Q4 2016 Diluted EPS $0.44 compared to $0.39 for Q4 2015 and $0.40 for Q3 2016; Full year 2016 Diluted EPS $1.61 compared to $1.50 for 2015

MOOREFIELD, W. Va., Jan. 30, 2017 (GLOBE NEWSWIRE) -- Summit Financial Group, Inc. ("Company" or "Summit") (NASDAQ:SMMF) today reported fourth quarter 2016 net income of $4.71 million, or $0.44 per diluted share, compared to $4.15 million, or $0.39 per diluted share, for the fourth quarter of 2015, representing an increase of 13.6 percent, or 12.8 percent per diluted share.

For the year ended December 31, 2016, Summit recorded net income of $17.30 million, or $1.61 per diluted share, compared with $16.10 million, or $1.50 per diluted share for 2015, representing an increase of 7.4 percent, or 7.3 percent per diluted share. 

On October 1, 2016, Summit completed its acquisition of Highland County Bankshares, Inc. ("HCB") and its subsidiary, First & Citizens Bank, headquartered in Monterey, Virginia. Accordingly, HCB's results of operations are included in Summit's consolidated results of operation from the date of acquisition, and therefore Summit's fourth quarter and full-year 2016 results reflect increased levels of average balances, income and expense compared to its fourth quarter and full-year 2015 results.  At consummation, HCB had total assets of $122.8 million, loans of $60.8 million, and deposits of $106.9 million. In addition, our merger related expenses totaled $933,000 in 2016, with $588,000 of those expenses incurred during fourth quarter 2016.

Q4 2016 versus Q4 2015
  • Net interest earnings increased $1.72 million, or 14.7 percent;
  • Gains realized on sales of securities declined from $421,000 in Q4 2015 to $291,000 in Q4 2016;
  • Write-downs of foreclosed properties were $165,000 in Q4 2016 compared to $636,000 during Q4 2015;
  • Personnel costs increased 17.2 percent, or $778,000 in Q4 2016;
  • Recognized $487,000 net gain on insurance proceeds in excess of related flood losses during Q4 2016; and
  • Merger related expenses of $588,000 were incurred during Q4 2016, while there were none in Q4 2015.

FY 2016 versus FY 2015
  • Net interest earnings increased 6.5 percent, or $2.99 million;
  • Provision for loan losses declined to $500,000 for 2016 compared to $1.25 million during 2015;
  • Higher personnel costs, reaching $19.57 million during 2016 compared to $17.64 million for 2015;
  • Merger related expenses of $933,000 were incurred during 2016, while none were recognized in 2015;
  • Recognized $320,000 net gain on insurance proceeds in excess of related flood losses in 2016;
  • Gains on sales of foreclosed properties totaled $916,000 during 2016 compared to $26,000 during 2015; and
  • Write-downs of foreclosed properties declined to $668,000 for 2016 compared to $2.42 million for 2015.

Fourth Quarter 2016 Highlights
  • Summit completed its acquisition of HCB on October 1, 2016, and converted substantially its data processing systems to that of Summit's effective December 5, 2016;
  • Our pending acquisition of First Century Bankshares, Inc. ("FCB") was approved by FCB's shareholders on December 6, 2016. All requisite regulatory approvals relative to this transaction were previously received, and it is expected to close at the beginning of second quarter 2017;
  • Total revenues increased 11.3 percent compared to the linked quarter and 12.7 percent compared to the year ago quarter;
  • Loans, excluding mortgage warehouse lines of credit and HCB's purchased loan portfolio, grew $35.5 million during the quarter, or 12.5 percent (on an annualized basis), and grew $81.9 million, or 7.5 percent in 2016;
  • Nonperforming assets as a percentage of total assets declined for the seventeenth consecutive quarter to 2.22 percent compared to 2.36 percent for the linked quarter, reaching its lowest level since Q2 2008;
  • Net interest margin declined 17 basis points since Q4 2015, but increased 2 basis points compared to the linked quarter; and
  • Recorded charges of $165,000 to write-down foreclosed properties compared to $134,000 in Q3 2016 and $636,000 in Q4 2015.

H. Charles Maddy, III, President and Chief Executive Officer of Summit, commented, "I am very pleased to report that Summit achieved record quarterly earnings in the quarter just ended and record annual earnings in 2016. Further, I am particularly gratified by our revenue growth during 2016 which resulted principally from our continued robust lending activity and our recent acquisition of Highland County Bankshares. Our pending acquisition of First Century Bankshares has received all approvals and is expected to close in early Q2 2017. This acquisition combined with our recent Highland County purchase - that is already positively impacting our bottom line -- represent significant opportunities for us. The combination of Summit and these two financially strong institutions which have similar cultures and core values as ours should contribute significantly towards our goal of being a consistent, high-performing community banking institution and gives us optimism as we look forward to 2017 and beyond."

Results from Operations

Total revenue for fourth quarter 2016, consisting of net interest income and noninterest income, grew 12.7 percent to $16.5 million compared to $14.6 million for the fourth quarter 2015. For the annual period ended December 31, 2016, total revenue was $60.6 million compared to $57.9 million for 2015, representing a 4.7 percent increase.

For the fourth quarter of 2016, net interest income was $13.5 million, an increase of 14.7 percent from the $11.7 million reported in the prior-year fourth quarter and increased $1.4 million compared to the linked quarter. The net interest margin for fourth quarter 2016 was 3.34 percent compared to 3.51 percent for the year-ago quarter, and 3.32 percent for the linked quarter.  Summit recognized net accretion income totaling $66,000 in Q4 2016 related to HCB's loan fair value acquisition accounting adjustments.

Noninterest income, consisting primarily of insurance commissions from Summit's insurance agency subsidiary and service fee income from community banking activities, for fourth quarter 2016 was $3.00 million compared to $2.87 million for the comparable period of 2015. Excluding realized securities gains, noninterest income was $2.71 million for fourth quarter 2016, compared to $2.45 million reported for fourth quarter 2015.

We recorded no provision for loan losses during fourth quarter 2016, compared to $250,000 for the year-ago quarter.

Noninterest expense continues to be well-controlled. Total noninterest expense increased 10.6 percent to $9.39 million compared to $8.49 million for the prior-year fourth quarter. Noninterest expense for the year 2016 increased 3.5 percent compared to 2015.

Balance Sheet

At December 31, 2016, total assets were $1.76 billion, an increase of $266.2 million, or 17.8 percent since December 31, 2015. Total loans, net of unearned fees and allowance for loan losses, were $1.31 billion at December 31, 2016, up $228.5 million, or 21.2 percent, from the $1.08 billion reported at year-end 2015. Excluding mortgage warehouse lines of credit, net loans increased $142.6 million or 13.2 percent since year-end 2015.

At December 31, 2016, deposits were $1.30 billion, an increase of $228.8 million, or 21.5 percent, since year end 2015. During 2016, checking deposits increased by $77.6 million or 23.2 percent, time deposits increased by $80.7 million or 17.3 percent, and savings deposits increased by $70.5 million or 26.4 percent.

Asset Quality

As of December 31, 2016, nonperforming assets ("NPAs"), consisting of nonperforming loans, foreclosed properties, and repossessed assets, were $39.1 million, or 2.22 percent of assets. This compares to $39.2 million, or 2.36 percent of assets at the linked quarter, and $41.3 million, or 2.77 percent of assets, at fourth quarter 2015.

Fourth quarter 2016 net loan charge-off recoveries were $56,000, or 0.02 percent of average loans annualized; with no provision for loan losses. The allowance for loan losses stood at $11.7 million, or 0.88 percent of total loans at December 31, 2016, compared to 1.05 percent at year-end 2015.

Capital Adequacy

Shareholders' equity was $155.4 million as of December 31, 2016 compared to $143.7 million at December 31, 2015. Tangible book value per common share increased to $13.20 at December 31, 2016 compared to $12.78 at December 31, 2015. Summit had 10,736,970 outstanding common shares at year end 2016 compared to 10,671,744 at year end 2015.

Summit's depository institution, Summit Community Bank, Inc. (the "Bank"), is well in excess of regulatory requirements for a "well capitalized" institution at December 31, 2016. The Bank's total risk-based capital ratio was 12.7 percent at December 31, 2016 compared to 14.5 percent at December 31, 2015, while its Tier 1 leverage capital ratio was 9.5 percent at December 31, 2016 compared to the 10.8 percent reported at December 31, 2015. 

About the Company

Summit Financial Group, Inc. is a $1.76 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 eighteen banking locations. Summit also operates Summit Insurance Services, LLC in Moorefield, West Virginia and Leesburg, Virginia.

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.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:   SMMF)    
Quarterly Performance Summary -- Q4 2016 vs Q4 2015    
         
       
      For the Quarter Ended     Percent  
  Dollars in thousands   12/31/2016 12/31/2015   Change  
  Condensed Statements of Income        
  Interest income      
  Loans, including fees $ 15,780   $ 13,265   19.0 %
  Securities   1,796     1,685   6.6 %
  Other   161     1   n/a  
  Total interest income   17,737     14,951   18.6 %
  Interest expense              
  Deposits   2,430     2,085   16.5 %
  Borrowings   1,850     1,133   63.3 %
  Total interest expense   4,280     3,218   33.0 %
  Net interest income   13,457     11,733   14.7 %
  Provision for loan losses   -     250   -100.0 %
  Net interest income after provision              
  for loan losses   13,457     11,483   17.2 %
  Noninterest income              
  Insurance commissions   992     851   16.6 %
  Service fees related to deposit accounts   1,194     1,126   6.0 %
  Realized securities gains   291     421   -30.9 %
  Other income   521     471   10.6 %
  Total noninterest income   2,998     2,869   4.5 %
  Noninterest expense              
  Salaries and employee benefits   5,308     4,530   17.2 %
  Net occupancy expense   522     481   8.5 %
  Equipment expense   700     617   13.5 %
  Professional fees   344     507   -32.1 %
  Amortization of intangibles   97     50   94.0 %
  FDIC premiums   75     270   -72.2 %
  Merger expense   588     -   n/a  
  Foreclosed properties expense   97     150   -35.3 %
  Loss (gain) on sales of foreclosed properties   (465 )   (314 ) 48.1 %
  Write-downs of foreclosed properties   165     636   -74.1 %
  Other expenses   1,961     1,567   25.1 %
  Total noninterest expense   9,392     8,494   10.6 %
  Income before income taxes   7,063     5,858   20.6 %
  Income taxes   2,353     1,712   37.4 %
  Net income $ 4,710   $ 4,146   13.6 %

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:   SMMF)    
Quarterly Performance Summary -- Q4 2016 vs Q4 2015    
       
      For the Quarter Ended     Percent  
    12/31/2016 12/31/2015   Change  
  Per Share Data        
  Earnings per common share      
  Basic $ 0.44   $ 0.39   12.8 %
  Diluted $ 0.44   $ 0.39   12.8 %
         
  Cash dividends $ 0.10   $ 0.08   25.0 %
         
  Average common shares outstanding      
  Basic   10,710,164     10,661,700   0.5 %
  Diluted   10,762,445     10,669,192   0.9 %
         
  Common shares outstanding at period end   10,736,970     10,671,744   0.6 %
         
  Performance Ratios        
  Return on average equity   12.22 %   11.66 % 4.8 %
  Return on average tangible equity   13.42 %   12.31 % 9.0 %
  Return on average assets   1.07 %   1.12 % -4.5 %
  Net interest margin   3.34 %   3.51 % -4.8 %
  Efficiency ratio (A)   56.67 %   54.46 % 4.1 %
         

NOTE (A) - 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 -- 2016 vs 2015      
         
         
      For the Year Ended     Percent  
  Dollars in thousands   12/31/2016 12/31/2015   Change  
  Condensed Statements of Income        
  Interest income      
  Loans, including fees $ 56,980   $ 52,068   9.4 %
  Securities   6,938     6,808   1.9 %
  Other   173     7   n/a  
  Total interest income   64,091     58,883   8.8 %
  Interest expense              
  Deposits   8,964     8,336   7.5 %
  Borrowings   6,120     4,531   35.1 %
  Total interest expense   15,084     12,867   17.2 %
  Net interest income   49,007     46,016   6.5 %
  Provision for loan losses   500     1,250   -60.0 %
  Net interest income after provision              
  for loan losses   48,507     44,766   8.4 %
                 
  Noninterest income              
  Insurance commissions   4,022     4,042   -0.5 %
  Service fees related to deposit accounts   4,370     4,285   2.0 %
  Realized securities gains   1,127     1,444   -22.0 %
  Other income   2,081     2,090   -0.4 %
  Total noninterest income   11,600     11,861   -2.2 %
  Noninterest expense              
  Salaries and employee benefits   19,573     17,638   11.0 %
  Net occupancy expense   2,098     1,964   6.8 %
  Equipment expense   2,759     2,294   20.3 %
  Amortization of intangibles   247     200   23.5 %
  Professional fees   1,515     1,616   -6.3 %
  FDIC premiums   875     1,220   -28.3 %
  Merger expense   933     -   n/a  
  Foreclosed properties expense   414     684   -39.5 %
  Loss (gain) on sales of foreclosed properties   (916 )   (26 ) n/a  
  Write-downs of foreclosed properties   668     2,415   -72.3 %
  Other expenses   6,636     5,627   17.9 %
  Total noninterest expense   34,802     33,632   3.5 %
  Income before income taxes   25,305     22,995   10.0 %
  Income taxes   8,008     6,893   16.2 %
  Net income $ 17,297   $ 16,102   7.4 %

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:   SMMF)    
Annual Performance Summary -- 2016 vs 2015      
       
      For the Year Ended     Percent  
    12/31/2016 12/31/2015   Change  
  Per Share Data        
  Earnings per common share      
  Basic $ 1.62   $ 1.56   3.8 %
  Diluted $ 1.61   $ 1.50   7.3 %
         
  Cash dividends $ 0.40   $ 0.32   25.0 %
         
  Average common shares outstanding      
  Basic   10,689,224     10,295,434   3.8 %
  Diluted   10,716,871     10,715,275   0.0 %
         
  Common shares outstanding at period end   10,736,970     10,671,744   0.6 %
         
  Performance Ratios        
  Return on average equity   11.53 %   11.62 % -0.8 %
  Return on average tangible equity   12.27 %   12.29 % -0.2 %
  Return on average assets   1.08 %   1.10 % -1.8 %
  Net interest margin   3.39 %   3.50 % -3.1 %
  Efficiency ratio (A)   55.34 %   52.17 % 6.1 %
         

NOTE (A) - 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   12/31/2016 9/30/2016 6/30/2016 3/31/2016 12/31/2015
  Condensed Statements of Income            
   Interest income           
    Loans, including fees  $ 15,780   $ 14,142   $ 13,622   $ 13,436   $ 13,265  
    Securities    1,796     1,759     1,656     1,726     1,685  
    Other    161     5     5     3     1  
   Total interest income    17,737     15,906     15,283     15,165     14,951  
   Interest expense                               
    Deposits    2,430     2,209     2,154     2,170     2,085  
    Borrowings    1,850     1,659     1,395     1,216     1,133  
   Total interest expense    4,280     3,868     3,549     3,386     3,218  
   Net interest income    13,457     12,038     11,734     11,779     11,733  
   Provision for loan losses    -     -     250     250     250  
   Net interest income after provision                               
    for loan losses    13,457     12,038     11,484     11,529     11,483  
                                 
   Noninterest income                               
    Insurance commissions    992     1,016     1,090     924     851  
    Service fees related to deposit accounts    1,194     1,138     1,059     978     1,126  
    Realized securities gains    291     61     383     393     421  
    Other income    521     534     513     511     471  
  Total noninterest income   2,998     2,749     3,045     2,806     2,869  
   Noninterest expense                               
    Salaries and employee benefits   5,308     4,819     4,764     4,682     4,530  
    Net occupancy expense   522     525     512     540     481  
    Equipment expense   700     716     686     656     617  
    Professional fees   344     270     429     472     507  
    Amortization of intangibles   97     50     50     50     50  
    FDIC premiums   75     200     300     300     270  
    Merger expense   588     80     153     112     -  
    Foreclosed properties expense   97     100     93     124     150  
    Loss (gain) on sales of foreclosed properties    (465 )   (168 )   (276 )   (6 )   (314 )
    Write-downs of foreclosed properties    165     134     259     109     636  
    Other expenses   1,961     1,693     1,467     1,515     1,567  
  Total noninterest expense   9,392     8,419     8,437     8,554     8,494  
   Income before income taxes    7,063     6,368     6,092     5,781     5,858  
   Income taxes    2,353     2,087     1,849     1,719     1,712  
   Net income  $ 4,710   $ 4,281   $ 4,243   $ 4,062   $ 4,146  

 
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:   SMMF)          
Five Quarter Performance Summary          
           
      For the Quarter Ended  
    12/31/2016 9/30/2016 6/30/2016 3/31/2016 12/31/2015
  Per Share Data            
  Earnings per common share          
  Basic $ 0.44   $ 0.40   $ 0.40   $ 0.38   $ 0.39  
  Diluted $ 0.44   $ 0.40   $ 0.40   $ 0.38   $ 0.39  
             
  Cash dividends $ 0.10   $ 0.10   $ 0.10   $ 0.10   $ 0.08  
             
  Average common shares outstanding          
  Basic   10,710,164     10,692,423     10,681,995     10,671,856     10,661,700  
  Diluted   10,762,445     10,727,140     10,701,017     10,679,301     10,669,192  
             
  Common shares outstanding at period end   10,736,970     10,701,841     10,692,320     10,681,880     10,671,744  
             
  Performance Ratios            
  Return on average equity   12.22 %   11.29 %   11.49 %   11.10 %   11.66 %
  Return on average tangible equity   13.42 %   11.86 %   12.10 %   11.70 %   12.31 %
  Return on average assets   1.07 %   1.08 %   1.10 %   1.08 %   1.12 %
  Net interest margin   3.34 %   3.32 %   3.40 %   3.50 %   3.51 %
  Efficiency ratio (A)   56.67 %   53.30 %   55.35 %   55.93 %   54.46 %
             

NOTE (A) - 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          
     
  Dollars in thousands, except per share amounts   12/31/2016 9/30/2016 6/30/2016 3/31/2016 12/31/2015
             
  Assets            
  Cash and due from banks $   4,262   $   25,067   $   4,161   $   4,005   $   3,625  
  Interest bearing deposits other banks     42,354       9,432       8,897       12,655       5,862  
  Securities     266,542       262,102       261,633       271,515       280,792  
  Loans, net     1,307,862       1,234,605       1,166,723       1,096,790       1,079,331  
  Property held for sale     24,504       24,767       23,425       24,684       25,567  
  Premises and equipment, net     23,737       21,802       21,405       21,589       21,572  
  Intangible assets     13,652       7,348       7,398       7,448       7,498  
  Cash surrender value of life insurance policies     39,143       38,504       38,246       37,989       37,732  
  Other assets     36,591       34,009       33,293       31,893       30,450  
    Total assets $   1,758,647   $   1,657,636   $   1,565,181   $   1,508,568   $   1,492,429  
                                 
  Liabilities and Shareholders' Equity                                
  Deposits $   1,295,519   $   1,156,785   $   1,096,545   $   1,094,544   $   1,066,709  
  Short-term borrowings     224,461       234,657       205,552       153,448       171,394  
  Long-term borrowings and                              
    subordinated debentures     66,259       93,735       94,214       94,692       95,170  
  Other liabilities     17,048       18,640       18,201       19,755       15,412  
  Shareholders' equity     155,360       153,819       150,669       146,129       143,744  
    Total liabilities and shareholders' equity $   1,758,647   $   1,657,636   $   1,565,181   $   1,508,568   $   1,492,429  
                                 
  Book value per common share $   14.47   $   14.37   $   14.09   $   13.68   $   13.48  
  Tangible book value per common share $   13.20   $   13.69   $   13.40   $   12.98   $   12.78  
  Tangible common equity to tangible assets   8.1 %   8.9 %   9.2 %   9.2 %   9.2 %
             

SUMMIT FINANCIAL GROUP INC. (NASDAQ:   SMMF)          
Regulatory Capital Ratios            
               
    12/31/2016 9/30/2016     6/30/2016     3/31/2016     12/31/2015  
Summit Financial Group, Inc.            
  CET1 Risk-based Capital 10.5 % 11.1 %     11.5 %     11.9 %     11.8 %  
  Tier 1 Risk-based Capital 11.8 % 12.4 %     12.9 %     13.5 %     13.4 %  
  Total Risk-based Capital 12.6 % 13.3 %     13.8 %     14.5 %     14.4 %  
  Tier 1 Leverage Ratio 9.4 % 10.4 %     10.5 %     10.7 %     10.7 %  
               
Summit Community Bank, Inc.            
  CET1 Risk-based Capital 11.9 % 12.5 %     13.0 %     13.6 %     13.6 %  
  Tier 1 Risk-based Capital 11.9 % 12.5 %     13.0 %     13.6 %     13.6 %  
  Total Risk-based Capital 12.7 % 13.4 %     13.9 %     14.5 %     14.5 %  
  Tier 1 Leverage Ratio 9.5 % 10.5 %     10.6 %     10.7 %     10.8 %  
               

 
SUMMIT FINANCIAL GROUP INC. (NASDAQ:   SMMF)        
Loan Composition            
               
Dollars in thousands 12/31/2016 9/30/2016 6/30/2016 3/31/2016 12/31/2015  
               
Commercial   $   119,088   $   110,466   $   101,521   $   101,743   $   97,201  
Mortgage warehouse lines     85,966       108,983       80,282       -       -  
Commercial real estate            
  Owner occupied     203,047       192,254       190,534       202,680       203,555  
  Non-owner occupied     381,921       367,196       348,099       353,350       337,295  
Construction and development            
  Land and development     72,042       65,430       65,702       66,483       65,500  
  Construction       16,584       11,276       8,506       7,997       9,970  
Residential real estate            
  Non-jumbo       265,641       228,777       225,919       221,368       221,749  
  Jumbo       65,628       57,276       52,105       50,057       50,313  
  Home equity       74,596       75,161       75,904       74,097       74,300  
Consumer       25,534       19,756       19,520       19,095       19,251  
Other       9,489       9,649       10,008       11,235       11,669  
 Total loans, net of unearned fees     1,319,536       1,246,224       1,178,100       1,108,105       1,090,803  
Less allowance for loan losses     11,674       11,619       11,377       11,315       11,472  
Loans, net $   1,307,862   $   1,234,605   $   1,166,723   $   1,096,790   $   1,079,331  
               

 
SUMMIT FINANCIAL GROUP INC. (NASDAQ:   SMMF)        
Deposit Composition            
               
Dollars in thousands   12/31/2016 9/30/2016 6/30/2016 3/31/2016 12/31/2015  
Non interest bearing checking $   149,737   $   122,652   $   120,845   $   122,378   $   119,010  
Interest bearing checking     262,591       212,172       205,095       210,878       215,721  
Savings       337,348       321,563       306,785       286,695       266,825  
Time deposits       545,843       500,398       463,820       474,593       465,153  
Total deposits $   1,295,519   $   1,156,785   $   1,096,545   $   1,094,544   $   1,066,709  
               

 
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:   SMMF)        
Asset Quality Information          
             
      For the Quarter Ended  
  Dollars in thousands   12/31/2016 9/30/2016 6/30/2016 3/31/2016 12/31/2015
             
  Gross loan charge-offs   $   400     $   331     $   263     $   561     $   132  
  Gross loan recoveries       (456 )       (573 )       (75 )       (154 )       (126 )
    Net loan charge-offs (recoveries)   $   (56 )   $   (242 )   $   188     $   407     $   6  
             
  Net loan charge-offs to average loans (annualized)     -0.02 %     -0.09 %     0.07 %     0.15 %     0.00 %
                                           
  Allowance for loan losses   $   11,674     $   11,619     $   11,377     $   11,315     $   11,472  
  Allowance for loan losses as a percentage          
    of period end loans     0.88 %     0.93 %     0.97 %     1.02 %     1.05 %
                                           
  Nonperforming assets:          
    Nonperforming loans          
    Commercial   $   298     $   846     $   399     $   430     $   853  
    Commercial real estate       4,844         4,867         5,773         6,140         5,955  
    Residential construction and development       4,465         4,360         5,400         5,467         5,623  
    Residential real estate       4,815         4,174         3,531         3,248         3,245  
    Consumer       152         169         91         121         92  
  Total nonperforming loans       14,574         14,416         15,194         15,406         15,768  
    Foreclosed properties          
    Commercial real estate       1,749         1,749         976         976         1,300  
    Commercial construction and development       8,610         8,664         8,708         8,717         8,717  
    Residential construction and development       13,265         13,741         12,989         13,808         14,068  
    Residential real estate       880         613         752         1,183         1,482  
  Total foreclosed properties       24,504         24,767         23,425         24,684         25,567  
    Other repossessed assets       12         12         38         -         5  
  Total nonperforming assets   $   39,090     $   39,195     $   38,657     $   40,090     $   41,340  
             
  Nonperforming loans to period end loans     1.10 %     1.16 %     1.29 %     1.39 %     1.45 %
  Nonperforming assets to period end assets     2.22 %     2.36 %     2.47 %     2.66 %     2.77 %
             
  Troubled debt restructurings          
    Performing   $   28,066     $   28,287     $   27,750     $   29,452     $   29,473  
    Nonperforming       564         863         2,133         897         1,051  
  Total troubled debt restructurings   $   28,630     $   29,150     $   29,883     $   30,349     $   30,524  

Loans Past Due 30-89 Days          
      For the Quarter Ended  
  In thousands   12/31/2016 9/30/2016 6/30/2016 3/31/2016 12/31/2015
             
  Commercial   $   175   $   405   $   422   $   465   $   339
  Commercial real estate       434       626       214       920       543
  Construction and development       552       235       520       218       1,182
  Residential real estate       5,517       2,941       4,763       3,055       4,442
  Consumer       375       144       177       73       186
  Other       14       13       12       14       9
    Total   $   7,067   $   4,364   $   6,108   $   4,745   $   6,701
             

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:   SMMF)            
Average Balance Sheet, Interest Earnings & Expenses and Average Rates          
Q4 2016 vs Q4 2015                
  Q4 2016   Q4 2015  
  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 $   1,308,418     $   15,650   4.76 %   $   1,064,491     $   13,111   4.89 %  
  Tax-exempt     13,845         195   5.60 %       16,393         232   5.61 %  
  Securities                
  Taxable     191,951         1,111   2.30 %       202,417         1,027   2.01 %  
  Tax-exempt     89,745         1,039   4.61 %       82,013         997   4.82 %  
  Interest bearing deposits other banks                
  and Federal funds sold     49,341         161   1.30 %       7,345         1   0.05 %  
Total interest earning assets     1,653,300         18,156   4.37 %       1,372,659         15,368   4.44 %  
                 
Noninterest earning assets                
  Cash & due from banks     4,650             3,828        
  Premises & equipment     23,616             21,701        
  Other assets     96,165             91,596        
  Allowance for loan losses     (11,905 )           (11,370 )      
  Total assets $   1,765,826         $   1,478,414        
                 
  LIABILITIES AND SHAREHOLDERS' EQUITY              
                 
Liabilities                
Interest bearing liabilities                
  Interest bearing                 
  demand deposits $   256,307     $   128   0.20 %   $   215,315     $   72   0.13 %  
  Savings deposits     335,658         633   0.75 %       262,557         474   0.72 %  
  Time deposits     542,602         1,669   1.22 %       469,249         1,539   1.30 %  
  Short-term borrowings     221,200         954   1.72 %       156,812         156   0.39 %  
  Long-term borrowings and                
  subordinated debentures     85,699         896   4.16 %       95,531         977   4.06 %  
Total interest bearing liabilities     1,441,466         4,280   1.18 %       1,199,464         3,218   1.06 %  
                 
Noninterest bearing liabilities                
  Demand deposits     150,318             119,785        
  Other liabilities     19,902             16,970        
  Total liabilities     1,611,686             1,336,219        
                 
Shareholders' equity - common     154,140             142,195        
  Total liabilities and                
  shareholders' equity $   1,765,826         $   1,478,414        
                 
NET INTEREST EARNINGS     $   13,876         $   12,150    
                 
NET INTEREST MARGIN       3.34 %         3.51 %  
                 

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:   SMMF)            
Average Balance Sheet, Interest Earnings & Expenses and Average Rates          
YTD 2016 vs YTD 2015                
     
  YTD 2016   YTD 2015  
  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 $ 1,177,445     $ 56,439   4.79 %   $ 1,049,172     $ 51,554   4.91 %  
Tax-exempt   14,628       820   5.61 %     13,706       779   5.68 %  
Securities                
Taxable   202,795       4,395   2.17 %     209,316       4,328   2.07 %  
Tax-exempt   79,571       3,853   4.84 %     77,280       3,756   4.86 %  
Interest bearing deposits other banks                
and Federal funds sold   19,211       173   0.90 %     8,878       8   0.09 %  
Total interest earning assets   1,493,650       65,680   4.40 %     1,358,352       60,425   4.45 %  
                 
Noninterest earning assets                
Cash & due from banks   3,968           3,839        
Premises & equipment   21,858           20,707        
Other assets   90,957           94,996        
Allowance for loan losses   (10,836 )         (11,307 )      
Total assets $ 1,599,597         $ 1,466,587        
                 
  LIABILITIES AND SHAREHOLDERS' EQUITY              
                 
Liabilities                
Interest bearing liabilities                
Interest bearing                
demand deposits $ 220,708     $ 376   0.17 %   $ 208,160     $ 251   0.12 %  
Savings deposits   306,312       2,296   0.75 %     255,186       1,781   0.70 %  
Time deposits   491,652       6,292   1.28 %     481,732       6,304   1.31 %  
Short-term borrowings   190,876       2,288   1.20 %     151,102       525   0.35 %  
Long-term borrowings and                
subordinated debentures   92,343       3,832   4.15 %     99,805       4,007   4.01 %  
    1,301,891       15,084   1.16 %     1,195,985       12,868   1.08 %  
Noninterest bearing liabilities                
Demand deposits   128,894           116,995        
Other liabilities   18,795           15,024        
Total liabilities   1,449,580           1,328,004        
                 
Shareholders' equity - preferred   -           1,786        
Shareholders' equity - common   150,017           136,797        
Total liabilities and                
shareholders' equity $ 1,599,597         $ 1,466,587        
                 
NET INTEREST EARNINGS     $ 50,596         $ 47,557    
                 
NET INTEREST MARGIN       3.39 %         3.50 %  
                 

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

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