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CORRECTION: Summit Financial Group Reports Earnings of $1.11 Per Share for Fourth Quarter 2023

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Summit Financial Group, Inc. (NASDAQ: SMMF) reported strong financial results for Q4 2023, with net income applicable to common shares of $16.4 million. The company's pending merger with Burke & Herbert Financial Services Corp. was approved, and TBVPCS increased by $1.67 to $23.89. However, the net interest margin decreased by 12 basis points, and core deposits experienced a modest decline in the fourth quarter of 2023.
Positive
  • Net income applicable to common shares of $16.4 million for Q4 2023
  • Pending merger with Burke & Herbert Financial Services Corp. was approved
  • Tangible Book Value Per Common Share increased by $1.67 to $23.89
  • Net interest margin decreased 12 basis points to 3.76 percent
  • Core deposits experienced a modest decline in the fourth quarter of 2023
Negative
  • Net interest margin decreased by 12 basis points
  • Core deposits experienced a modest decline in the fourth quarter of 2023

MOOREFIELD, W.Va., Jan. 25, 2024 (GLOBE NEWSWIRE) -- In a release issued under the same headline on Thursday, January 25th by Summit Financial Group, Inc. (NASDAQ: SMMF), please note that in the Annual Performance Summary (unaudited) table, cash dividends per common share for the year ended 12/31/2023 have been corrected to $0.84. The corrected release follows:

Summit Financial Group, Inc. ("Company" or "Summit") (NASDAQ: SMMF) today reported financial results for the fourth quarter of 2023, highlighting robust core operating performance marked by continued notable strength in its net interest margin. The Company’s continued success underscores its position as an exceptional community bank, reflecting a sound strategy and solid operational execution.

The Company, which serves commercial and individual clients across West Virginia, the Washington D.C. metropolitan area, Virginia, Kentucky, the Eastern Shore of Maryland and Delaware through Summit Community Bank, Inc., reported net income applicable to common shares of $16.4 million, or $1.11 per diluted share, for the fourth quarter of 2023, as compared to $16.1 million, or $1.09 per diluted share, for the third quarter of 2023 and $14.9 million, or $1.16 per diluted share, for the fourth quarter of 2022.

Key Highlights for the Fourth Quarter and Year 2023

  • Our pending merger with Burke & Herbert Financial Services Corp. ("Burke & Herbert") was approved by both Burke & Herbert’s and Summit’s shareholders on December 6, 2023. The transaction is expected to close in late Q1 2024 following receipt of Federal regulatory approval.
  • Tangible Book Value Per Common Share ("TBVPCS") increased by $1.67 to $23.89 during the fourth quarter of 2023, representing a 7.5 percent increase. This increase was primarily due to retained earnings and the increase in the fair value of available for sale securities reflected in accumulated other comprehensive loss. For 2023, TBVPCS increased by $2.19.
  • Our net interest margin ("NIM") decreased 12 basis points to 3.76 percent from the linked quarter. For the year 2023, NIM increased 11 basis points.
  • The fourth quarter saw a modest increase in total loans, excluding mortgage warehouse lines of credit and acquired loans, registering an increase of 2.85 percent (11.4 percent annualized). This performance was further underscored by year-over-year growth of 8.3 percent.
  • Summit's core deposits experienced modest decline in the fourth quarter of 2023, down 1.1 percent from the linked quarter and, excluding acquired Provident State Bank, Inc. ("PSB") deposits, increased 1.5 percent during full-year 2023.
  • The Company’s provision for credit losses totaled $1.50 million in the fourth quarter of 2023 compared to $1.25 million in the linked quarter.
  • Summit’s efficiency ratio was 47.33 percent compared to 47.15 percent in the linked quarter, indicating optimized use of resources. For full year 2023, the efficiency ratio was 47.51 percent compared to 47.76 percent in 2022.
  • Annualized non-interest expense ratio decreased to 2.05 percent of average assets from 2.10 percent in the previous quarter and increased from 1.92 percent in the same quarter last year. Excluding acquisition-related expenses, annualized non-interest expense would have been 1.98 percent of average assets in Q4 2023 and 2.01 percent of average assets for Q3 2023.

"We are extremely pleased by our core performance both for fourth quarter and for the year 2023," stated H. Charles Maddy III, President and Chief Executive Officer of Summit Financial Group, "highlighted by solid loan growth, a stable top quartile peer net interest margin, an enviable efficiency ratio and best-in-class return on tangible common equity." Mr. Maddy continued, "Looking ahead as we prepare for our strategic merger with Burke & Herbert, we remain committed to enhancing shareholder value, driven by our foundational strengths and synergistic growth plans. With our dedicated team, resilient strategies and community trust, we are optimistic and geared up for the opportunities and challenges ahead."

Results from Operations

Net interest income totaled $40.8 million in the fourth quarter of 2023, marking an increase of 18.7 percent from the prior-year fourth quarter and down 1.2 percent from the linked quarter. This year-over-year robust growth is primarily attributable to our strategic expansion of the loan portfolio and optimizations in investment allocations. NIM for the fourth quarter 2023 was 3.76 percent compared to 3.88 percent for the linked quarter and 3.80 percent for the prior-year quarter, as the cost of interest-bearing funds outpaced the increased yields on interest earning assets.

Summit recorded a $1.50 million provision for credit losses in the fourth quarter of 2023 compared to $1.25 million for the linked quarter and $1.50 million in the fourth quarter of 2022.

Noninterest income, consisting primarily of service fee income from community banking activities and trust and wealth management fees, for fourth quarter 2023 was $5.80 million compared to $5.27 million for the linked quarter and $4.87 million for the comparable period of 2022. The Company recognized net gains on equity investments of $365,000 in the fourth quarter 2023 compared to $180,000 in the linked quarter. Excluding gains and losses from debt securities and equity investments, the combined revenue from net interest income and non-interest income for Q4 2023 was $46.2 million compared to $46.4 million in the linked quarter and a substantial 18.6 percent growth from $39.0 million recorded in the fourth quarter of 2022.

Total noninterest expense decreased to $23.9 million in the fourth quarter of 2023, down 1.1 percent from $24.2 million in the linked quarter primarily due to lower salaries and employee benefits and fewer acquisition-related expenses in the fourth quarter. Conversely, there was a 26.8 percent hike from $18.8 million for the same quarter in the prior year, attributed mainly to the assimilation of operational costs from the newly integrated PSB operations and higher acquisition-related expenses in 2024.

Salary and benefit expenses were $11.4 million in the fourth quarter of 2023, a decrease from $12.0 million in the preceding quarter but up from $10.5 million in the same period last year. The year-over-year increase was primarily due to the PSB acquisition and higher group health insurance premiums.

Acquisition-related expenses representing legal, due diligence and fairness opinion costs relative to the Burke & Herbert merger were $839,000 for Q4 2023 compared to $1.11 million for the linked quarter and $81,000 during Q4 2022.

Summit’s efficiency ratio was 47.33 percent in the fourth quarter of 2023, an increase from 46.40 percent in the fourth quarter of 2022, and marginally better than the 47.15 percent in the linked quarter. Concurrently, the non-interest expense to average assets ratio was optimized to 2.05 percent, compared to 2.10 percent in the previous quarter, indicating enhanced operational efficiency despite the expanded asset base post-PSB acquisition.

Balance Sheet

As of December 31, 2023, total assets were $4.6 billion, an increase of $717.6 million, or 18.3 percent since December 31, 2022. Excluding acquired PSB assets, total assets increased by $149.3 million, or 3.8 percent since December 31, 2022.

Total loans net of unearned fees increased 19.4 percent to $3.7 billion as of December 31, 2023, from $3.1 billion at December 31, 2022. Total loans, excluding those related to mortgage warehouse lending and acquired loans, reached $3.2 billion as of December 31, 2023. This represents an increase of 2.85 percent (or 11.4 percent when annualized) during the quarter just ended.

Deposits totaled $3.7 billion on December 31, 2023, a 1.0 percent decrease during the fourth quarter. Core deposits decreased 1.1 percent during the fourth quarter 2023 to $3.7 billion. Adjusted uninsured deposits (excluding uninsured public deposits otherwise secured or collateralized as required by law) were 34.8 percent of total deposits at December 31, 2023 compared to 29.8 percent at year-end 2022.

Total shareholders’ equity was $440.2 million as of December 31, 2023, compared to $354.5 million at December 31, 2022. Summit paid a quarterly common dividend of $0.22 per share in the fourth quarter of 2023.

Tangible Book Value Per Common Share ("TBVPCS") increased by $1.67 to $23.89 during the fourth quarter of 2023, representing a 7.5 percent increase. This increase was primarily due to retained earnings and the increase in the fair value of available for sale securities reflected in accumulated other comprehensive loss. Summit had 14,683,457 outstanding common shares at December 31, 2023, compared to 12,783,646 at year-end 2022.

Asset Quality

The Company recorded net loan recoveries of $188,000 during the fourth quarter 2023, representing 0.02 percent of average loans annualized, compared to net loan charge-offs ("NCOs") of $119,000, representing 0.01 percent of average loans annualized, in the linked quarter. NCOs of $1,000 represented 0.0 percent of average loans annualized in the year-ago period.

Summit’s allowance for loan credit losses was $48.1 million on December 31, 2023, $47.2 million at the end of the linked quarter, and $38.9 million on December 31, 2022. As of December 31, 2023, the allowance for loan credit losses stood at 1.31 percent of total loans, reflecting a slight increase compared to the rate of 1.26 percent recorded as of December 31, 2022. In terms of the allowance's coverage, it represented 386.6 percent of nonperforming loans at December 31, 2023, in contrast to the figure of 497.2 percent at December 31, 2022.

Summit’s allowance for credit losses on unfunded loan commitments was $7.74 million as of December 31, 2023, compared to $6.91 million at the end of the linked quarter. During the most recent quarter, the allowance for credit losses on unfunded loan commitments increased by $830,000, primarily due to a change in mix of type of unfunded loan balances.

As of December 31, 2023, nonperforming assets ("NPAs"), consisting of nonperforming loans, foreclosed properties, and repossessed assets, totaled $16.2 million, or 0.35 percent of assets, compared to NPAs of $12.9 million, or 0.33 percent of assets at year-end 2022.

About the Company

Summit Financial Group, Inc. is the $4.6 billion financial holding company for Summit Community Bank, Inc. Its talented bankers serve commercial and individual clients throughout West Virginia, the Washington, D.C. metropolitan area, Virginia, Kentucky, Eastern Shore of Maryland and Delaware. Summit’s focus on in-market commercial lending and providing other business banking services in dynamic markets is designed to leverage its highly efficient operations and core deposits in strong legacy locations. Residential and consumer lending, trust and wealth management, and other retail financial services are offered through convenient digital and mobile banking platforms, including MySummitBank.com and 54 full-service branch locations. More information on Summit Financial Group, Inc. (NASDAQ: SMMF), headquartered in West Virginia’s Eastern Panhandle in Moorefield, is available at SummitFGI.com.

Non-GAAP Financial Measures

In addition to the results of operations presented in accordance with Generally Accepted Accounting Principles (GAAP), Summit’s management uses, and this press release contains or references, certain non-GAAP financial measures, such as tangible common equity/tangible assets; efficiency ratio; return on average tangible equity and return on average tangible common equity. Summit believes these financial measures provide information useful to investors in understanding our operational performance and business and performance trends which facilitate comparisons with the performance of others in the financial services industry. Although Summit believes that these non-GAAP financial measures enhance investors' understanding of Summit’s business and performance, these non-GAAP financial measures should not be considered an alternative to GAAP or are they necessarily comparable to non-GAAP performance measures presented by other companies.

Forward-Looking Statements

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

Although we believe the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially. Factors that might cause such a difference include: the effect of pandemics, including the negative impacts and disruptions on the communities we serve, and the domestic and global economy, which may have an adverse effect on our business; current and future economic and market conditions, including the effects of declines in housing prices, high unemployment rates, U.S. fiscal debt, budget and tax matters, geopolitical matters, and any slowdown in global economic growth; fiscal and monetary policies of the Federal Reserve; future provisions for credit losses on loans and debt securities; changes in nonperforming assets; changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; the successful integration of operations of our acquisitions; changes in banking laws and regulations; changes in tax laws; the impact of technological advances; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; changes in the national and local economies, the impact of natural disasters, extreme weather events, military conflict (including the Russia/Ukraine conflict, the conflict in Israel and surrounding areas, the possible expansion of such conflicts and potential geopolitical consequences), terrorism or other geopolitical events; delays in completing the pending merger of Summit and Burke & Herbert, the failure to obtain necessary regulatory approvals and shareholder approvals or to satisfy any of the other conditions to the merger on a timely basis or at all, the possibility that the anticipated benefits of the merger are not realized when expected or at all, corporate strategies or objectives, including the impact of certain actions and initiatives, anticipated trends in Summit's business, regulatory developments, estimated synergies, cost savings and financial benefits of completed transactions, growth strategies, the inability to realize cost savings or improved revenues or to implement integration plans and other consequences associated with the proposed merger; and the other factors discussed in the "Risk Factors" section of Summit’s Annual Report on Form 10–K for the year ended December 31, 2022, in the "Risk Factors" and "Management’s Discussion and Analysis of Financial Condition and Results of Operations" section of Summit’s Quarterly Report on Form 10–Q for the quarters ended March 31, 2023, June 30, 2023 and September 30, 2023, and other reports Summit files with the SEC. We undertake no obligation to revise these statements following the date of this press release.

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


   
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary (unaudited)
Q4 2023 vs Q4 2022
    
  For the Quarter EndedPercent
Dollars in thousands12/31/202312/31/2022Change
Statements of Income   
 Interest income   
 Loans, including fees$59,856 $43,589 37.3%
 Securities 6,538  4,181 56.4%
 Other 122  70 74.3%
 Total interest income 66,516  47,840 39.0%
 Interest expense   
 Deposits 21,417  10,194 110.1%
 Borrowings 4,306  3,293 30.8%
 Total interest expense 25,723  13,487 90.7%
 Net interest income 40,793  34,353 18.7%
 Provision for credit losses 1,500  1,500 0.0%
 Net interest income after provision for credit losses 39,293  32,853 19.6%
     
 Noninterest income   
 Trust and wealth management fees 952  750 26.9%
 Mortgage origination revenue 65  286 -77.3%
 Service charges on deposit accounts 1,866  1,526 22.3%
 Bank card revenue 1,837  1,513 21.4%
 Net gains on equity investments 365  280 30.4%
 Net realized gains/(losses) on debt securities 15  (24)n/m
 Bank owned life insurance and annuity income 499  367 36.0%
 Other income 202  167 21.0%
 Total noninterest income 5,801  4,865 19.2%
 Noninterest expense   
 Salaries and employee benefits 11,374  10,532 8.0%
 Net occupancy expense 1,554  1,328 17.0%
 Equipment expense 2,342  1,769 32.4%
 Professional fees 529  386 37.0%
 Advertising and public relations 432  280 54.3%
 Amortization of intangibles 995  351 183.5%
 FDIC premiums 670  352 90.3%
 Bank card expense 809  679 19.1%
 Foreclosed properties expense, net of (gains)/losses 16  159 -89.9%
 Acquisition-related expense 839  81 n/m
 Other expenses 4,347  2,932 48.3%
 Total noninterest expense 23,907  18,849 26.8%
 Income before income taxes 21,187  18,869 12.3%
 Income taxes 4,590  3,783 21.3%
 Net income 16,597  15,086 10.0%
 Preferred stock dividends 225  225 n/a
     
 Net income applicable to common shares$16,372 $14,861 10.2%


   
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary (unaudited)
Q4 2023 vs Q4 2022
     
  For the Quarter EndedPercent
  12/31/202312/31/2022Change
Per Share Data   
 Earnings per common share   
 Basic$1.12 $1.16 -3.4%
 Diluted$1.11 $1.16 -4.3%
     
 Cash dividends per common share$0.22 $0.20 10.0%
 Common stock dividend payout ratio 19.5% 16.9%15.4%
     
 Average common shares outstanding   
 Basic 14,676,383  12,775,703 14.9%
 Diluted 14,718,790  12,837,637 14.7%
     
 Common shares outstanding at period end 14,683,457  12,783,646 14.9%
     
Performance Ratios   
 Return on average equity 15.74% 17.50%-10.1%
 Return on average tangible equity (C) 20.01% 21.75%-8.0%
 Return on average tangible common equity (D) 20.91% 22.96%-8.9%
 Return on average assets 1.42% 1.54%-7.8%
 Net interest margin (A) 3.76% 3.80%-1.1%
 Efficiency ratio (B) 47.33% 46.40%2.0%
     

NOTES

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

(B) – Non-GAAP financial measure computed on a tax equivalent basis excluding acquisition-related expenses, gains/losses on sales of assets, write-downs of OREO properties to fair value and amortization of intangibles.

(C) – Non-GAAP financial measure that equals: (Net income + Amortization of intangibles [after-tax]) / (Average shareholders’ equity – Average intangible assets).

(D) – Non-GAAP financial measure that equals: (Net income + Amortization of intangibles [after-tax]) / (Average common shareholders’ equity – Average intangible assets).

    
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Annual Performance Summary (unaudited)
2023 vs 2022
     
  For the Year EndedPercent
Dollars in thousands12/31/202312/31/2022Change
Statements of Income   
 Interest income   
 Loans, including fees$217,855 $145,364 49.9%
 Securities 23,961  13,052 83.6%
 Other 732  331 121.1%
 Total interest income 242,548  158,747 52.8%
 Interest expense   
 Deposits 73,191  20,683 253.9%
 Borrowings 12,788  9,078 40.9%
 Total interest expense 85,979  29,761 188.9%
 Net interest income 156,569  128,986 21.4%
 Provision for credit losses 12,250  6,950 76.3%
 Net interest income after provision for credit losses 144,319  122,036 18.3%
     
 Noninterest income   
 Trust and wealth management fees 3,436  2,978 15.4%
 Mortgage origination revenue 577  1,480 -61.0%
 Service charges on deposit accounts 6,977  6,150 13.4%
 Bank card revenue 7,299  6,261 16.6%
 Net gains on equity investments 740  265 179.2%
 Net realized (losses) on debt securities (266) (708)62.4%
 Bank owned life insurance and annuity income 1,576  1,211 30.1%
 Other income 537  516 4.1%
 Total noninterest income 20,876  18,153 15.0%
 Noninterest expense   
 Salaries and employee benefits 46,296  40,452 14.4%
 Net occupancy expense 5,851  5,128 14.1%
 Equipment expense 9,094  7,253 25.4%
 Professional fees 1,775  1,628 9.0%
 Advertising and public relations 1,113  893 24.6%
 Amortization of intangibles 3,335  1,440 131.6%
 FDIC premiums 2,458  1,224 100.8%
 Bank card expense 3,429  2,928 17.1%
 Foreclosed properties expense, net of (gains)/losses 89  236 -62.3%
 Acquisition-related expense 6,444  114 n/m
 Other expenses 14,909  11,583 28.7%
 Total noninterest expense 94,793  72,879 30.1%
 Income before income taxes 70,402  67,310 4.6%
 Income taxes 15,163  14,094 7.6%
 Net income 55,239  53,216 3.8%
 Preferred stock dividends 900  900 0.0%
     
 Net income applicable to common shares$54,339 $52,316 3.9%


   
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Annual Performance Summary (unaudited)
2023 vs 2022  
     
  For the Year EndedPercent
  12/31/202312/31/2022Change
Per Share Data   
 Earnings per common share   
 Basic$3.82 $4.10 -6.8%
 Diluted$3.81 $4.08 -6.6%
     
 Cash dividends per common share$0.84 $0.76 10.5%
 Common stock dividend payout ratio 21.6% 18.2%18.7%
     
 Average common shares outstanding   
 Basic 14,206,811  12,760,649 11.3%
 Diluted 14,249,129  12,821,533 11.1%
     
 Common shares outstanding at period end 14,683,457  12,783,646 14.9%
     
Performance Ratios   
 Return on average equity 13.69% 15.83%-13.5%
 Return on average tangible equity (C) 17.51% 19.88%-11.9%
 Return on average tangible common equity (D) 18.34% 21.03%-12.8%
 Return on average assets 1.25% 1.42%-12.0%
 Net interest margin (A) 3.84% 3.73%2.9%
 Efficiency ratio (B) 47.57% 47.76%-0.4%
     

NOTES

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

(B) – Non-GAAP financial measure computed on a tax equivalent basis excluding acquisition-related expenses, gains/losses on sales of assets, write-downs of OREO properties to fair value and amortization of intangibles.

(C) – Non-GAAP financial measure that equals: (Net income + Amortization of intangibles [after-tax]) / (Average shareholders’ equity – Average intangible assets).

(D) – Non-GAAP financial measure that equals: (Net income applicable to common shares + Amortization of intangibles [after-tax]) / (Average common shareholders’ equity – Average intangible assets).

     
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)    
Five Quarter Performance Summary (unaudited)
       
   For the Quarter Ended
Dollars in thousands12/31/20239/30/20236/30/20233/31/202312/31/2022
Statements of Income     
 Interest income      
 Loans, including fees $59,856 $58,102 $54,413 $45,485 $43,589 
 Securities  6,538  6,357  6,247  4,819  4,181 
 Other  122  235  203  171  70 
 Total interest income  66,516  64,694  60,863  50,475  47,840 
 Interest expense      
 Deposits  21,417  19,924  17,851  14,000  10,194 
 Borrowings  4,306  3,497  2,699  2,286  3,293 
 Total interest expense  25,723  23,421  20,550  16,286  13,487 
 Net interest income  40,793  41,273  40,313  34,189  34,353 
 Provision for credit losses  1,500  1,250  8,000  1,500  1,500 
 Net interest income after provision for credit losses  39,293  40,023  32,313  32,689  32,853 
        
 Noninterest income      
 Trust and wealth management fees  952  819  854  811  750 
 Mortgage origination revenue  65  172  169  171  286 
 Service charges on deposit accounts  1,866  1,775  1,943  1,392  1,526 
 Bank card revenue  1,837  1,907  1,987  1,568  1,513 
 Net gains on equity investments  365  180  150  45  280 
 Net realized gains/(losses) on debt securities  15  (12) (211) (59) (24)
 Bank owned life insurance and annuity income  499  311  431  336  367 
 Other income  202  113  100  122  167 
 Total noninterest income  5,801  5,265  5,423  4,386  4,865 
 Noninterest expense      
 Salaries and employee benefits  11,374  11,959  12,156  10,807  10,532 
 Net occupancy expense  1,554  1,436  1,528  1,333  1,328 
 Equipment expense  2,342  2,361  2,361  2,030  1,769 
 Professional fees  529  400  471  376  386 
 Advertising and public relations  432  247  264  170  280 
 Amortization of intangibles  995  998  999  343  351 
 FDIC premiums  670  716  742  330  352 
 Bank card expense  809  972  951  696  679 
 Foreclosed properties expense, net of (gains)/losses  16  10  48  15  159 
 Acquisition-related expenses  839  1,110  4,163  331  81 
 Other expenses  4,347  3,953  3,641  2,968  2,932 
 Total noninterest expense  23,907  24,162  27,324  19,399  18,849 
 Income before income taxes  21,187  21,126  10,412  17,676  18,869 
 Income tax expense  4,590  4,794  2,203  3,575  3,783 
 Net income  16,597  16,332  8,209  14,101  15,086 
 Preferred stock dividends  225  225  225  225  225 
        
 Net income applicable to common shares $16,372 $16,107 $7,984 $13,876 $14,861 


     
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Five Quarter Performance Summary (unaudited)     
      
  For the Quarter Ended
  12/31/20239/30/20236/30/20233/31/202312/31/2022
Per Share Data     
 Earnings per common share     
 Basic$1.12 $1.10 $0.54 $1.09 $1.16 
 Diluted$1.11 $1.09 $0.54 $1.08 $1.16 
       
 Cash dividends per common share$0.22 $0.22 $0.20 $0.20 $0.20 
 Common stock dividend payout ratio 19.5% 19.8% 36.7% 18.1% 16.9%
       
 Average common shares outstanding     
 Basic 14,676,383  14,672,176  14,668,923  12,783,851  12,775,703 
 Diluted 14,718,790  14,714,211  14,703,636  12,830,102  12,837,637 
       
 Common shares outstanding at period end 14,683,457  14,674,852  14,672,147  12,786,404  12,783,646 
       
Performance Ratios     
 Return on average equity 15.74% 15.66% 7.99% 15.55% 17.50%
 Return on average tangible equity (C) 20.01% 20.03% 10.86% 19.10% 21.75%
 Return on average tangible common equity (D) 20.91% 20.95% 11.37% 20.10% 22.96%
 Return on average assets 1.42% 1.42% 0.73% 1.43% 1.54%
 Net interest margin (A) 3.76% 3.88% 3.89% 3.83% 3.80%
 Efficiency ratio (B) 47.33% 47.15% 47.90% 48.00% 46.40%
                 

NOTES

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

(B) – Non-GAAP financial measure computed on a tax equivalent basis excluding acquisition-related expenses, gains/losses on sales of assets, write-downs of OREO properties to fair value and amortization of intangibles.

(C) – Non-GAAP financial measure that equals: (Net income + Amortization of intangibles [after-tax]) / (Average shareholders’ equity – Average intangible assets).

(D) – Non-GAAP financial measure that equals: (Net income + Amortization of intangibles [after-tax]) / (Average common shareholders’ equity – Average intangible assets).

      
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)  
Selected Balance Sheet Data (unaudited)     
Dollars in thousands, except per share amounts12/31/20239/30/20236/30/20233/31/202312/31/2022
Assets     
 Cash and due from banks$21,834 $23,159 $23,341 $16,488 $16,469 
 Interest bearing deposits other banks 30,398  36,398  39,902  54,328  28,248 
 Debt securities, available for sale 502,762  511,403  512,038  431,933  405,201 
 Debt securities, held to maturity 94,227  94,715  95,200  95,682  96,163 
 Equity investments 10,958  31,241  30,818  29,867  29,494 
 Other investments 21,130  19,579  16,014  12,696  16,029 
 Loans, net 3,633,522  3,551,686  3,506,880  3,059,099  3,043,919 
 Property held for sale 3,729  4,505  4,742  5,128  5,067 
 Premises and equipment, net 63,038  62,721  60,967  54,491  53,981 
 Goodwill and other intangible assets, net 74,430  75,425  76,423  61,807  62,150 
 Cash surrender value of life insurance policies and annuities 85,679  85,076  84,790  72,019  71,640 
 Derivative financial instruments 33,145  44,527  39,951  34,758  40,506 
 Other assets 59,470  63,773  61,204  49,111  47,825 
 Total assets$4,634,322 $4,604,208 $4,552,270 $3,977,407 $3,916,692 
Liabilities and Shareholders' Equity     
 Deposits$3,715,148 $3,754,495 $3,735,034 $3,299,846 $3,169,879 
 Short-term borrowings 302,957  258,054  232,150  140,150  225,999 
 Long-term borrowings and subordinated debentures, net 124,008  123,892  123,776  123,660  123,543 
 Other liabilities 52,001  51,315  48,136  44,205  42,741 
 Total liabilities 4,194,114  4,187,756  4,139,096  3,607,861  3,562,162 
 Preferred stock and related surplus 14,920  14,920  14,920  14,920  14,920 
 Common stock and related surplus 129,990  130,508  130,227  90,939  90,696 
 Retained earnings 302,783  289,641  276,762  271,712  260,393 
 Accumulated other comprehensive loss (7,485) (18,617) (8,735) (8,025) (11,479)
 Total shareholders' equity 440,208  416,452  413,174  369,546  354,530 
 Total liabilities and shareholders' equity$4,634,322 $4,604,208 $4,552,270 $3,977,407 $3,916,692 
       
 Book value per common share$28.96 $27.36 $27.14 $27.73 $26.57 
 Tangible book value per common share (A)$23.89 $22.22 $21.93 $22.90 $21.70 
 Tangible common equity to tangible assets (B) 7.7% 7.2% 7.2% 7.5% 7.2%
       

NOTES

(A) – Non-GAAP financial measure that equals: (Common stock and related surplus + Retained earnings + Accumulated other comprehensive income/loss – Intangible assets) / Common shares outstanding.

(B) – Non-GAAP financial measure that equals: (Common stock and related surplus + Retained earnings + Accumulated other comprehensive income/loss – Intangible assets) / (Total assets – Intangible assets).

     
SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
 
Loan Composition (unaudited)      
        
Dollars in thousands12/31/20239/30/20236/30/20233/31/202312/31/2022
        
Commercial $503,842 $511,951 $511,457 $498,268 $501,844 
Mortgage warehouse lines 108,848  114,734  118,785  86,240  130,390 
Commercial real estate      
Owner occupied 545,108  547,886  566,447  469,560  467,050 
Non-owner occupied 1,254,337  1,217,029  1,193,927  1,036,358  1,004,368 
Construction and development      
Land and development 145,258  114,354  117,371  102,351  106,362 
Construction  374,026  349,049  309,709  290,556  282,935 
Residential real estate      
Conventional  505,398  497,076  483,998  395,312  386,874 
Jumbo  116,614  113,837  117,219  111,475  92,103 
Home equity  81,126  81,967  86,050  70,167  71,986 
Consumer  43,756  44,288  44,429  36,531  35,372 
Other  3,299  6,748  3,169  3,117  3,534 
Total loans, net of unearned fees 3,681,612  3,598,919  3,552,561  3,099,935  3,082,818 
Less allowance for loan credit losses  48,090  47,233  45,681  40,836  38,899 
Loans, net$3,633,522 $3,551,686 $3,506,880 $3,059,099 $3,043,919 
        
Unfunded loan commitments$950,001 $943,508 $957,278 $907,757 $925,657 


     
SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)    
Deposit Composition (unaudited)     
        
Dollars in thousands 12/31/20239/30/20236/30/20233/31/202312/31/2022
Core deposits       
Non-interest bearing checking$593,576 $630,055 $679,139 $552,716 $553,616 
Interest bearing checking 2,164,522  2,144,737  2,024,341  1,886,011  1,743,299 
Savings  450,526  477,348  512,129  462,631  496,751 
Time deposits  473,687  469,530  465,026  327,037  343,423 
Total core deposits 3,682,311  3,721,670  3,680,635  3,228,395  3,137,089 
        
Brokered time deposits 32,837  32,825  54,399  71,451  32,790 
Total deposits$3,715,148 $3,754,495 $3,735,034 $3,299,846 $3,169,879 
        
Estimated uninsured deposits (A)$1,291,467 $1,283,610 $1,189,908 $933,703 $946,188 
        
(A) - Excludes uninsured public funds otherwise secured or collateralized as required by law.  


     
SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
 
Regulatory Capital Ratios (unaudited)      
  12/31/20239/30/20236/30/20233/31/202312/31/2022
Summit Financial Group, Inc.      
 CET1 Risk-based Capital9.1%8.9%8.7%8.9%8.6% 
 Tier 1 Risk-based Capital9.9%9.7%9.5%9.8%9.5% 
 Total Risk-based Capital13.7%13.5%13.3%14.0%13.5% 
 Tier 1 Leverage8.7%8.5%8.4%8.7%8.5% 
        
Summit Community Bank, Inc.      
 CET1 Risk-based Capital11.7%11.6%11.3%11.9%11.6% 
 Tier 1 Risk-based Capital11.7%11.6%11.3%11.9%11.6% 
 Total Risk-based Capital12.9%12.7%12.5%13.1%12.6% 
 Tier 1 Leverage10.2%10.1%9.9%10.6%10.4% 


     
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)    
Asset Quality Information (unaudited)     
  For the Quarter Ended
Dollars in thousands12/31/20239/30/20236/30/20233/31/202312/31/2022
 Gross loan charge-offs$444 $227 $4,009 $164 $250 
 Gross loan recoveries (632) (108) (118) (227) (249)
 Net loan charge-offs (recoveries)$(188)$119 $3,891 $(63)$1 
       
 Net loan charge-offs (recoveries) to average loans (annualized) -0.02% 0.01% 0.44% -0.01% 0.00%
       
 Allowance for loan credit losses$48,090 $47,233 $45,681 $40,836 $38,899 
 Allowance for loan credit losses as a percentage of period end loans 1.31% 1.31% 1.29% 1.32% 1.26%
       
 Allowance for credit losses on unfunded loan commitments ("ULC")$7,742 $6,912 $7,332 $6,572 $6,947 
 Allowance for credit losses on ULC as a percentage of period end ULC 0.81% 0.73% 0.81% 0.72% 0.75%
       
 Nonperforming assets:     
 Nonperforming loans     
 Commercial$1,088 $783 $254 $402 $93 
 Commercial real estate 5,675  6,402  5,970  1,700  1,750 
 Residential construction and development 708  750  772  813  851 
 Residential real estate 4,831  4,787  4,298  4,322  5,117 
 Consumer 137  124  46  65  12 
 Total nonperforming loans 12,439  12,846  11,340  7,302  7,823 
 Foreclosed properties     
 Commercial real estate 297  297  297  297  297 
 Commercial construction and development 1,253  2,187  2,187  2,187  2,187 
 Residential construction and development 1,924  1,924  2,161  2,293  2,293 
 Residential real estate 255  97  97  351  290 
 Total foreclosed properties 3,729  4,505  4,742  5,128  5,067 
 Total nonperforming assets$16,168 $17,351 $16,082 $12,430 $12,890 
       
 Nonperforming loans to period end loans 0.34% 0.36% 0.32% 0.24% 0.25%
 Nonperforming assets to period end assets 0.35% 0.38% 0.35% 0.31% 0.33%


     
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Loans Past Due 30-89 Days (unaudited)     
       
Dollars in thousands12/31/20239/30/20236/30/20233/31/202312/31/2022
       
 Commercial$1,152 $3,300 $1,006 $463 $3,168
 Commercial real estate 1,711  781  513  1,000  641
 Construction and development 570  793  161  3,459  317
 Residential real estate 6,114  4,620  4,933  2,311  6,231
 Consumer 401  440  389  252  253
 Other 43  37  17  13  22
 Total$9,991 $9,971 $7,019 $7,498 $10,632


           
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
 
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
 
Q4 2023 vs Q3 2023 vs Q4 2022 (unaudited)  
             
 Q4 2023 Q3 2023 Q4 2022 
 AverageEarnings /Yield / AverageEarnings /Yield / AverageEarnings /Yield / 
Dollars in thousandsBalancesExpenseRate BalancesExpenseRate BalancesExpenseRate 
             
ASSETS            
Interest earning assets            
Loans, net of unearned interest (1)              
Taxable$3,688,505 $59,802 6.43% $3,591,583 $58,040 6.41% $3,100,595 $43,549 5.57% 
Tax-exempt (2) 4,357  68 6.19%  3,911  78 7.91%  4,525  52 4.56% 
Securities            
Taxable 410,211  5,129 4.96%  417,299  4,972 4.73%  280,114  2,747 3.89% 
Tax-exempt (2) 206,375  1,784 3.43%  211,150  1,754 3.30%  219,245  1,813 3.28% 
Interest bearing deposits other banks and Federal funds sold 31,053  122 1.56%  39,200  235 2.38%  25,785  70 1.08% 
Total interest earning assets 4,340,501  66,905 6.12%  4,263,143  65,079 6.06%  3,630,264  48,231 5.27% 
             
Noninterest earning assets            
Cash & due from banks 22,485     24,229     16,892    
Premises & equipment 63,298     62,085     54,431    
Intangible assets 75,043     76,037     62,336    
Other assets 215,821     219,150     191,926    
Allowance for loan credit losses (47,834)    (46,498)    (37,377)   
Total assets$4,669,314    $4,598,146    $3,918,472    
             
LIABILITIES AND SHAREHOLDERS' EQUITY          
             
Liabilities            
Interest bearing liabilities            
Interest bearing demand deposits 2,170,953  16,196 2.96%  2,057,035  15,053 2.90%  1,615,275  7,848 1.93% 
Savings deposits 459,277  1,986 1.72%  493,565  2,035 1.64%  529,039  1,651 1.24% 
Time deposits 508,383  3,235 2.52%  505,824  2,836 2.22%  399,101  695 0.69% 
Short-term borrowings 309,657  2,791 3.58%  267,935  1,988 2.94%  276,823  1,868 2.68% 
Long-term borrowings and subordinated debentures 123,954  1,515 4.85%  123,839  1,509 4.83%  123,488  1,425 4.58% 
Total interest bearing liabilities 3,572,224  25,723 2.86%  3,448,198  23,421 2.69%  2,943,726  13,487 1.82% 
             
Noninterest bearing liabilities            
Demand deposits 621,082     681,035     586,617    
Other liabilities 54,160     51,669     43,378    
Total liabilities 4,247,466     4,180,902     3,573,721    
             
Shareholders' equity - preferred 14,920     14,920     14,920    
Shareholders' equity - common 406,928     402,324     329,831    
Total liabilities and shareholders' equity$4,669,314    $4,598,146    $3,918,472    
             
NET INTEREST EARNINGS $41,182   $41,658   $34,744  
             
NET INTEREST MARGIN   3.76%    3.88%    3.80% 
             
(1) - For purposes of this table, nonaccrual loans are included in average loan balances.      
(2) - Interest income on tax-exempt securities and loans has been adjusted assuming a Federal tax rate of 21% for all periods presented. 
The tax equivalent adjustment resulted in an increase in interest income of $389,000, $385,000, and $391,000 for Q4 2023,  
Q3 2023 and Q4 2022, respectively.           


        
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
  
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
  
YTD 2023 vs YTD 2022 (unaudited)         
    
 YTD 2023 YTD 2022  
 AverageEarnings /Yield / AverageEarnings /Yield /  
Dollars in thousandsBalancesExpenseRate BalancesExpenseRate  
          
ASSETS         
Interest earning assets         
Loans, net of unearned interest (1)         
Taxable$3,472,844 $217,615 6.27% $2,949,350 $145,189 4.92%  
Tax-exempt (2) 4,618  304 6.58%  4,961  222 4.47%  
Securities         
Taxable 392,720  18,412 4.69%  295,264  8,442 2.86%  
Tax-exempt (2) 210,945  7,024 3.33%  195,558  5,836 2.98%  
Interest bearing deposits other banks and Federal funds sold 34,948  732 2.09%  46,248  331 0.72%  
Total interest earning assets 4,116,075  244,087 5.93%  3,491,381  160,020 4.58%  
          
Noninterest earning assets         
Cash & due from banks 21,948     17,473     
Premises & equipment 60,123     55,219     
Intangible assets 73,430     62,878     
Other assets 209,305     167,982     
Allowance for loan credit losses (44,564)    (34,630)    
Total assets$4,436,317    $3,760,303     
          
LIABILITIES AND SHAREHOLDERS' EQUITY        
          
Liabilities         
Interest bearing liabilities         
Interest bearing demand deposits$2,009,253 $55,471 2.76% $1,350,227 $13,863 1.03%  
Savings deposits 490,219  7,935 1.62%  627,630  4,155 0.66%  
Time deposits 479,573  9,785 2.04%  479,545  2,665 0.56%  
Short-term borrowings 238,351  6,816 2.86%  204,265  3,786 1.85%  
Long-term borrowings and subordinated debentures 123,777  5,972 4.82%  123,331  5,292 4.29%  
  3,341,173  85,979 2.57%  2,784,998  29,761 1.07%  
Noninterest bearing liabilities         
Demand deposits 641,806     597,199     
Other liabilities 49,966     42,005     
Total liabilities 4,032,945     3,424,202     
          
Shareholders' equity - preferred 14,920     14,920     
Shareholders' equity - common 388,452     321,181     
Total liabilities and shareholders' equity$4,436,317    $3,760,303     
          
NET INTEREST EARNINGS $158,108   $130,259   
          
NET INTEREST MARGIN   3.84%    3.73%  
          
(1) - For purposes of this table, nonaccrual loans are included in average loan balances.    
(2) - Interest income on tax-exempt securities and loans has been adjusted assuming a Federal tax rate of 21% for all periods presented. 
The tax equivalent adjustment resulted in an increase in interest income of $1,539,000 and $1,273,000 for the   
YTD 2023 and YTD 2022 periods, respectively.        
          

FAQ

What is the net income applicable to common shares for Q4 2023?

The net income applicable to common shares for Q4 2023 was $16.4 million.

Was the pending merger with Burke & Herbert Financial Services Corp. approved?

Yes, the pending merger with Burke & Herbert Financial Services Corp. was approved.

What was the increase in Tangible Book Value Per Common Share during the fourth quarter of 2023?

The Tangible Book Value Per Common Share increased by $1.67 to $23.89 during the fourth quarter of 2023.

What was the change in net interest margin in the fourth quarter of 2023?

The net interest margin decreased by 12 basis points to 3.76 percent in the fourth quarter of 2023.

Did core deposits experience any changes in the fourth quarter of 2023?

Yes, core deposits experienced a modest decline in the fourth quarter of 2023.

Summit Financial Group, Inc.

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