EX-99 2 earnings407.htm SUMMIT FINANCIAL GROUP EARNINGS PRESS RELEASE Summit Financial Group Earnings Press Release
Exhibit 99


FOR RELEASE 6:00 AM EDT, THURSDAY, APRIL 19, 2007

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

 
SUMMIT FINANCIAL GROUP REPORTS FIRST QUARTER 2007 EARNINGS
 
 
EPS from Continuing Operations Grows 8.3 Percent
 
 
MOOREFIELD, WV--April 19, 2007--Summit Financial Group, Inc. (Nasdaq: SMMF) today reported the first quarter 2007 results of its consolidated operations and its continuing operations which excludes from income substantially all business activities of Summit Mortgage, its residential mortgage loan origination unit, which ceased operations in January 2007.
 
 
Income from continuing operations for the first quarter of 2007 was $2.8 million, or $0.39 per diluted share, up 8.0 percent and 8.3 percent, respectively, compared with $2.6 million, or $0.36 per diluted share, reported for the prior-year period. Consolidated net income was $2.6 million, or $0.36 per diluted share, compared with $3.0 million, or $0.41 per diluted share reported for the first quarter of 2006. First quarter 2007 results reflect solid asset growth and well-controlled expenses. For the first quarter of 2007, the returns on average shareholders' equity and average assets from continuing operations were 13.67 percent and 0.90 percent, respectively, compared with prior-year ratios of 13.59 percent and 0.92 percent.
 
 
H. Charles Maddy, III, President and Chief Executive Officer, commented, “The first quarter of 2007 marks a return to our focus on community banking. We look forward to concentrating our energies and our capital to expand market share in some of the best markets in the country. These markets continue to provide us with excellent opportunities for loan and deposit growth, including the new markets in Northern Virginia and Montgomery County, Maryland that we plan to enter when we complete our acquisition of Greater Atlantic Financial Corp. in the fourth quarter of this year. After we close this acquisition, 50 percent of our assets will be located in high-growth Virginia and Maryland markets.”
 


 
For the first quarter of 2007, total revenue increased 7.0 percent to $10.0 million compared with $9.4 million for the year-earlier quarter. Net interest income was $9.0 million compared with $8.4 million in the prior-year first quarter, an increase of 7.7 percent. The increase reflected 11.5 percent growth in average earning assets, partially offset by a 19 basis point decline in the net interest margin to 3.20 percent. Non-interest income, which consists primarily of insurance commissions and service fees, was $1.0 million for the current quarter, and was basically unchanged at that level for the four preceding quarters.
 
 
Non-interest expense has remained relatively stable over the past four quarters as well; revenue growth has slightly outpaced growth in operating expenses. Non-interest expense for the quarter was $5.6 million compared with $5.4 million for the prior year first quarter, up 5.4 percent. The efficiency ratio (for continuing operations) was 53.86 percent compared with 54.72 percent for the prior-year quarter.
 
 
Asset quality remains sound overall. Nonperforming loans increased by $3.9 million during the fourth quarter of 2006, primarily from one single customer relationship. However, the loan is well-collateralized, and adequate reserves are in place. At March 31, 2007, nonperforming assets totaled $4.5 million, or 0.36 percent of assets, compared with $5.4 million, or 0.43 percent at 2006 year-end, and $1.7 million, or 0.15 percent for the year-ago quarter. Net charge-offs have traditionally been low. For the current quarter, the Company had net charge-offs of $119,000, or 0.05 percent of average loans annualized, compared with $263,000, or 0.11 percent annualized for the linked quarter, and virtually zero for the year earlier period. At March 31, 2007, the allowance for loan losses was 0.83 percent of loans outstanding.
 
 
Assets at March 31, 2007 were $1.25 billion, an increase of $116.2 million, or 10.2 percent over the last twelve months. Loans, net of unearned income, were $938.6 million at period end, up $107.8 million or 13.0 percent year-over-year. Commercial real estate and construction/development were the largest contributors to loan growth, up $53.7 million (19.5 percent) and $55.4 million (33.6 percent), respectively, since March 31, 2006. Together, these two categories comprise 58.5 percent of the loan portfolio, with residential mortgages accounting for an additional 29.7 percent.
 
 
Deposits at March 31, 2007 were $877.2 million, an increase of $146.5 million, or 20.0 percent above prior year-end levels. Retail deposits accounted for $623.4 million of the total, growing $62.9 million or 11.2 percent from year-ago levels. Brokered deposits increased $83.6 million, or 49.1 percent, compared to the prior year, ending the quarter at $253.8 million.
 


 
Shareholders' equity at March 31, 2007 was $82.9 million, an increase of 9.4 percent over the last twelve months. Common shares outstanding totaled 7,084,980 at quarter-end.
 
 
ABOUT THE COMPANY
 
 
Summit Financial Group, Inc., a financial holding company with total assets of $1.25 billion, operates fifteen banking locations through its two wholly-owned community banks: Summit Community Bank, headquartered in Moorefield, West Virginia; and Shenandoah Valley National Bank in Winchester, Virginia. Summit also operates Summit Insurance Services, LLC in Moorefield, West 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 economy. We undertake no obligation to revise these statements following the date of this press release. 
 

 

 

 


SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
              
Quarterly Performance Summary -- Q1 2007 vs Q1 2006
              
               
           
   
For the Quarter Ended
 
Percent
 
Dollars in thousands
 
3/31/2007
  
3/31/2006
  
Change
 
Condensed Statements of Income
                   
Interest income
                   
Loans, including fees
 
$
18,712
  
$
15,240
    
22.8
%
Securities
   
3,124
   
2,647
   
18.0
%
Other
   
6
   
24
   
-75.0
%
Total interest income
   
21,842
   
17,911
   
21.9
%
Interest expense
                   
Deposits
   
9,028
   
5,153
   
75.2
%
Borrowings
   
3,790
   
4,379
   
-13.5
%
Total interest expense
   
12,818
   
9,532
   
34.5
%
Net interest income
   
9,024
   
8,379
   
7.7
%
Provision for loan losses
   
390
   
325
   
20.0
%
Net interest income after provision
                   
for loan losses
   
8,634
   
8,054
   
7.2
%
Noninterest income
                   
Insurance commissions
   
206
   
230
   
-10.4
%
Service fee income
   
617
   
631
   
-2.2
%
Securities gains (losses)
   
-
   
-
   
-
  
Other income
   
189
   
142
   
33.1
%
Total noninterest income
    
1,012
   
1,003
   
0.9
%
Noninterest expense
                   
Salaries and employee benefits
    
3,226
   
3,055
   
5.6
%
Net occupancy expense
    
418
   
401
   
4.2
%
Equipment expense
    
446
   
450
   
-0.9
%
Professional fees
    
174
   
207
   
-15.9
%
Other expenses
    
1,385
   
1,248
   
11.0
%
Total noninterest expense
    
5,649
   
5,361
   
5.4
%
Income from continuing operations before income taxes
   
3,997
   
3,696
   
8.1
%
Income taxes
   
1,201
   
1,108
   
8.4
%
Income from continuing operations
   
2,796
   
2,588
   
8.0
%
Discontinued operations
                   
Exit costs and impairment of long-lived assets
   
80
   
-
   
n/a
  
Operating income (loss)
   
(372
)
  
609
   
-161.1
%
Income (loss) from discontinued operations
                   
before income taxes
   
(292
)
  
609
   
-147.9
%
Income taxes
   
(97
)
  
226
   
-142.9
%
Income (loss) from discontinued operations
   
(195
)
  
383
   
-150.9
%
                     
Net Income
 
$
2,601
  
$
2,971
    
-12.5
%


 
 
 
 

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
          
Quarterly Performance Summary -- Q1 2007 vs Q1 2006
          
           
   
For the Quarter Ended
 
Percent
 
 
  
3/31/2007
  
3/31/2006
  
Change
 
Per Share Data
                   
Earnings per share from continuing operations
                   
Basic
 
$
0.40
  
$
0.36
    
11.1
%
Diluted
 
$
0.39
  
$
0.36
    
8.3
%
Earnings per share from discontinued operations
                   
Basic
 
$
(0.03
)
$
0.06
    
-150.0
%
Diluted
 
$
(0.03
)
$
0.05
    
-160.0
%
Earnings per share
                   
Basic
 
$
0.37
  
$
0.42
    
-11.9
%
Diluted
 
$
0.36
  
$
0.41
    
-12.2
%
                     
Average shares outstanding
                   
Basic
   
7,084,980
   
7,128,076
   
-0.6
%
Diluted
   
7,147,170
   
7,189,063
   
-0.6
%
                     
Performance Ratios
                   
Return on average equity
   
12.72
%
  
15.60
%
  
-18.5
%
Return on average equity - continuing operations
   
13.67
%
  
13.59
%
  
0.6
%
Return on average assets
   
0.83
%
  
1.05
%
  
-21.0
%
Return on average assets - continuing operations
   
0.90
%
  
0.92
%
  
-2.2
%
Net interest margin
   
3.20
%
  
3.39
%
  
-5.6
%
Efficiency ratio (A)
   
58.07
%
  
69.29
%
  
-16.2
%
Efficiency ratio - continuing operations (A)
   
53.86
%
  
54.72
%
  
-1.6
%

                         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
 
3/31/2007
  
12/31/2006
  
9/30/2006
  
6/30/2006
  
3/31/2006
  
Condensed Statements of Income
                               
Interest income
                               
Loans, including fees
 
$
18,712
  
$
18,746
  
$
18,060
  
$
16,609
  
$
15,240
  
Securities
   
3,124
   
3,131
   
2,998
   
2,787
   
2,647
 
Other
   
6
   
7
   
16
   
13
   
24
 
Total interest income
   
21,842
   
21,884
   
21,074
   
19,409
   
17,911
 
Interest expense
                               
Deposits
   
9,028
   
8,990
   
7,761
   
6,408
   
5,153
 
Borrowings
   
3,790
   
3,705
   
4,239
   
4,348
   
4,379
 
Total interest expense
   
12,818
   
12,695
   
12,000
   
10,756
   
9,532
 
Net interest income
   
9,024
   
9,189
   
9,074
   
8,653
   
8,379
 
Provision for loan losses
   
390
   
930
   
260
   
330
   
325
 
Net interest income after provision
                               
for loan losses
   
8,634
   
8,259
   
8,814
   
8,323
   
8,054
 
Noninterest income
                               
Insurance commissions
   
206
   
228
   
219
   
247
   
230
 
Service fee income
   
617
   
702
   
700
   
726
   
631
 
Securities gains (losses)
   
-
   
-
   
-
   
-
   
-
 
Other income
   
189
   
162
   
131
   
136
   
142
 
Total noninterest income
    
1,012
   
1,092
   
1,050
   
1,109
   
1,003
 
Noninterest expense
                               
Salaries and employee benefits
    
3,226
   
2,899
   
2,817
   
3,049
   
3,055
 
Net occupancy expense
    
418
   
378
   
387
   
390
   
401
 
Equipment expense
    
446
   
480
   
476
   
496
   
450
 
Professional fees
    
174
   
252
   
188
   
245
   
207
 
Other expenses
    
1,385
   
1,291
   
1,409
   
1,492
   
1,248
 
Total noninterest expense
    
5,649
   
5,300
   
5,277
   
5,672
   
5,361
 
Income before income taxes
   
3,997
   
4,051
   
4,587
   
3,760
   
3,696
 
Income taxes
   
1,201
   
1,328
   
1,421
   
1,167
   
1,108
 
Income from continuing operations
   
2,796
   
2,723
   
3,166
   
2,593
   
2,588
 
Discontinued operations
                               
Exit costs and impairment of long-lived assets
   
80
   
(2,480
)
  
-
   
-
   
-
 
Operating income (loss)
   
(372
)
  
(1,373
)
  
(1,059
)
  
74
   
609
 
Income (loss) from discontinued operations
                               
before income taxes
   
(292
)
  
(3,853
)
  
(1,059
)
  
74
   
609
 
Income taxes
   
(97
)
  
(1,311
)
  
(374
)
  
33
   
226
 
Income (loss) from discontinued operations
   
(195
)
  
(2,542
)
  
(685
)
  
41
   
383
 
                                 
Net Income
 
$
2,601
  
$
181
  
$
2,481
  
$
2,634
  
$
2,971
  
                                 
 
 
 
 
 
 
 

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
                      
Five Quarter Performance Summary
                      
                   
   
For the Quarter Ended
 
 
  
3/31/2007
  
12/31/2006
  
9/30/2006
  
6/30/2006
  
3/31/2006
  
Per Share Data
                               
Earnings per share from continuing operations
                               
Basic
 
$
0.40
  
$
0.39
  
$
0.45
  
$
0.36
  
$
0.36
  
Diluted
 
$
0.39
  
$
0.39
  
$
0.45
  
$
0.36
  
$
0.36
  
Earnings per share from discontinued operations
                               
Basic
 
$
(0.03
)
$
(0.36
)
$
(0.10
)
$
0.01
  
$
0.06
  
Diluted
 
$
(0.03
)
$
(0.36
)
$
(0.10
)
$
0.01
  
$
0.05
  
Earnings per share
                               
Basic
 
$
0.37
  
$
0.03
  
$
0.35
  
$
0.37
  
$
0.42
  
Diluted
 
$
0.36
  
$
0.03
  
$
0.35
  
$
0.37
  
$
0.41
  
                                 
Average shares outstanding
                               
Basic
   
7,084,980
   
7,092,531
   
7,127,650
   
7,135,107
   
7,128,076
 
Diluted
   
7,147,170
   
7,151,378
   
7,187,274
   
7,193,407
   
7,189,063
 
                                 
Performance Ratios
                               
Return on average equity
   
12.72
%
  
0.88
%
  
12.46
%
  
13.53
%
  
15.60
%
Return on average equity - continuing operations
   
13.67
%
  
13.24
%
  
15.90
%
  
13.32
%
  
13.59
%
Return on average assets
   
0.83
%
  
0.06
%
  
0.83
%
  
0.91
%
  
1.05
%
Return on average assets - continuing operations
   
0.90
%
  
0.89
%
  
1.06
%
  
0.89
%
  
0.92
%
Net interest margin
   
3.20
%
  
3.25
%
  
3.33
%
  
3.32
%
  
3.39
%
Efficiency ratio (A)
   
58.07
%
  
69.20
%
  
70.57
%
  
70.69
%
  
69.29
%
Efficiency ratio - continuing operations (A)
   
53.86
%
  
48.85
%
  
49.38
%
  
54.33
%
  
54.72
%
 
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
                      
                       
                       
   
For the Quarter Ended
 
Dollars in thousands, except per share amounts
 
3/31/2007
  
12/31/2006
  
9/30/2006
  
6/30/2006
  
3/31/2006
  
                       
Assets
 
$
1,253,925
  
$
1,234,831
  
$
1,210,491
  
$
1,179,648
  
$
1,137,692
  
Securities
   
258,173
   
247,874
   
246,332
   
238,382
   
233,805
 
Loans, net
   
930,769
   
916,045
   
894,836
   
866,170
   
824,359
 
Intangible assets
   
3,159
   
3,197
   
3,234
   
3,272
   
3,310
 
Assets related to discontinued operations
   
2,170
   
9,715
   
8,369
   
11,633
   
14,577
 
Retail deposits
   
623,431
   
609,064
   
598,293
   
570,731
   
560,551
 
Brokered time deposits
   
253,794
   
279,623
   
266,769
   
190,832
   
170,185
 
Short-term borrowings
   
79,886
   
60,428
   
90,422
   
164,185
   
136,483
 
Long-term borrowings and
                               
subordinated debentures
    
201,814
   
193,881
   
163,864
   
167,168
   
183,136
 
Shareholders' equity
   
82,935
   
79,875
   
80,630
   
76,559
   
75,816
 
                                 
Book value per share
  
$
11.71
  
$
11.27
  
$
11.35
  
$
10.73
  
$
10.63
  
 
 

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
                  
Loan Composition
                      
                       
Dollars in thousands
  
3/31/2007
  
12/31/2006
  
9/30/2006
  
6/30/2006
  
3/31/2006
  
                       
Commercial
  
$
69,700
  
$
69,470
  
$
67,352
  
$
64,342
  
$
66,564
  
Commercial real estate
    
329,561
   
314,199
   
300,676
   
296,680
   
275,896
 
Construction and development
    
220,430
   
215,820
   
207,545
   
182,000
   
165,026
 
Residential real estate
    
279,564
   
282,512
   
283,943
   
288,316
   
281,301
 
Consumer
    
33,845
   
36,455
   
36,885
   
37,040
   
37,356
 
Other
    
7,209
   
6,968
   
7,086
   
6,188
   
6,382
 
Total loans
    
940,309
   
925,424
   
903,487
   
874,566
   
832,525
 
Less unearned fees and interest
    
1,757
   
1,868
   
1,806
   
1,767
   
1,731
 
Total loans net of unearned fees and interest
    
938,552
   
923,556
   
901,681
   
872,799
   
830,794
 
Less allowance for loan losses
    
7,783
   
7,511
   
6,845
   
6,629
   
6,435
 
Loans, net
  
$
930,769
  
$
916,045
  
$
894,836
  
$
866,170
  
$
824,359
  

 

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
              
Retail Deposit Composition
                      
                       
Dollars in thousands
  
3/31/2007
  
12/31/2006
  
9/30/2006
  
6/30/2006
  
3/31/2006
  
                       
Non interest bearing checking
  
$
60,645
  
$
62,591
  
$
64,751
  
$
66,071
  
$
62,860
  
Interest bearing checking
    
230,634
   
220,167
   
223,992
   
214,279
   
214,572
 
Savings
    
44,713
   
47,984
   
44,980
   
38,737
   
39,474
 
Time deposits
    
287,439
   
278,322
   
264,570
   
251,644
   
243,645
 
Total retail deposits
  
$
623,431
  
$
609,064
  
$
598,293
  
$
570,731
  
$
560,551
  



 
 
 

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
                  
Asset Quality Information - Continuing Operations
                  
                       
   
For the Quarter Ended
 
Dollars in thousands
 
3/31/2007
  
12/31/2006
  
9/30/2006
  
6/30/2006
  
3/31/2006
  
                       
Net loan charge-off's
  
$
119
  
$
263
  
$
45
  
$
135
  
$
2
  
Net loan charge-off's to average loans (annualized)
    
0.05
%
  
0.11
%
  
0.02
%
  
0.06
%
  
0.00
%
Allowance for loan losses
  
$
7,783
  
$
7,511
  
$
6,845
  
$
6,629
  
$
6,435
  
Allowance for loan losses as a percentage
                                
of period end loans
    
0.83
%
  
0.81
%
  
0.76
%
  
0.76
%
  
0.77
%
Nonperforming assets:
                                
Nonperforming loans
  
$
4,474
  
$
5,276
  
$
1,273
  
$
987
  
$
1,447
  
Foreclosed properties and
                                
other repossessed assets
    
43
   
77
   
180
   
298
   
271
 
Total
  
$
4,517
  
$
5,353
  
$
1,453
  
$
1,285
  
$
1,718
  
                                 
Nonperforming loans to period end loans
    
0.48
%
  
0.57
%
  
0.14
%
  
0.11
%
  
0.17
%
Nonperforming assets to period end assets
    
0.36
%
  
0.43
%
  
0.12
%
  
0.11
%
  
0.15
%



 
 
 

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
                      
Consolidated Average Balance Sheet, Interest Earnings & Expenses and Average Rates
              
Q1 2007 vs Q1 2006
                          
   
Q1 2007
  
Q1 2006
  
   
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
  
$
928,979
  
$
18,665
    
8.15
%
$
829,381
  
$
15,392
    
7.53
%
Tax-exempt
    
8,917
   
173
   
7.87
%
  
8,244
   
150
   
7.38
%
Securities
                                      
Taxable
    
208,315
   
2,577
   
5.02
%
  
186,586
   
2,135
   
4.64
%
Tax-exempt
    
47,289
   
814
   
6.98
%
  
44,077
   
767
   
7.06
%
Interest bearing deposits other banks
                                      
and Federal funds sold
    
446
   
5
   
4.55
%
  
2,294
   
24
   
4.24
%
Total interest earning assets
    
1,193,946
   
22,234
   
7.55
%
  
1,070,582
   
18,468
   
7.00
%
                                       
Noninterest earning assets
                                      
Cash & due from banks
    
13,099
               
14,449
             
Premises & equipment
    
22,332
               
23,361
             
Other assets
    
26,993
               
24,659
             
Allowance for loan losses
    
(8,135
)
              
(6,338
)
            
Total assets
  
$
1,248,235
              
$
1,126,713
              
                                   
LIABILITIES AND SHAREHOLDERS' EQUITY
                              
                                       
Liabilities
                                      
Interest bearing liabilities
                                      
Interest bearing
                                     
demand deposits
  
$
221,924
  
$
2,067
    
3.78
%
$
204,161
  
$
1,543
    
3.07
%
Savings deposits
    
46,407
   
217
   
1.90
%
  
43,067
   
73
   
0.69
%
Time deposits
    
556,525
   
6,745
   
4.92
%
  
374,170
   
3,537
   
3.83
%
Short-term borrowings
    
72,415
   
956
   
5.35
%
  
172,380
   
1,964
   
4.62
%
Long-term borrowings and
                                      
subordinated debentures
    
196,005
   
2,832
   
5.86
%
  
184,051
   
2,415
   
5.32
%
     
1,093,276
   
12,817
   
4.75
%
  
977,829
   
9,532
   
3.95
%
Noninterest bearing liabilities
                                      
Demand deposits
    
61,288
               
63,308
             
Other liabilities
    
11,881
               
9,395
             
Total liabilities
    
1,166,445
               
1,050,532
             
                                       
Shareholders' equity
    
81,790
               
76,181
             
Total liabilities and
                                  
shareholders' equity
  
$
1,248,235
              
$
1,126,713
              
                                   
NET INTEREST EARNINGS
        
$
9,417
              
$
8,936
        
                                   
NET INTEREST MARGIN
                
3.20
%
              
3.39
%