shareholders' equity  $ 1,421,101      $ 1,469,794    
             
NET INTEREST EARNINGS    $ 41,320      $ 41,369  
             
NET INTEREST MARGIN     3.19%     3.08%
             
         
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)        
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures        
         
   For the Quarter Ended   For the Years Ended 
Dollars in thousands  12/31/2012 12/31/2011 12/31/2012 12/31/2011
         
Net income applicable to common shares - excluding realized securities gains, gains/losses on sales of assets, other-than-temporary impairment of securities and write-downs of foreclosed properties   $ 2,424  $ 1,786  $ 8,491  $ 6,850
         
Realized securities gains   103  542  2,348  4,006
Applicable income tax effect   (38)  (201)  (869)  (1,482)
Gain (loss) on sale of assets   (94)  19  (677)  295
Applicable income tax effect   35  (7)  250  (109)
Other-than-temporary impairment of securities   (76)  (401)  (451)  (2,646)
Applicable income tax effect   28  148  167  979
Write-downs foreclosed properties   (748)  (882)  (6,862)  (6,651)
Applicable income tax effect   277  326  2,539  2,461
   (513)  (455)  (3,555)  (3,147)
GAAP net income applicable to common shares   $ 1,911  $ 1,331  $ 4,936  $ 3,703
         
         
Diluted earnings per common share - excluding realized securities gains, gains/losses on sales of assets, other-than-temporary impairment of securities and write-downs of foreclosed properties  $ 0.28  $ 0.21  $ 0.97  $ 0.86
         
Realized securities gains   0.01  0.06  0.24  0.48
Applicable income tax effect   --   (0.02)  (0.09)  (0.18)
Gain (loss) on sale of assets   (0.01)  --   (0.07)  0.04
Applicable income tax effect   --   --   0.03  (0.01)
Other-than-temporary impairment of securities   (0.01)  (0.04)  (0.05)  (0.32)
Applicable income tax effect   --   0.01  0.02  0.12
Write-downs of foreclosed properties   (0.08)  (0.10)  (0.71)  (0.80)
Applicable income tax effect   0.03  0.04  0.26  0.30
   (0.06)  (0.05)  (0.37)  (0.37)
GAAP diluted earnings per common share   $ 0.22  $ 0.16  $ 0.60  $ 0.49
         
         
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)      
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures    
         
   For the Quarter Ended   For the Years Ended 
Dollars in thousands  12/31/2012 12/31/2011 12/31/2012 12/31/2011
         
Total revenue - excluding realized securities gains, gains/losses on sales of assets, other-than-temporary impairment of securities and write-downs of foreclosed properties   $ 12,714  $ 12,372  $ 50,802  $ 50,390
         
Realized securities gains  103  542  2,348  4,006
Gain (loss) on sale of assets   (94)  19  (677)  295
Other-than-temporary impairment of securities   (76)  (401)  (451)  (2,646)
Write-downs of foreclosed properties   (748)  (882)  (6,862)  (6,651)
   (815)  (722)  (5,642)  (4,996)
GAAP total revenue   $ 11,899  $ 11,650  $ 45,160  $ 45,394
         
         
Total noninterest income - excluding realized securities gains, gains/losses on sales of assets, other-than- temporary impairment of securities and write-downs of foreclosed properties   $ 2,818  $ 2,711  $ 10,982  $ 10,545
         
Realized securities gains  103  542  2,348  4,006
Gain (loss) on sale of assets   (94)  19  (677)  295
Other-than-temporary impairment of securities   (76)  (401)  (451)  (2,645)
Write-downs of foreclosed properties   (748)  (882)  (6,862)  (6,651)
   (815)  (722)  (5,642)  (4,995)
GAAP total noninterest income   $ 2,003  $ 1,989  $ 5,340  $ 5,550
         
CONTACT: Robert S. Tissue, Sr. Vice President & CFO         Telephone: (304) 530-0552         Email: rtissue@summitfgi.com

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