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

Rhea-AI Summary

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 Ended						Percent
Dollars in thousands		12/31/2023		12/31/2022				Change
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 Ended						Percent
		12/31/2023			12/31/2022			Change
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 Ended						Percent
Dollars in thousands		12/31/2023			12/31/2022			Change
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 Ended						Percent
		12/31/2023			12/31/2022			Change
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 thousands			12/31/2023		9/30/2023				6/30/2023			3/31/2023			12/31/2022
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
		12/31/2023			9/30/2023			6/30/2023			3/31/2023			12/31/2022
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 amounts		12/31/2023			9/30/2023			6/30/2023			3/31/2023			12/31/2022
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 thousands		12/31/2023		9/30/2023			6/30/2023			3/31/2023				12/31/2022
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		12/31/2023		9/30/2023			6/30/2023			3/31/2023			12/31/2022
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)
		12/31/2023		9/30/2023		6/30/2023		3/31/2023		12/31/2022
Summit Financial Group, Inc.
	CET1 Risk-based Capital	9.1	%	8.9	%	8.7	%	8.9	%	8.6	%
	Tier 1 Risk-based Capital	9.9	%	9.7	%	9.5	%	9.8	%	9.5	%
	Total Risk-based Capital	13.7	%	13.5	%	13.3	%	14.0	%	13.5	%
	Tier 1 Leverage	8.7	%	8.5	%	8.4	%	8.7	%	8.5	%
Summit Community Bank, Inc.
	CET1 Risk-based Capital	11.7	%	11.6	%	11.3	%	11.9	%	11.6	%
	Tier 1 Risk-based Capital	11.7	%	11.6	%	11.3	%	11.9	%	11.6	%
	Total Risk-based Capital	12.9	%	12.7	%	12.5	%	13.1	%	12.6	%
	Tier 1 Leverage	10.2	%	10.1	%	9.9	%	10.6	%	10.4	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Asset Quality Information (unaudited)
		For the Quarter Ended
Dollars in thousands		12/31/2023			9/30/2023			6/30/2023			3/31/2023			12/31/2022
	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 thousands		12/31/2023		9/30/2023			6/30/2023			3/31/2023			12/31/2022
	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
	Average			Earnings /		Yield /				Average			Earnings /		Yield /				Average			Earnings /		Yield /
Dollars in thousands	Balances			Expense		Rate				Balances			Expense		Rate				Balances			Expense		Rate
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
	Average			Earnings /		Yield /				Average			Earnings /		Yield /
Dollars in thousands	Balances			Expense		Rate				Balances			Expense		Rate
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.