EX-99.1 2 a4808465ex99.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99 Summit Financial Group Reports Fiscal Year 2004 EPS of $1.49, up 28.4 Percent; Common Stock to be Listed on NASDAQ SmallCap Market Effective 1/31/05 MOOREFIELD, W.Va.--(BUSINESS WIRE)--Jan. 26, 2005--Summit Financial Group, Inc. (OTCBB: SMMF) today reported fiscal year 2004 net income of $10.6 million, or $1.49 per diluted share, up 28.4 percent from the $1.16 per diluted share reported for the fiscal year 2003. These record earnings reflect strong growth in both community banking and mortgage banking. Net income for 2004 generated a return on average shareholders' equity (ROE) of 17.21 percent and a return on average assets (ROA) of 1.26 percent compared with 2003 ratios of 15.03 percent and 1.14 percent, respectively. For the fourth quarter of 2004, the Company reported net income of $2.4 million, or $0.33 per diluted share, compared with $2.5 million or $0.35 per diluted share for the prior-year fourth quarter. Net income for the fourth quarter of 2004 generated an annualized ROE of 14.33 percent and an annualized ROA of 1.07 percent compared with 17.66 percent and 1.30 percent, respectively, for the prior-year period. Summit also reported that its common stock will begin trading on The Nasdaq SmallCap Market on January 31, 2005. The Company's trading symbol of 'SMMF' will remain unchanged. H. Charles Maddy, III, President and Chief Executive Officer commented, "We are pleased to report another record year of net income growth - our 17th consecutive year. Both of our business segments performed very well this past year. The high-growth markets that we pursue continue to provide us with opportunities for our community banks. This past quarter, we merged our two West Virginia banks into Summit Community Bank to take advantage of operating efficiencies. We see excellent upside in our Virginia markets, combined with continuing stability in West Virginia. The new branch we opened this past quarter in Harrisonburg, Virginia, one of our strongest markets, will contribute to this growth. "2004 was our first full year of mortgage banking operations, and the growth in this segment has been exceptional. After an expected weak fourth quarter, our pipeline has begun to strengthen as we enter 2005, and we continue to improve efficiencies as we mature. We enter the new year with a favorable outlook for both our business segments. "We are committed to enhancing shareholder value through financial performance and improved liquidity of our stock. Our two-for-one stock distribution during the fourth quarter of 2004, combined with listing on The Nasdaq SmallCap Market at the end of this month, should continue to enhance the value of Summit Financial Group." Fourth Quarter and Fiscal 2004 Consolidated Results Revenue for fiscal year 2004, consisting of net interest income plus non-interest income, was $55.0 million, an increase of 86.4 percent over 2003. Net interest income increased 17.2 percent to $27.8 million, reflecting 16.1 percent growth in average earning assets combined with a three basis point increase in the net interest margin to 3.66 percent; Summit has maintained a stable net interest margin across varying interest rate environments. Non-interest income for 2004 was $27.3 million compared with $5.8 million for 2003, an increase of 367.9 percent. Excluding gains from the sale of securities in both years and from gains on asset sales of $336,000 in 2003, non-interest income increased 416.5 percent to $27.2 million. This increase primarily reflects the operations of the Company's mortgage banking unit, Summit Financial, LLC, which commenced operations during the third quarter of 2003 and is discussed below. Revenue for the fourth quarter of 2004 was $13.7 million, an increase of 36.1 percent over the $10.0 million reported for the prior-year quarter. Net interest income grew 14.6 percent for the quarter to $7.3 million, reflecting 14.6 percent growth in earning assets and an unchanged net interest margin, at 3.69 percent. Non-interest income increased 73.8 percent to $6.3 million. The largest component of this increase was mortgage banking revenue. Non-interest expense for fiscal 2004 was $38.8 million, a $21.9 million or 129.7 percent increase over the $16.9 million reported for 2003. The majority of the increase is associated with the full-year inclusion of operations in 2004 of Summit Financial, LLC. Fiscal year 2003 results also included a $164,000 non-cash charitable contribution. The efficiency ratio was 68.33 percent for 2004 compared with 55.07 percent for 2003. The efficiency ratio for the Company's Community Banking Segment, shown below, is a more accurate indicator of its performance compared with other community banks. Non-interest expense for the fourth quarter of 2004 was $10.0 million, a 58.8 percent increase over the $6.3 million reported for the prior-year 2003 quarter. The increase again reflected the operations of Summit Financial, LLC. Summit's consolidated efficiency ratio for the fourth quarter of 2004 was 70.50 percent compared with 61.85 percent for the prior-year fourth quarter. Asset quality remains strong. Charge-offs were $657,000 for the year, equivalent to 0.11 percent of average loans. Nonperforming assets were 0.18 percent of assets at December 31, 2004, compared with 0.30 percent at September 30, 2004 and 0.28 percent twelve months ago. At period-end, loan loss reserves were 0.83 percent of loans. Assets at December 31, 2004 were $889.5 million, an increase of 12.4 percent over the last twelve months. The increase was driven by loan growth of $104.8 million, up 20.8 percent to $607.8 million; commercial real estate loans, up 33.5 percent, and residential mortgage loans, up 14.0 percent, were the largest contributors to this growth. Deposits increased $12.8 million, or 2.5 percent, to $524.6 million. To support its strong loan growth, the Company increased short term borrowings by $70.9 million, to $120.6 million. Shareholders' equity at period end was $65.7 million, an increase of 14.9 percent over the last twelve months. During the fourth quarter, the Company distributed a two-for-one stock split in the form of a stock dividend. Common shares outstanding totaled 7,039,540 at year end 2004. FOURTH QUARTER AND 2004 OPERATING SEGMENT RESULTS Community Banking Financial Performance The Community Banking segment achieved net income for fiscal year 2004 of $9.7 million, up 13.2 percent from $8.5 million in 2003. Total revenue increased 14.6 percent to $30.4 million, reflecting strong growth in net interest income and in service fee income. Net interest income benefited from strong growth in commercial real estate loans. Non-interest expense grew 15.5 percent to $15.5 million. The efficiency ratio for the Community Banking segment was 52.13 percent compared with last year's efficiency ratio of 50.25 percent. Net income for the fourth quarter of 2004 was $2.5 million, relatively unchanged from the prior-year fourth quarter. Total revenue increased 8.8% to $8.1 million, while non-interest expense increased 16.3 percent to $4.2 million due to one-time costs associated with the merger of Capital State into Summit Community Bank, and the opening of the de novo Harrisonburg, Virginia branch. The Community Banking segment's efficiency ratio was 52.70 percent compared with 49.23 percent for the 2003 period. Mortgage Banking Financial Performance The Company's mortgage banking unit, Summit Financial, LLC, commenced operations during the third quarter of 2003. This segment originates first mortgages in the Company's community banking markets and debt consolidation second mortgage loans for borrowers nationwide. Loan originations in the fourth quarter of 2004 were impacted by seasonal factors and a change in product mix, which tempered this unit's profitability. Net income for the fiscal year 2004 was $1.8 million compared to $95,000 for 2003. In its first full year of operation, the mortgage company originated $261.0 million in loans and sold $251.4 million. Revenue totaled $24.8 million compared with $3.2 million in 2003. Non-interest expense was $22.0 million, compared with $3.1 million in 2003. For the fourth quarter of 2004, net income was $118,000 compared with $73,000 for the fourth quarter of 2003. About the Company Summit Financial Group, Inc., a financial holding company with total assets of $889 million, operates thirteen 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 Financial, LLC, a residential mortgage loan originator located in Herndon, Virginia. Forward-Looking Statements This press release contains forward-looking statements as defined by federal securities laws. These statements may address issues that involve significant risks, uncertainties, estimates and assumptions made by management. Actual results could differ materially from current projections. Please refer to Summit's filings with the Securities and Exchange Commission for a summary of important factors that could affect Summit's forward-looking statements. Summit undertakes no obligation to revise these statements following the date of this press release. SUMMIT FINANCIAL GROUP, INC. (OTCBB: SMMF) Quarterly Performance Summary -- Q4 2004 vs Q4 2003 For the Quarter Ended Dollars in thousands, except ---------------------- Percent per share amounts 12/31/2004 12/31/2003 Change ---------------------------------------------------------------------- Condensed Statements of Income Interest income Loans, including fees $9,814 $8,096 21.2% Securities 2,294 2,501 -8.3% Other 30 37 -18.9% ---------------------- Total interest income 12,138 10,634 14.1% ---------------------- Interest expense Deposits 2,456 2,390 2.8% Borrowings 2,366 1,862 27.1% ---------------------- Total interest expense 4,822 4,252 13.4% ---------------------- Net interest income 7,316 6,382 14.6% Provision for loan losses 292 232 25.9% ---------------------- Net interest income after provision for loan losses 7,024 6,150 14.2% ---------------------- Noninterest income Service fee income 592 455 30.1% Mortgage origination revenue 5,423 2,604 108.3% Securities gains (losses) 32 105 -69.5% Other income 287 480 -40.2% ---------------------- Total noninterest income 6,334 3,644 73.8% ---------------------- Noninterest expense Salaries and employee benefits 4,607 3,064 50.4% Net occupancy expense 404 240 68.3% Equipment expense 473 383 23.5% Postage expense 1,361 781 74.3% Advertising 1,231 571 115.6% Other expenses 1,939 1,268 52.9% ---------------------- Total noninterest expense 10,015 6,307 58.8% ---------------------- Income before income taxes 3,343 3,487 -4.1% Income taxes 986 994 -0.8% ---------------------- Net income $2,357 $2,493 -5.5% ====================== Per Share Data Basic earnings $0.34 $0.36 -5.6% Diluted earnings $0.33 $0.35 -5.7% Average shares outstanding Basic 7,032,512 7,013,749 0.3% Diluted 7,149,981 7,082,593 1.0% Performance Ratios Return on average equity 14.33% 17.66% -18.9% Return on average assets 1.07% 1.30% -17.7% Net yield on earning assets - taxable equivalent 3.69% 3.69% 0.0% Efficiency ratio consolidated (A) 70.50% 61.85% 14.0% Efficiency ratio excluding mortgage banking (A) 52.70% 49.23% 7.0% NOTE: (A) - Computed on a tax equivalent basis excluding nonrecurring income and expense items and amortization of intangibles. SUMMIT FINANCIAL GROUP, INC. (OTCBB: SMMF) Annual Performance Summary -- 2004 vs 2003 For the Year Ended Dollars in thousands, except --------------------- Percent per share amounts 12/31/2004 12/31/2003 Change ---------------------------------------------------------------------- Condensed Statements of Income Interest income Loans, including fees $36,207 $31,165 16.2% Securities 9,403 9,889 -4.9% Other 127 170 -25.3% ------------------------- Total interest income 45,737 41,224 10.9% ------------------------- Interest expense Deposits 9,710 9,999 -2.9% Borrowings 8,250 7,531 9.5% ------------------------- Total interest expense 17,960 17,530 2.5% ------------------------- Net interest income 27,777 23,694 17.2% Provision for loan losses 1,050 915 14.8% ------------------------- Net interest income after provision for loan losses 26,727 22,779 17.3% ------------------------- Noninterest income Service fee income 2,238 1,586 41.1% Mortgage origination revenue 24,089 3,138 667.7% Securities gains (losses) 33 212 -84.4% Other income 892 888 0.5% ------------------------- Total noninterest income 27,252 5,824 367.9% ------------------------- Noninterest expense Salaries and employee benefits 18,087 9,005 100.9% Net occupancy expense 1,503 868 73.2% Equipment expense 1,776 1,320 34.5% Postage expense 5,851 985 494.0% Advertising 4,725 772 512.0% Other expenses 6,847 3,934 74.0% ------------------------- Total noninterest expense 38,789 16,884 129.7% ------------------------- Income before income taxes 15,190 11,719 29.6% Income taxes 4,582 3,511 30.5% ------------------------- Net income $10,608 $8,208 29.2% ========================= Per Share Data Basic earnings $1.51 $1.17 29.1% Diluted earnings $1.49 $1.16 28.4% Average shares outstanding Basic 7,025,118 7,010,007 0.2% Diluted 7,121,761 7,073,286 0.7% Performance Ratios Return on average equity 17.21% 15.03% 14.5% Return on average assets 1.26% 1.14% 10.5% Net yield on earning assets - taxable equivalent 3.66% 3.63% 0.8% Efficiency ratio consolidated (A) 68.33% 55.07% 24.1% Efficiency ratio excluding mortgage banking (A) 52.13% 50.25% 3.7% NOTE: (A) - Computed on a tax equivalent basis excluding nonrecurring income and expense items and amortization of intangibles. SUMMIT FINANCIAL GROUP, INC. (OTCBB: SMMF) Five Quarter Performance Summary Dollars in thousands, For the Quarter Ended except per share ---------------------------------------------------- amounts 12/31/2004 9/30/2004 6/30/2004 3/31/2004 12/31/2003 ---------------------------------------------------------------------- Condensed Statements of Income Interest income Loans,including fees $9,814 $9,334 $8,744 $8,314 $8,096 Securities 2,294 2,267 2,316 2,527 2,501 Other 30 33 32 32 37 ----------------------------------------------------- Total interest income 12,138 11,634 11,092 10,873 10,634 ----------------------------------------------------- Interest expense Deposits 2,456 2,451 2,390 2,414 2,390 Borrowings 2,366 2,122 1,904 1,857 1,862 ----------------------------------------------------- Total interest expense 4,822 4,573 4,294 4,271 4,252 ----------------------------------------------------- Net interest income 7,316 7,061 6,798 6,602 6,382 Provision for loan losses 292 293 233 233 232 ----------------------------------------------------- Net interest income after provision for loan losses 7,024 6,768 6,565 6,369 6,150 ----------------------------------------------------- Noninterest income Service fee income 592 575 562 509 455 Mortgage origination revenue 5,423 7,732 6,614 4,319 2,604 Securities gains (losses) 32 (35) 17 20 105 Other income 287 273 239 94 480 ----------------------------------------------------- Total noninterest income 6,334 8,545 7,432 4,942 3,644 ----------------------------------------------------- Noninterest expense Salaries and employee benefits 4,607 5,055 4,740 3,686 3,064 Net occupancy expense 404 408 386 304 240 Equipment expense 473 433 441 429 383 Postage expense 1,361 1,703 1,435 1,353 781 Advertising 1,231 1,229 1,304 962 571 Other expenses 1,939 1,939 1,862 1,105 1,268 ----------------------------------------------------- Total noninterest expense 10,015 10,767 10,168 7,839 6,307 ----------------------------------------------------- Income before income taxes 3,343 4,546 3,829 3,472 3,487 Income taxes 986 1,420 1,155 1,021 994 ----------------------------------------------------- Net income $2,357 $3,126 $2,674 $2,451 $2,493 ===================================================== Per Share Data Basic earnings $0.34 $0.44 $0.38 $0.35 $0.36 Diluted earnings $0.33 $0.43 $0.38 $0.35 $0.35 Average shares outstanding Basic 7,032,512 7,026,173 7,021,567 7,020,126 7,013,749 Diluted 7,149,981 7,174,852 7,108,161 7,084,970 7,082,593 Performance Ratios Return on average equity 14.33% 20.06% 17.96% 16.77% 17.66% Return on average assets 1.07% 1.46% 1.29% 1.23% 1.30% Net yield on earning assets - taxable equivalent 3.69% 3.65% 3.64% 3.67% 3.69% Efficiency ratio consolidated (A) 70.50% 67.11% 69.61% 65.84% 61.85% Efficiency ratio excluding mortgage banking (A) 52.70% 51.68% 53.61% 50.45% 49.23% NOTE: (A) - Computed on a tax equivalent basis excluding nonrecurring income and expense items and amortization of intangibles. SUMMIT FINANCIAL GROUP, INC. (OTCBB: SMMF) Segment Information For the Quarter Ended December 31, 2004 Parent Dollars in Community Mortgage and thousands Banking Banking Other Eliminations Total ---------------------------------------------------------------------- Condensed Statements of Income Interest income $11,935 $419 $5 $(221) $12,138 Interest expense 4,670 220 153 (221) 4,822 ------------------------------------------------- Net interest income 7,265 199 (148) - 7,316 Provision for loan losses 292 - - - 292 ------------------------------------------------- Net interest income after provision for loan losses 6,973 199 (148) - 7,024 ------------------------------------------------- Noninterest income 798 5,423 1,183 (1,070) 6,334 Noninterest expense 4,225 5,445 1,415 (1,070) 10,015 ------------------------------------------------- Income before income taxes 3,546 177 (380) - 3,343 Income taxes 1,075 59 (148) - 986 ------------------------------------------------- Net income $2,471 $118 $(232) $- $2,357 ================================================= Average assets $867,934 $20,639 $78,885 $(88,743) $878,715 ================================================= SUMMIT FINANCIAL GROUP, INC. (OTCBB: SMMF) Segment Information For the Quarter Ended December 31, 2003 Parent Community Mortgage and Dollars in thousands Banking Banking Other Eliminations Total ---------------------------------------------------------------------- Condensed Statements of Income Interest income $10,568 $125 $2 $(61) $10,634 Interest expense 4,198 56 59 (61) 4,252 ------------------------------------------------- Net interest income 6,370 69 (57) - 6,382 Provision for loan losses 232 - - - 232 ------------------------------------------------- Net interest income after provision for loan losses 6,138 69 (57) - 6,150 ------------------------------------------------- Noninterest income 1,040 2,604 847 (847) 3,644 Noninterest expense 3,634 2,562 958 (847) 6,307 ------------------------------------------------- Income before income taxes 3,544 111 (168) - 3,487 Income taxes 1,015 38 (59) - 994 ------------------------------------------------- Net income $2,529 $73 $(109) $- $2,493 ================================================= Average assets $751,775 $6,452 $64,490 $(58,095) $764,622 ================================================= SUMMIT FINANCIAL GROUP, INC. (OTCBB: SMMF) Segment Information For the Year Ended December 31, 2004 Parent Dollars in Community Mortgage and thousands Banking Banking Other Eliminations Total ---------------------------------------------------------------------- Condensed Statements of Income Interest income $45,031 $1,348 $16 $(658) $45,737 Interest expense 17,460 652 506 (658) 17,960 -------------------------------------------------- Net interest income 27,571 696 (490) - 27,777 Provision for loan losses 1,050 - - - 1,050 -------------------------------------------------- Net interest income after provision for loan losses 26,521 696 (490) - 26,727 -------------------------------------------------- Noninterest income 2,863 24,087 4,215 (3,913) 27,252 Noninterest expense 15,523 22,045 5,134 (3,913) 38,789 -------------------------------------------------- Income before income taxes 13,861 2,738 (1,409) - 15,190 Income taxes 4,189 944 (551) - 4,582 -------------------------------------------------- Net income $9,672 $1,794 $(858) $- $ 10,608 ================================================== Average assets $817,414 $16,701 $74,101 $(67,333) $840,883 ================================================== SUMMIT FINANCIAL GROUP, INC. (OTCBB: SMMF) Segment Information For the Year Ended December 31, 2003 Parent Dollars in Community Mortgage and thousands Banking Banking Other Eliminations Total ---------------------------------------------------------------------- Condensed Statements of Income Interest income $ 41,166 $ 125 $ 8 $ (75) $ 41,224 Interest expense 17,317 56 232 (75) 17,530 -------- ------ ------- -------- -------- Net interest income 23,849 69 (224) - 23,694 Provision for loan losses 915 - - - 915 -------- ------ ------- -------- -------- Net interest income after provision for loan losses 22,934 69 (224) - 22,779 -------- ------ ------- -------- -------- Noninterest income 2,706 3,137 3,292 (3,311) 5,824 Noninterest expense 13,444 3,061 3,690 (3,311) 16,884 -------- ------ ------- -------- -------- Income before income taxes 12,196 145 (622) - 11,719 Income taxes 3,655 50 (194) - 3,511 -------- ------ ------- -------- -------- Net income $ 8,541 $ 95 $ (428) $ - $ 8,208 ======== ====== ======= ======== ======== Average assets $717,565 $4,081 $60,164 $(59,066) $722,744 ======== ====== ======= ======== ======== SUMMIT FINANCIAL GROUP, INC. (OTCBB: SMMF) Selected Balance Sheet Data For the Quarter Ended ---------------------------------------------------- Dollars in thousands, except per share amounts 12/31/2004 9/30/2004 6/30/2004 3/31/2004 12/31/2003 ---------------------------------------------------------------------- Assets $889,489 $862,246 $849,555 $809,216 $791,465 Securities 211,362 209,702 213,644 215,732 235,409 Loans held for sale, net 14,274 12,097 15,607 9,596 6,353 Loans, net 602,728 586,201 559,869 532,855 498,340 Intangible assets 3,499 3,537 3,574 3,612 3,050 Deposits 524,614 535,822 536,589 530,372 511,801 Short-term borrowings 120,629 77,518 71,350 42,547 49,714 Long-term borrowings and subordinated debentures 172,201 178,334 176,248 169,608 168,255 Shareholders' equity 65,708 65,289 58,975 60,674 57,188 Book value per share $ 9.33 $ 9.29 $ 8.40 $ 8.64 $ 8.15 SUMMIT FINANCIAL GROUP INC. (OTCBB: SMMF) Loan Composition Dollars in thousands 12/31/2004 9/30/2004 6/30/2004 3/31/2004 12/31/2003 ---------------------------------------------------------------------- Commercial $53,226 $49,630 $49,294 $47,178 $46,860 Commercial real estate 279,631 271,097 250,562 235,565 209,391 Residential construction 3,916 3,351 2,665 2,698 2,369 Residential mortgage 223,689 218,118 212,371 203,225 196,135 Consumer 38,948 40,559 41,787 41,060 41,112 Other 9,605 9,784 9,316 8,968 8,223 ---------------------------------------------------- Total loans 609,015 592,539 565,995 538,694 504,090 Less unearned fees and interest 1,214 1,200 1,173 1,118 1,069 ---------------------------------------------------- Total loans net of unearned fees and interest 607,801 591,339 564,822 537,576 503,021 Less allowance for loan losses 5,073 5,138 4,953 4,721 4,681 ---------------------------------------------------- Loans, net $602,728 $586,201 $559,869 $532,855 $498,340 ==================================================== SUMMIT FINANCIAL GROUP INC. (OTCBB: SMMF) Mortgage Banking Segment Loan Activity For the Quarter Ended ------------------------------------------------- Dollars in thousands 12/31/2004 9/30/2004 6/30/2004 3/31/2004 12/31/2003 ---------------------------------------------------------------------- Loans originated Amount $65,983 $75,791 $74,333 $44,935 $32,413 Number 1,182 1,532 1,461 931 724 Loans sold Amount $62,043 $79,927 $68,013 $41,376 $26,261 Number 1,148 1,610 1,364 861 603 SUMMIT FINANCIAL GROUP, INC. (OTCBB: SMMF) Asset Quality Information For the Quarter Ended ----------------------------------------------------- Dollars in thousands 12/31/2004 9/30/2004 6/30/2004 3/31/2004 12/31/2003 ---------------------------------------------------------------------- Net loan charge- off's $357 $107 $1 $192 $37 Net loan charge- off's to average loans (annualized) 0.25% 0.08% 0.00% 0.15% 0.03% Allowance for loan losses $5,073 $5,138 $4,953 $4,721 $4,681 Allowance for loan losses as a percentage of period end loans 0.83% 0.87% 0.88% 0.88% 0.93% Nonperforming assets: Nonperforming loans $672 $1,464 $1,577 $1,448 $1,356 Foreclosed properties 593 756 475 475 480 Nonaccrual securities 349 363 384 389 396 ----------------------------------------------------- Total $1,614 $2,583 $2,436 $2,312 $2,232 ===================================================== Nonperforming loans to period end loans and other real estate 0.21% 0.37% 0.36% 0.36% 0.36% ===================================================== Nonperforming assets to period end assets 0.18% 0.30% 0.29% 0.29% 0.28% ===================================================== SUMMIT FINANCIAL GROUP, INC. (OTCBB: SMMF) Average Balance Sheet, Interest Earnings & Expenses and Average Rates Q4 2004 vs Q3 2003 Q4 2004 Q4 2003 ------------------------ ------------------------ 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 $605,020 $9,701 6.41% $490,823 $8,016 6.53% Tax-exempt 9,381 173 7.38% 5,943 122 8.21% Securities Taxable 162,810 1,734 4.26% 179,265 2,002 4.47% Tax-exempt 48,387 835 6.90% 43,323 738 6.81% Interest bearing deposits other banks and Federal funds sold 3,249 31 3.82% 3,908 39 3.99% --------- -------- ----- --------- -------- ----- Total interest earning assets 828,847 12,474 6.02% 723,262 10,917 6.04% Noninterest earning assets Cash & due from banks 17,698 9,928 Premises & equipment 20,573 17,360 Other assets 16,806 18,646 Allowance for loan losses (5,209) (4,574) --------- --------- Total assets $878,715 $764,622 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Interest bearing liabilities Interest bearing demand deposits $122,038 $343 1.12% $106,587 $203 0.76% Savings deposits 51,508 68 0.53% 47,472 54 0.46% Time deposits 305,411 2,045 2.68% 284,266 2,133 3.00% Short-term borrowings 91,763 512 2.23% 48,222 156 1.29% Long-term borrowings and subordinated debentures 177,709 1,854 4.17% 168,570 1,706 4.05% --------- -------- ----- --------- -------- ----- 748,429 4,822 2.58% 655,117 4,252 2.60% Noninterest bearing liabilities Demand deposits 58,921 48,454 Other liabilities 5,557 4,592 --------- --------- Total liabilities 812,907 708,163 Shareholders' equity 65,808 56,459 --------- --------- Total liabilities and shareholders' equity $878,715 $764,622 ========= ========= NET INTEREST EARNINGS $7,652 $6,665 ======== ======== NET INTEREST YIELD ON EARNING ASSETS 3.69% 3.69% ===== ===== SUMMIT FINANCIAL GROUP, INC. (OTCBB: SMMF) Average Balance Sheet, Interest Earnings & Expenses and Average Rates YTD 2004 vs YTD 2003 For the Year Ended December 31, ---------------------------------------------------- 2004 2003 --------------------------- ------------------------ Average Earnings/ Yield/ Average Earnings/ Yield/ Dollars in Balances Expense Rate Balances Expense Rate thousands ---------------------------------------------------------------------- ASSETS Interest earning assets Loans, net of unearned interest Taxable $567,066 $35,770 6.31% $455,526 $30,842 6.77% Tax-exempt 8,818 662 7.51% 5,933 489 8.24% Securities Taxable 166,882 7,193 4.31% 175,821 7,952 4.52% Tax-exempt 48,356 3,303 6.83% 41,537 2,889 6.96% Interest bearing deposits other banks and Federal funds sold 3,489 127 3.64% 5,368 170 3.17% ------------ -------- ----- --------- -------- ----- Total interest earning assets 794,611 47,055 5.92% 684,185 42,342 6.19% Noninterest earning assets Cash & due from banks 14,367 8,970 Premises & equipment 19,998 14,168 Other assets 16,879 19,746 Allowance for loan losses (4,972) (4,325) ------------ --------- Total assets $840,883 $722,744 ============ ========= LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Interest bearing liabilities Interest bearing demand deposits $120,066 $1,183 0.99% $100,084 $793 0.79% Savings deposits 49,806 242 0.49% 46,985 256 0.54% Time deposits 306,850 8,285 2.70% 280,064 8,950 3.20% Short-term borrowings 70,318 1,204 1.71% 31,907 441 1.38% Long-term borrowings and subordinated debentures 172,580 7,046 4.08% 158,040 7,090 4.49% ------------ -------- ----- --------- -------- ----- 719,620 17,960 2.50% 617,080 17,530 2.84% Noninterest bearing liabilities Demand deposits 54,212 46,166 Other liabilities 5,416 4,870 ------------ --------- Total liabilities 779,248 668,116 Shareholders' equity 61,635 54,628 ------------ --------- Total liabilities and shareholders' equity $840,883 $722,744 ============ ========= NET INTEREST EARNINGS $29,095 $24,812 ======== ======== NET INTEREST YIELD ON EARNING ASSETS 3.66% 3.63% ===== ===== CONTACT: Summit Financial Group, Inc. Robert S. Tissue, 304-530-0552 rtissue@SummitFGI.com