Summit Financial Group Reports Second Quarter 2021 EPS of $0.80, Growth in Loans and Revenue, and Lower Credit Costs

Rhea-AI Summary

Summit Financial Group (SMMF) reported a strong financial performance for Q2 2021, with net income of $10.4 million, or $0.80 per diluted share, reflecting an 81.4% increase year-over-year. Total loans grew 3.7% during the quarter, while net interest income rose 2.1% from the previous quarter, totaling $26.8 million. The company also announced the acquisition of MVB Bank's Southern West Virginia operations. Despite a decrease in net interest margin to 3.55%, the efficiency ratio improved to 49.09%. The provision for credit losses declined to $1.0 million, signaling robust asset quality.

Positive

• Net income increased to $10.4 million, or $0.80 per diluted share, up 81.8% year-over-year.
• Total loans increased by 3.7% in Q2 2021, and 22% since June 2020.
• Net interest income grew to $26.8 million, a 16.2% increase from the prior year.
• Acquisition of MVB Bank’s operations expected to enhance growth and market presence.
• Provision for credit losses declined to $1.0 million, indicating improved asset quality.

Negative

• Net interest margin decreased to 3.55%, down 10 basis points from the previous quarter.
• Total noninterest expense increased by 3.7% from the linked quarter, reflecting acquisition-related expenses.

MOOREFIELD, W.Va., July 29, 2021 (GLOBE NEWSWIRE) -- Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ: SMMF) today reported financial results for the second quarter of 2021, including continued strong earnings on growth in loans and total revenue, as well as lower credit costs.

Second quarter 2021 net income applicable to common shares totaled $10.4 million, or $0.80 per diluted share. Net income applicable to common shares were $10.4 million or $0.80 per diluted share in the first quarter of 2021 and $6.9 million or $0.54 per diluted share in the second quarter of 2020. For the six months ended June 30, 2021, Summit recorded net income applicable to common shares of $20.8 million, or $1.60 per diluted share, compared with $11.5 million, or $0.88 per diluted share, for the comparable 2020 six-month period, representing an increase of 81.4 percent or 81.8 percent per diluted share.  

“Summit’s performance in the second quarter and first half of this year gives us even greater confidence in our loan growth goals for 2021 and beyond,” said H. Charles Maddy, III, President and Chief Executive Officer. “We expect to continue benefitting from production and pipelines that reflect our success in growing commercial relationships in our existing markets, particularly in the D.C., Northern Virginia, Charleston and Huntington, West Virginia regions, complemented by recent acquisitions. We intend to continue creating significant organic growth opportunities, while leveraging Summit’s operational efficiencies and core deposits in strong legacy locations, as well as our high-performing bankers in every community we serve.”

Highlights for Q2 2021

• Total loans, excluding mortgage warehouse lines of credit and PPP loans, increased 3.7 percent (14.8 percent annualized) during the quarter, 9.6 percent (19.2 percent annualized) year-to-date and 22.0 percent since June 30, 2020.
• Net interest income increased 2.1 percent compared to the linked quarter, and increased 16.2 percent from the year-ago period, primarily due to loan growth and lower funding costs.
• Net interest margin (“NIM”) decreased 10 basis points to 3.55 percent from the linked quarter, as yield on interest earning assets decreased 16 basis points while the cost of deposits and other funding declined 8 basis points.
• Recorded an efficiency ratio of 49.09 percent and maintained non-interest expense at 2.09 percent of average assets.
• Provision for credit losses declined to $1.0 million. Allowance for loan credit losses at period end equaled $33.9 million, or 1.39 percent of total loans and 148.2 percent of nonperforming loans.
• Announced the acquisition of substantially all of MVB Bank’s Southern West Virginia community banking operations including four full-service branches and two drive-up locations in and around the state’s largest cities of Charleston and Huntington, approximately $163.1 million in deposits, and $53.9 million in loans, with an accretive transaction that closed earlier this month.
• Raised $15.0 million in growth capital through a previously disclosed private placement of 6% Fixed-Rate Non-Cumulative Perpetual Preferred Stock to provide flexibility for executing our strategic plan.
  

Results from Operations

Net interest income grew to $26.8 million in the second quarter of 2021, an increase of 2.1 percent from the linked quarter and 16.2 percent from the prior-year second quarter. NIM for second quarter 2021 was 3.55 percent compared to 3.65 percent for the linked quarter and 3.68 percent for the year-ago quarter. Excluding the impact of accretion and amortization of fair value acquisition accounting adjustments, Summit’s net interest margin would have been 3.50 percent for the second quarter of 2021, 3.60 percent for the linked quarter and 3.61 percent for the year-ago period.

Noninterest income, consisting primarily of service fee income from community banking activities and trust and wealth management fees, for second quarter 2021 was $4.7 million compared to $5.0 million for the linked quarter and $3.6 million for the comparable period of 2020. The Company recorded securities gains of $127,000 in the second quarter of 2021 and $476,000 in the linked quarter. Excluding securities gains, noninterest income was $4.6 million for second quarter 2021 and $4.5 million for the linked quarter. Mortgage origination revenue was $898,000 in the second quarter of 2021 compared to $998,000 for the linked quarter and $641,000 for the year-ago period, due to higher volumes of secondary market loans driven primarily by historically low interest rates.

Revenue from net interest income and noninterest income, excluding securities gains, grew to $31.4 million, up 2.1 percent from $30.8 million in the linked quarter and 17.8 percent from $26.7 million in the year-ago quarter. Revenue, excluding securities gains, for the first half of 2021, grew to $62.1 million, up 20.5 percent from the first half of 2020 and outpacing the 10.8 percent noninterest expense increase recorded for the comparable six-month periods.

Total noninterest expense increased to $17.0 million in the second quarter of 2021, up 3.7 percent from $16.4 million in the linked quarter and 12.1 percent from $15.2 million for the prior-year second quarter, reflecting acquisition-related expenses primarily from Summit’s recently completed Southern West Virginia branch acquisition, as well as ongoing operating costs for its April 2020 branch acquisitions in West Virginia’s Eastern Panhandle and its December 2020 purchase of Kentucky’s WinFirst Bank.

Salary and benefit expenses of $8.2 million in the second quarter of 2021 declined from $8.4 million in the linked quarter, while acquisitions closed in April and December 2020 contributed to an increase from $7.7 million in the year-ago period. Additionally, other significant factors contributing to the changes in total noninterest expense in the second quarter of 2021 were:   FDIC assessments of $488,000 compared to $277,000 for the linked quarter and $110,000 for the year-ago period, as well as foreclosed properties expense of $746,000 compared to $227,000 in the linked quarter and $240,000 in the year-ago period. Summit’s efficiency ratio improved to 49.09 percent in the second quarter of 2021 from 49.79 percent in the linked quarter and 51.97 percent for the year-ago period. Non-interest expense was 2.09 percent of average assets in the second quarter of 2021, unchanged from the linked quarter and improved from 2.23 percent in the year-ago period.

Balance Sheet

At June 30, 2021, total assets were $3.27 billion, an increase of $166.1 million, or 5.3 percent since December 31, 2020.

Total loans net of unearned fees and excluding PPP and mortgage warehouse lending grew to $2.28 billion on June 30, 2021, increasing 3.7 percent during the second quarter, 9.6 percent year-to-date and 22.0 percent since June 30, 2020.

Total commercial loans, including commercial and industrial (C&I) and commercial real estate (CRE) and excluding PPP lending, grew to $1.5 billion on June 30, 2021, increasing 5.9 percent during the second quarter, 15.3 percent year-to-date and 26.4 percent since June 30, 2020. Residential real estate and consumer lending totaled $576.8 million on June 30, 2021, down 2.0 percent during the second quarter and 6.4 percent year-to-date, while increasing 0.8 percent from June 30, 2020.

PPP balances paid down to $40.4 million on June 30, 2021 from a peak of $98.5 million on September 30, 2020. Mortgage warehouse lines of credit, sourced solely from a participation arrangement with a large regional bank, have paid down to $105.3 million on June 30, 2021 from a peak of $252.5 million on June 30, 2020.

Total deposits grew to $2.73 billion on June 30, 2021, increasing 0.2 percent during the second quarter, 5.1 percent year-to-date and 11.3 percent since June 30, 2020. Core deposits grew to $2.63 billion on June 30, 2021, increasing 0.8 percent during the second quarter, 6.9 percent year-to-date and 16.4 percent June 30, 2020.

Total shareholders’ equity was $315.2 million as of June 30, 2021 compared to $281.6 million at December 31, 2020. During the second quarter of 2021, Summit raised $15.0 million in growth capital through a previously disclosed private placement of 6% Fixed-Rate Non-Cumulative Perpetual Preferred Stock.

Tangible book value per common share increased to $19.01 as of June 30, 2021 compared to $17.50 at December 31, 2020 and $16.63 at June 30, 2020. Summit had 12,963,057 outstanding common shares at the end of the second quarter of 2021 compared to 12,942,004 at year end 2020.

As announced in the first quarter of 2020, the Board of Directors authorized the open market repurchase of up to 750,000 shares of the issued and outstanding shares of Summit's common stock. The timing and quantity of stock purchases under this repurchase plan are at the discretion of management. During the second quarter of 2021, no shares of our common stock were repurchased under the Plan.

Asset Quality

Net loan charge-offs (“NCOs”) were $202,000, or 0.03 percent of average loans annualized, in the second quarter of 2021. NCOs of $189,000 represented 0.03 percent of average loan annualized in the linked quarter, and the Company recorded net recoveries of $51,000 in the year-ago period.

Summit’s provision for credit losses was $1.0 million in the second quarter of 2021, while its allowance for loan credit losses was $33.9 million, representing 1.39 percent of total loans and 148.2 percent of nonperforming loans, as of June 30, 2021. The provision for credit losses was $1.5 million and $3.0 million for the linked and year-ago quarters, respectively. The allowance for loan credit losses stood at $34.0 million or 1.39 percent of total loans on March 31, 2021 and $27.2 million or 1.22 percent at June 30, 2020.

As of June 30, 2021, nonperforming assets (“NPAs”), consisting of nonperforming loans, foreclosed properties and repossessed assets, totaled $36.0 million, or 1.10 percent of assets, compared to NPAs of $39.3 million, or 1.21 percent of assets at the linked quarter-end and $30.5 million, or 1.07 percent of assets at the end of second quarter 2020. A loan relationship totaling $9.5 million impacted by the COVID-19 pandemic and on nonaccrual at June 30, 2021 was restored to full accrual status in July 2021.

The aggregate balances of loans the Company has modified as result of the COVID-19 pandemic continued to decline to $8.7 million or 0.4 percent of total loans on June 30, 2021, down from $33.9 million, or 1.4 percent on March 31, 2021, as summarized in the following table.

			Loan Balances Modified Due to COVID-19 as of 6/30/2021
Dollars in thousands	Total Loan Balance as of 6/30/2021		Loans Modified to Interest Only Payments		Loans Modified to Payment Deferral		Total Loans Modified		Percentage of Loans Modified
Hospitality Industry	$	116,745	$	866	$	-	$	866	0.7	%
Non-Owner Occupied Retail Stores		143,931		7,223		-		7,223	5.0	%
Owner-Occupied Retail Stores		141,703		-		-		-	0.0	%
Restaurants		11,895		-		-		-	0.0	%
Oil & Gas Industry		17,158		-		-		-	0.0	%
Other Commercial Loans		1,315,074		581		-		581	0.0	%
Total Commercial Loans		1,746,506		8,670		-		8,670	0.5	%
Residential 1-4 Family Personal		279,970		-		-		-	0.0	%
Residential 1-4 Family Rentals		189,963		-		-		-	0.0	%
Home Equity Loans		72,956		-		-		-	0.0	%
Total Residential Real Estate Loans		542,889		-		-		-	0.0	%
Consumer Loans		32,731		-		-		-	0.0	%
Mortgage Warehouse Loans		105,288		-		-		-	0.0	%
Credit Cards and Overdrafts		2,356		-		-		-	0.0	%
Total Loans	$	2,429,770	$	8,670	$	-	$	8,670	0.4	%

About the Company

Summit Financial Group, Inc. is the $3.27 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, and Kentucky. 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 MySummit.bank, and 46 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.

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 the COVID-19 pandemic, 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; and changes in the national and local economies. We undertake no obligation to revise these statements following the date of this press release.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary (unaudited)
Q2 2021 vs Q2 2020
		For the Quarter Ended					Percent
Dollars in thousands		6/30/2021		6/30/2020			Change
Statements of Income
	Interest income
	Loans, including fees	$	27,697		$	25,624	8.1	%
	Securities		2,202			2,253	-2.3	%
	Other		56			60	-6.7	%
	Total interest income		29,955			27,937	7.2	%
	Interest expense
	Deposits		2,136			4,186	-49.0	%
	Borrowings		1,008			685	47.2	%
	Total interest expense		3,144			4,871	-35.5	%
	Net interest income		26,811			23,066	16.2	%
	Provision for credit losses		1,000			3,000	n/m
	Net interest income after provision
	for credit losses		25,811			20,066	28.6	%
	Noninterest income
	Trust and wealth management fees		683			582	17.4	%
	Mortgage origination revenue		898			641	40.1	%
	Service charges on deposit accounts		1,093			882	23.9	%
	Bank card revenue		1,519			1,087	39.7	%
	Realized securities gains		127			-	n/a
	Bank owned life insurance and annuity income		275			275	0.0	%
	Other income		120			131	-8.4	%
	Total noninterest income		4,715			3,598	31.0	%
	Noninterest expense
	Salaries and employee benefits		8,230			7,655	7.5	%
	Net occupancy expense		1,131			977	15.8	%
	Equipment expense		1,598			1,360	17.5	%
	Professional fees		428			417	2.6	%
	Advertising and public relations		138			93	48.4	%
	Amortization of intangibles		382			410	-6.8	%
	FDIC premiums		488			110	343.6	%
	Bank card expense		685			560	22.3	%
	Foreclosed properties expense, net of losses		746			240	210.8	%
	Acquisition-related expense		454			637	-28.7	%
	Other expenses		2,756			2,738	0.7	%
	Total noninterest expense		17,036			15,197	12.1	%
	Income before income taxes		13,490			8,467	59.3	%
	Income taxes		2,930			1,518	93.0	%
	Net income		10,560			6,949	52.0	%
	Preferred stock dividends		139			-	n/a
	Net income applicable to common shares	$	10,421		$	6,949	50.0	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary (unaudited)
Q2 2021 vs Q2 2020
		For the Quarter Ended						Percent
		6/30/2021			6/30/2020			Change
Per Share Data
	Earnings per common share
	Basic	$	0.80		$	0.54		48.1	%
	Diluted	$	0.80		$	0.54		48.1	%
	Cash dividends per common share	$	0.17		$	0.17		0.0	%
	Common stock dividend payout ratio		21.2	%		31.7	%	-33.1	%
	Average common shares outstanding
	Basic		12,952,357			12,911,979		0.3	%
	Diluted		13,013,714			12,943,804		0.5	%
	Common shares outstanding at period end		12,963,057			12,922,045		0.3	%
Performance Ratios
	Return on average equity		13.67	%		10.75	%	27.2	%
	Return on average tangible equity		17.03	%		13.57	%	25.5	%
	Return on average tangible common equity		17.59	%		13.57	%	29.6	%
	Return on average assets		1.29	%		1.02	%	26.5	%
	Net interest margin (A)		3.55	%		3.68	%	-3.5	%
	Efficiency ratio (B)		49.09	%		51.97	%	-5.5	%

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

NOTE (B) – 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.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Six Month Performance Summary (unaudited)
2021 vs 2020
		For the Six Months Ended					Percent
Dollars in thousands		6/30/2021		6/30/2020			Change
Statements of Income
	Interest income
	Loans, including fees	$	55,234		$	50,859	8.6	%
	Securities		4,359			4,563	-4.5	%
	Other		123			158	-22.2	%
	Total interest income		59,716			55,580	7.4	%
	Interest expense
	Deposits		4,632			9,537	-51.4	%
	Borrowings		2,022			1,534	31.8	%
	Total interest expense		6,654			11,071	-39.9	%
	Net interest income		53,062			44,509	19.2	%
	Provision for credit losses		2,500			8,250	n/m
	Net interest income after provision
	for credit losses		50,562			36,259	39.4	%
	Noninterest income
	Trust and wealth management fees		1,321			1,247	5.9	%
	Mortgage origination revenue		1,896			855	121.8	%
	Service charges on deposit accounts		2,193			2,145	2.2	%
	Bank card revenue		2,860			2,020	41.6	%
	Realized securities gains		602			1,038	-42.0	%
	Bank owned life insurance and annuity income		573			539	6.3	%
	Other income		244			255	-4.3	%
	Total noninterest income		9,689			8,099	19.6	%
	Noninterest expense
	Salaries and employee benefits		16,665			15,160	9.9	%
	Net occupancy expense		2,305			1,860	23.9	%
	Equipment expense		3,180			2,789	14.0	%
	Professional fees		766			804	-4.7	%
	Advertising and public relations		228			244	-6.6	%
	Amortization of intangibles		787			839	-6.2	%
	FDIC premiums		765			275	178.2	%
	Bank card expense		1,259			1,063	18.4	%
	Foreclosed properties expense, net of losses		972			1,207	-19.5	%
	Acquisition-related expense		893			1,425	-37.3	%
	Other expenses		5,649			4,529	24.7	%
	Total noninterest expense		33,469			30,195	10.8	%
	Income before income taxes		26,782			14,163	89.1	%
	Income taxes		5,863			2,708	116.5	%
	Net income		20,919			11,455	82.6	%
	Preferred stock dividends		139			-	n/a
	Net income applicable to common shares	$	20,780		$	11,455	81.4	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Six Month Performance Summary (unaudited)
2021 vs 2020
		For the Six Months Ended						Percent
		6/30/2021			6/30/2020			Change
Per Share Data
	Earnings per common share
	Basic	$	1.61		$	0.89		80.9	%
	Diluted	$	1.60		$	0.88		81.8	%
	Cash dividends per common share	$	0.34		$	0.34		0.0	%
	Common stock dividend payout ratio		21.3	%		38.6	%	-44.9	%
	Average common shares outstanding
	Basic		12,947,228			12,940,590		0.1	%
	Diluted		13,007,889			12,983,146		0.2	%
	Common shares outstanding at period end		12,963,057			12,922,045		0.3	%
Performance Ratios
	Return on average equity		14.09	%		8.83	%	59.6	%
	Return on average tangible equity		17.75	%		10.99	%	61.5	%
	Return on average tangible common equity		18.06	%		10.99	%	64.3	%
	Return on average assets		1.30	%		0.78	%	66.7	%
	Net interest margin (A)		3.60	%		3.72	%	-3.2	%
	Efficiency ratio (B)		49.44	%		51.70	%	-4.4	%

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

NOTE (B) – 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.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Five Quarter Performance Summary (unaudited)
		For the Quarter Ended
Dollars in thousands		6/30/2021		3/31/2021			12/31/2020			9/30/2020			6/30/2020
Statements of Income
	Interest income
	Loans, including fees	$	27,697		$	27,538		$	27,897		$	26,807		$	25,624
	Securities		2,202			2,157			2,228			2,382			2,253
	Other		56			67			51			57			60
	Total interest income		29,955			29,762			30,176			29,246			27,937
	Interest expense
	Deposits		2,136			2,496			2,956			3,552			4,186
	Borrowings		1,008			1,014			1,014			928			685
	Total interest expense		3,144			3,510			3,970			4,480			4,871
	Net interest income		26,811			26,252			26,206			24,766			23,066
	Provision for credit losses		1,000			1,500			3,000			3,250			3,000
	Net interest income after provision
	for credit losses		25,811			24,752			23,206			21,516			20,066
	Noninterest income
	Trust and wealth management fees		683			638			626			622			582
	Mortgage origination revenue		898			998			1,163			780			641
	Service charges on deposit accounts		1,093			1,100			1,305			1,138			882
	Bank card revenue		1,519			1,341			1,237			1,237			1,087
	Realized securities gains		127			476			912			1,522			-
	Bank owned life insurance and annuity income		275			298			233			795			275
	Other income		120			123			301			113			131
	Total noninterest income		4,715			4,974			5,777			6,207			3,598
	Noninterest expense
	Salaries and employee benefits		8,230			8,435			8,250			7,869			7,655
	Net occupancy expense		1,131			1,174			1,046			1,057			977
	Equipment expense		1,598			1,581			1,502			1,474			1,360
	Professional fees		428			338			370			364			417
	Advertising and public relations		138			90			207			145			93
	Amortization of intangibles		382			405			409			412			410
	FDIC premiums		488			277			261			320			110
	Bank card expense		685			573			573			589			560
	Foreclosed properties expense, net		746			227			676			607			240
	Acquisition-related expenses		454			440			218			28			637
	Other expenses		2,756			2,893			3,094			2,644			2,738
	Total noninterest expense		17,036			16,433			16,606			15,509			15,197
	Income before income taxes		13,490			13,293			12,377			12,214			8,467
	Income tax expense		2,930			2,933			2,126			2,594			1,518
	Net income		10,560			10,360			10,251			9,620			6,949
	Preferred stock dividends		139			-			-			-			-
	Net income applicable to common shares	$	10,421		$	10,360		$	10,251		$	9,620		$	6,949

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Five Quarter Performance Summary (unaudited)
		For the Quarter Ended
		6/30/2021			3/31/2021			12/31/2020			9/30/2020			6/30/2020
Per Share Data
	Earnings per common share
	Basic	$	0.80		$	0.80		$	0.79		$	0.74		$	0.54
	Diluted	$	0.80		$	0.80		$	0.79		$	0.74		$	0.54
	Cash dividends per common share	$	0.17		$	0.17		$	0.17		$	0.17		$	0.17
	Common stock dividend payout ratio		21.2	%		20.6	%		21.5	%		22.9	%		31.7	%
	Average common shares outstanding
	Basic		12,952,357			12,942,099			12,932,768			12,922,158			12,911,979
	Diluted		13,013,714			13,002,062			12,980,041			12,949,584			12,943,804
	Common shares outstanding at period end		12,963,057			12,950,714			12,942,004			12,932,415			12,922,045
Performance Ratios
	Return on average equity		13.67	%		14.51	%		14.90	%		14.38	%		10.75	%
	Return on average tangible equity		17.03	%		18.49	%		18.70	%		18.12	%		13.57	%
	Return on average tangible common equity		17.59	%		18.49	%		18.70	%		18.12	%		13.57	%
	Return on average assets		1.29	%		1.31	%		1.37	%		1.31	%		1.02	%
	Net interest margin (A)		3.55	%		3.65	%		3.76	%		3.64	%		3.68	%
	Efficiency ratio (B)		49.09	%		49.79	%		49.38	%		48.95	%		51.97	%

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

NOTE (B) – 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.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Selected Balance Sheet Data (unaudited)
Dollars in thousands, except per share amounts		6/30/2021			3/31/2021			12/31/2020			9/30/2020			6/30/2020
Assets
	Cash and due from banks	$	18,707		$	20,732		$	19,522		$	16,257		$	16,572
	Interest bearing deposits other banks		176,282			155,865			80,265			92,729			26,218
	Debt securities, available for sale		345,742			311,384			286,127			297,989			322,539
	Debt securities, held to maturity		98,995			99,457			99,914			91,600			80,497
	Loans, net		2,395,885			2,418,029			2,379,907			2,222,450			2,192,541
	Property held for sale		13,170			13,918			15,588			17,831			17,954
	Premises and equipment, net		53,104			53,289			52,537			52,880			51,847
	Goodwill and other intangible assets		53,858			54,239			55,123			48,101			48,513
	Cash surrender value of life insurance policies and annuities		60,087			59,740			59,438			57,029			55,315
	Other assets		56,703			61,482			57,963			49,996			49,355
	Total assets	$	3,272,533		$	3,248,135		$	3,106,384		$	2,946,862		$	2,861,351
Liabilities and Shareholders' Equity
	Deposits	$	2,729,205		$	2,725,010		$	2,595,651		$	2,451,891		$	2,451,769
	Short-term borrowings		140,146			140,145			140,146			140,145			90,945
	Long-term borrowings and
	subordinated debentures		49,710			49,681			49,652			50,292			20,297
	Other liabilities		38,265			39,854			39,355			32,571			34,909
	Shareholders' equity - preferred		14,920			-			-			-			-
	Shareholders' equity - common		300,287			293,445			281,580			271,963			263,431
	Total liabilities and shareholders' equity	$	3,272,533		$	3,248,135		$	3,106,384		$	2,946,862		$	2,861,351
	Book value per common share	$	23.16		$	22.66		$	21.76		$	21.03		$	20.39
	Tangible book value per common share	$	19.01		$	18.47		$	17.50		$	17.31		$	16.63
	Tangible common equity to tangible assets		7.7	%		7.5	%		7.4	%		7.7	%		7.6	%

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Regulatory Capital Ratios (unaudited)
		6/30/2021	3/31/2021	12/31/2020	9/30/2020	6/30/2020
Summit Financial Group, Inc.
	CET1 Risk-based Capital	9.6%	9.3%	9.3%	9.9%	9.7%
	Tier 1 Risk-based Capital	10.9%	10.1%	10.0%	10.7%	10.5%
	Total Risk-based Capital	13.0%	12.1%	12.1%	12.9%	11.3%
	Tier 1 Leverage	8.9%	8.5%	8.6%	8.7%	9.0%
Summit Community Bank, Inc.
	CET1 Risk-based Capital	11.9%	11.1%	11.1%	11.8%	10.5%
	Tier 1 Risk-based Capital	11.9%	11.1%	11.1%	11.8%	10.5%
	Total Risk-based Capital	12.9%	12.0%	12.0%	12.7%	11.4%
	Tier 1 Leverage	9.7%	9.3%	9.5%	9.6%	9.0%

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Loan Composition (unaudited)
Dollars in thousands		6/30/2021		3/31/2021			12/31/2020			9/30/2020			6/30/2020
Commercial		$	326,468		$	348,022		$	306,885		$	350,985		$	323,788
Mortgage warehouse lines			105,288			187,995			251,810			243,730			252,472
Commercial real estate
Owner occupied			392,164			358,200			351,860			312,502			336,143
Non-owner occupied			784,415			735,594			685,565			618,624			593,167
Construction and development
Land and development			102,670			106,312			107,342			97,343			92,706
Construction			140,788			126,011			91,100			66,878			48,116
Residential real estate
Conventional			398,239			411,103			425,519			368,009			371,225
Jumbo			71,694			65,851			74,185			73,836			76,360
Home equity			72,956			77,684			81,588			82,991			88,929
Consumer			32,732			32,924			33,906			34,655			34,640
Other			2,356			2,375			2,393			2,251			2,161
Total loans, net of unearned fees			2,429,770			2,452,071			2,412,153			2,251,804			2,219,707
Less allowance for credit losses			33,885			34,042			32,246			29,354			27,166
Loans, net		$	2,395,885		$	2,418,029		$	2,379,907		$	2,222,450		$	2,192,541

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Deposit Composition (unaudited)
Dollars in thousands		6/30/2021		3/31/2021			12/31/2020			9/30/2020			6/30/2020
Core deposits
Non-interest bearing checking		$	503,097		$	505,264		$	440,819		$	420,070		$	443,190
Interest bearing checking			1,005,725			988,204			934,185			867,442			830,258
Savings			677,000			656,514			621,168			598,564			561,029
Time deposits			441,139			456,431			460,443			414,542			422,286
Total core deposits			2,626,961			2,606,413			2,456,615			2,300,618			2,256,763
Brokered time deposits			23,521			39,125			55,454			64,120			90,279
Other non-core time deposits			78,723			79,472			83,582			87,153			104,727
Total deposits		$	2,729,205		$	2,725,010		$	2,595,651		$	2,451,891		$	2,451,769

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Asset Quality Information (unaudited)
		For the Quarter Ended
Dollars in thousands		6/30/2021			3/31/2021				12/31/2020				9/30/2020				6/30/2020
	Gross loan charge-offs	$	343			$	354			$	434			$	1,259			$	218
	Gross loan recoveries		(141	)			(165	)			(195	)			(245	)			(269	)
	Net loan charge-offs/(recoveries)	$	202			$	189			$	239			$	1,014			$	(51	)
	Net loan charge-offs to average loans (annualized)		0.03	%			0.03	%			0.04	%			0.18	%			-0.01	%
	Allowance for loan credit losses	$	33,885			$	34,042			$	32,246			$	29,354			$	27,166
	Allowance for loan credit losses as a percentage
	of period end loans		1.39	%			1.39	%			1.34	%			1.30	%			1.22	%
	Allowance for credit losses on
	unfunded loan commitments	$	4,660			$	3,705			$	4,190			$	3,525			$	3,477
	Nonperforming assets:
	Nonperforming loans
	Commercial	$	968			$	848			$	525			$	553			$	754
	Commercial real estate		14,430				17,137				14,237				4,313				5,822
	Residential construction and development		621				626				235				2				14
	Residential real estate		6,800				6,667				5,264				5,104				5,873
	Consumer		38				54				74				31				29
	Other		-				-				-				-				35
	Total nonperforming loans		22,857				25,332				20,335				10,003				12,527
	Foreclosed properties
	Commercial real estate		2,281				2,281				2,581				2,500				1,774
	Commercial construction and development		3,146				3,884				4,154				4,154				4,511
	Residential construction and development		6,859				7,129				7,791				10,330				10,645
	Residential real estate		884				624				1,062				847				1,024
	Total foreclosed properties		13,170				13,918				15,588				17,831				17,954
	Other repossessed assets		-				-				-				-				-
	Total nonperforming assets	$	36,027			$	39,250			$	35,923			$	27,834			$	30,481
	Nonperforming loans to period end loans		0.94	%			1.03	%			0.84	%			0.44	%			0.56	%
	Nonperforming assets to period end assets		1.10	%			1.21	%			1.16	%			0.94	%			1.07	%
	Troubled debt restructurings
	Performing	$	20,799			$	20,462			$	21,375			$	22,232			$	22,117
	Nonperforming		1,235				3,828				3,127				2,988				3,003
	Total troubled debt restructurings	$	22,034			$	24,290			$	24,502			$	25,220			$	25,120

Loans Past Due 30-89 Days (unaudited)
		For the Quarter Ended
Dollars in thousands		6/30/2021		3/31/2021			12/31/2020			9/30/2020			6/30/2020
	Commercial	$	414		$	335		$	1		$	147		$	196
	Commercial real estate		733			508			274			1,740			1,231
	Construction and development		1,911			330			47			422			8
	Residential real estate		3,594			2,146			4,405			4,464			2,763
	Consumer		404			96			233			160			164
	Other		-			3			5			2			3
	Total	$	7,056		$	3,418		$	4,965		$	6,935		$	4,365

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q2 2021 vs Q1 2021 vs Q2 2020 (unaudited)
	Q2 2021									Q1 2021									Q2 2020
	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	$	2,455,757		$	27,593		4.51	%		$	2,355,705		$	27,419		4.72	%		$	2,118,158		$	25,466		4.84	%
Tax-exempt (2)		11,370			132		4.66	%			12,679			151		4.83	%			17,244			200		4.66	%
Securities
Taxable		285,092			1,351		1.90	%			266,289			1,295		1.97	%			248,792			1,453		2.35	%
Tax-exempt (2)		147,703			1,078		2.93	%			144,880			1,091		3.05	%			120,385			1,012		3.38	%
Interest bearing deposits other banks
and Federal funds sold		154,677			56		0.15	%			166,531			67		0.16	%			41,776			60		0.58	%
Total interest earning assets		3,054,599			30,210		3.97	%			2,946,084			30,023		4.13	%			2,546,355			28,191		4.45	%
Noninterest earning assets
Cash & due from banks		19,095									17,961									16,672
Premises & equipment		53,210									53,317									50,457
Other assets		170,470									167,343									140,355
Allowance for credit losses		(34,674	)								(32,706	)								(25,799	)
Total assets	$	3,262,700								$	3,151,999								$	2,728,040
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	995,673		$	371		0.15	%		$	960,190		$	394		0.17	%		$	764,852		$	369		0.19	%
Savings deposits		665,735			634		0.38	%			642,241			645		0.41	%			512,634			1,200		0.94	%
Time deposits		562,605			1,131		0.81	%			583,723			1,457		1.01	%			625,717			2,617		1.68	%
Short-term borrowings		140,146			464		1.33	%			140,146			469		1.36	%			95,744			499		2.10	%
Long-term borrowings and
subordinated debentures		49,694			544		4.39	%			49,664			545		4.45	%			20,299			186		3.69	%
Total interest bearing liabilities		2,413,853			3,144		0.52	%			2,375,964			3,510		0.60	%			2,019,246			4,871		0.97	%
Noninterest bearing liabilities
Demand deposits		503,116									451,957									417,992
Other liabilities		36,842									38,393									32,238
Total liabilities		2,953,811									2,866,314									2,469,476
Shareholders' equity - preferred		11,254									-									-
Shareholders' equity - common		297,635									285,685									258,564
Total liabilities and
shareholders' equity	$	3,262,700								$	3,151,999								$	2,728,040
NET INTEREST EARNINGS				$	27,066								$	26,513								$	23,320
NET INTEREST MARGIN							3.55	%								3.65	%								3.68	%
(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 $255,000, $261,000, and $254,000 for Q2 2021,
Q1 2021 and Q2 2020, respectively.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
YTD 2021 vs YTD 2020 (unaudited)
	YTD 2021									YTD 2020
	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	$	2,406,007		$	55,012		4.61	%		$	2,026,814		$	50,555		5.02	%
Tax-exempt (2)		12,021			281		4.71	%			16,059			385		4.82	%
Securities
Taxable		275,742			2,646		1.94	%			253,840			3,211		2.54	%
Tax-exempt (2)		146,300			2,168		2.99	%			95,313			1,710		3.61	%
Interest bearing deposits other banks
and Federal funds sold		160,592			123		0.15	%			38,712			159		0.83	%
Total interest earning assets		3,000,662			60,230		4.05	%			2,430,738			56,020		4.63	%
Noninterest earning assets
Cash & due from banks		18,592									15,548
Premises & equipment		53,263									48,303
Other assets		168,510									130,604
Allowance for loan losses		(33,696	)								(24,342	)
Total assets	$	3,207,331								$	2,600,851
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	978,029		$	765		0.16	%		$	704,404		$	1,449		0.41	%
Savings deposits		654,053			1,279		0.39	%			480,827			2,537		1.06	%
Time deposits		573,107			2,588		0.91	%			620,409			5,550		1.80	%
Short-term borrowings		140,146			933		1.34	%			107,675			1,129		2.11	%
Long-term borrowings and
subordinated debentures		49,679			1,089		4.42	%			20,301			405		4.01	%
		2,395,014			6,654		0.56	%			1,933,616			11,070		1.15	%
Noninterest bearing liabilities
Demand deposits		477,766									378,667
Other liabilities		37,614									29,106
Total liabilities		2,910,394									2,341,389
Shareholders' equity - preferred		5,658									-
Shareholders' equity - common		291,279									259,462
Total liabilities and
shareholders' equity	$	3,207,331								$	2,600,851
NET INTEREST EARNINGS				$	53,576								$	44,950
NET INTEREST MARGIN							3.60	%								3.72	%
(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%.
The tax equivalent adjustment resulted in an increase in interest income of $514,000 and $440,000 for the
YTD 2021 and YTD 2020 periods, respectively.

 

FAQ

What were Summit Financial Group's net income results for Q2 2021?

Summit Financial Group reported a net income of $10.4 million, or $0.80 per diluted share, for Q2 2021.

How did total loans perform in Q2 2021 for SMMF?

Total loans increased by 3.7% during Q2 2021, and 22% since June 30, 2020.

What was the net interest margin for Summit Financial Group in Q2 2021?

The net interest margin for Q2 2021 was 3.55%, down 10 basis points from the prior quarter.

Did Summit Financial Group announce any acquisitions in 2021?

Yes, Summit announced the acquisition of substantially all of MVB Bank’s Southern West Virginia operations.

What was the provision for credit losses for SMMF in Q2 2021?

The provision for credit losses for Q2 2021 was $1.0 million.