• Summit Financial Group Reports First Quarter 2022 EPS of $0.90 on Annualized Double-Digit Loan Growth and Record Net Interest Income

    Source: Nasdaq GlobeNewswire / 28 Apr 2022 06:00:01   America/New_York

    MOOREFIELD, W.Va., April 28, 2022 (GLOBE NEWSWIRE) -- Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ: SMMF) today reported continued strong financial results for the first quarter of 2022, including double-digit annualized growth in loans, record net interest income, sequential net interest margin (“NIM”) expansion, improving asset quality and low operating expenses.

    The Company, which serves commercial and individual clients across West Virginia, the Washington metropolitan area, Virginia and Kentucky through Summit Community Bank, Inc., reported net income applicable to common shares of $11.5 million, or $0.90 per diluted share, for the first quarter of 2022, $12.4 million, or $0.95 per diluted share, for the fourth quarter of 2021 and $10.4 million, or $0.80 per share, for the first quarter of 2021.

    “Summit’s growth markets and talented producers allowed us to efficiently deploy the bank’s ample liquidity, with sequential quarter net interest margin expansion and continued double-digit annual growth in commercial and total loans,” said H. Charles Maddy, III, President and Chief Executive Officer. “We remain confident in our ability to continue Summit’s record of execution with proven operating expense discipline, continued credit quality improvement, excellent in-market loan growth opportunities and a very strong commercial pipeline.”

    Highlights for Q1 2022

    • Total loans of $2.68 billion, excluding mortgage warehouse lines of credit and Paycheck Protection Program (“PPP”) lending, increased 6.2 percent, or 24.9 percent annualized, during the quarter and 21.6 percent since March 31, 2021.
    • Commercial loans excluding PPP lending increased 8.1 percent, or 32.3 percent annualized, during the quarter.
    • Net interest margin (“NIM”) increased 12 basis points to 3.61 percent from the linked quarter, as Summit remains strategically well positioned for a rising rate environment.
    • Net interest income increased 2.5 percent from the linked quarter and 12.6 percent from the year-ago period, primarily due to loan growth and lower funding costs.
    • Total noninterest expense decreased to $17.2 million in the quarter, down 4.1 percent from the linked quarter and up 4.7 percent from the year-ago quarter, as salary and benefits increases were largely offset by disciplined management of other operating costs.
    • Reduced annualized non-interest expense to 1.91 percent of average assets, down 11 basis points from the linked quarter and 18 basis points from the year-ago period.
    • Incurred $1.95 million provision for credit losses in the quarter increasing period-end allowance for loan credit losses to $32.6 million, or 1.14 percent of total loans and 278.0 percent of nonperforming loans.
    • Reduced foreclosed property held for sale by 30.0 percent during the quarter and 50.4 percent from the year-ago quarter to $6.9 million or 0.19 percent of assets at period end.
    • Reduced nonperforming assets (“NPAs”) to 0.51 percent of total assets at period end, excluding restructured assets, down 12 basis points during the quarter and 70 basis points from March 31, 2021.
    • Increased tangible book value per common share $0.25 during the quarter, despite unrealized net losses on debt securities available for sale (“AFS”) of $1.34 per common share (net of deferred income taxes) recorded in Other Comprehensive Income (“OCI”) partially offset by increases in the fair values of derivative financial instruments hedging against higher interest rates totaling $0.83 per common share (net of deferred income taxes) also recorded in OCI.

    Results from Operations

    Net interest income grew to a record $29.6 million in the first quarter of 2022, an increase of 2.5 percent from the linked quarter and 12.6 percent from the prior-year first quarter. NIM for first quarter of 2022 was 3.61 percent compared to 3.49 percent for the linked quarter and 3.65 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 3.57 percent for the first quarter of 2022, 3.45 percent for the linked quarter and 3.60 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 first quarter 2022 was $4.5 million compared to $6.0 million for the linked quarter and $5.0 million for the comparable period of 2021. The Company recorded realized securities losses on debt securities of $152,000 and $109,000 in the first quarter of 2022 and linked quarter, respectively, and gains of $476,000 in the year-ago quarter. In addition, the Company recognized a gain on equity investments of $372,000 in first quarter 2022 compared to $202,000 in the linked quarter.

    Mortgage origination revenue was $339,000 in the first quarter of 2022 compared to $482,000, excluding an $879,000 increase in the fair value of mortgage servicing rights, in the linked quarter. Mortgage origination revenue was $998,000 for the year-ago period.

    Excluding gains and losses on debt securities and equity investments and mortgage servicing rights fair value adjustments, noninterest income was $4.33 million in first quarter 2022 compared to $4.98 million in the linked quarter and $4.50 million in the year-ago quarter.

    Revenue from net interest income and noninterest income, excluding gains and losses on debt securities and equity investments and mortgage servicing rights fair value adjustments, grew 0.2 percent to $33.9 million for first quarter 2022 compared to $33.8 million for the linked quarter and increased 10.2 percent from $30.8 million in the year-ago quarter.

    Total noninterest expense decreased to $17.4 million in the first quarter of 2022, down 2.8 percent from $17.9 million in the linked quarter and up 6.0 percent from $16.4 million for the prior-year first quarter.

    Salary and benefit expenses of $9.7 million in the first quarter of 2022 increased from $9.0 million for the linked quarter and $8.4 million during the year-ago period. Higher group health insurance premiums and increased accruals for anticipated 2022 performance bonuses account for the primary reasons for the increases.

    The sequential-quarter reduction in total noninterest expense, on higher salary and benefits expenses, reflected reductions in most other categories of operating costs. Equipment expense of $1.84 million compared to $1.90 million for the linked quarter and $1.58 million for the year-ago period. Net occupancy expense of $1.24 million compared to $1.27 million for the linked quarter and $1.17 million for the year-ago period. Net gains in excess of expenses on foreclosed properties were $90,000 compared to net losses and expenses on foreclosed properties of $403,000 in the linked quarter and $227,000 in the year-ago period. Other expenses of $2.46 million compared to $3.25 million for the linked quarter and $2.89 million in the year-ago period. The changes in these other expenses include:

    • Fraud and robbery losses of $90,000 during the first quarter of 2022 compared to $190,000 and $117,000 in the linked and year-ago quarters, respectively;
    • Virginia franchise tax of $148,000 during the first quarter of 2022 compared to $228,000 and $90,000 in the linked and year-ago quarters, respectively;
    • Internet banking expenses of $342,000 during the first quarter of 2022 compared to $322,000 and $278,000 in the linked and year-ago quarters, respectively; and
    • Deferred director compensation plan-related income of $400,000 during the first quarter of 2022 compared to plan-related expense of $227,000 and $236,000 in the linked and year-ago quarters, respectively.

    Summit’s efficiency ratio was 49.44 percent in the first quarter of 2022 compared to 48.85 percent in the linked quarter and 49.54 percent for the year-ago period. Non-interest expense was 1.91 percent of average assets in the first quarter of 2022, compared to 2.02 percent during the linked quarter and 2.09 percent in the year-ago period.

    Balance Sheet

    At March 31, 2022, total assets were $3.64 billion, an increase of $67.0 million, or 1.9 percent, during the first quarter and $395.6 million, or 12.2 percent from March 31, 2021.

    Total loans net of unearned fees grew to $2.85 billion on March 31, 2022, increasing 3.2 percent during the quarter and 16.3 percent from March 31, 2021. Excluding PPP and mortgage warehouse lending, total loans grew to $2.68 billion on March 31, 2022, increasing 6.2 percent during the first quarter and 21.6 percent from March 31, 2021.

    Total commercial loans, including commercial and industrial (C&I) and commercial real estate (CRE) and excluding PPP lending, grew to $1.8 billion on March 31, 2022, increasing 8.1 percent during the first quarter and 33.3 percent from March 31, 2021.

    Residential real estate and consumer lending totaled $559.5 million on March 31, 2022, down 1.5 percent during the first quarter and 4.8 percent from March 31, 2021.

    PPP balances paid down to $7.9 million on March 31, 2022 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, were $164.9 million on March 31, 2022 compared to a peak of $252.5 million on June 30, 2020.

    Total deposits increased to $3.01 billion on March 31, 2022, up 2.2 percent during the first quarter and 10.4 percent from March 31, 2021. Core deposits increased to $2.89 billion on March 31, 2022, up 1.6 percent during the first quarter and 11.0 percent from March 31, 2021. Non-interest bearing deposit accounts grew $60.0 million or 10.5 percent in the first quarter of 2022 and $123.7 million or 24.5 percent since March 31, 2021. Interest bearing checking accounts grew $7.67 million or 0.7 percent in the first quarter of 2022 and $146.8 million or 14.9 percent since March 31, 2021. Savings accounts grew $3.91 million or 0.6 percent in the first quarter of 2022 and $45.6 million or 6.9 percent since March 31, 2021. Core time deposits declined $24.6 million or 5.5 percent in the first quarter of 2022 and $29.4 million or 6.4 percent since March 31, 2021.

    Total shareholders’ equity was $330.3 million as of March 31, 2022 compared to $293.4 million at March 31, 2021 and $327.5 million at December 31, 2021.

    Tangible book value per common share (“TBVPS”) increased to $19.79 as of March 31, 2022 from $19.54 at December 31, 2021. Unrealized net losses on debt securities AFS of $1.34 per common share (net of deferred income taxes) recorded in OCI during the quarter resulting from increased market interest rates negatively impacted TBVPS, but were partially offset by increased fair values of interest rate caps and swaps held as hedges against higher interest rates totaling $0.83 per common share (net of deferred income taxes), also recorded in OCI.

    Summit had 12,753,094 outstanding common shares at the end of the first quarter of 2022 compared to 12,743,125 at year-end 2021.

    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, of which 323,577 shares have been repurchased to date. The timing and quantity of stock purchases under this repurchase plan are at the discretion of management. During the first quarter of 2022, no shares of Summit’s common stock were repurchased under the Plan.

    Asset Quality

    Net loan charge-offs (“NCOs”) were $509,000, or 0.07 percent of average loans annualized, in the first quarter of 2022. NCOs of $193,000 represented 0.03 percent of average loans annualized in the linked quarter, and $189,000 or 0.03 percent of average loans annualized for first quarter 2021.

    Summit recorded a $1.95 million provision for credit losses in the first quarter of 2022, reflecting reserve build to support our substantial growth in both loans and unfunded loan commitments, partially offset by reserve reductions due to improving forecasted economic factors. The provision for credit losses was $1.50 million for both the linked and year-ago quarters.

    Summit’s allowance for loan credit losses was $32.6 million on March 31, 2022, $32.3 million at the end of the linked quarter and $34.0 million on March 31, 2021. The allowance increased $325,000 as the impact of improving forecasted economic factors and improved loss experience served to substantially offset the additional provisions for credit losses resulting from the significant volumes of new loans.

    Summit’s allowance for credit losses on unfunded loan commitments was $8.39 million on March 31, 2022, $7.28 million at the end of the linked quarter, and $3.71 million on March 31, 2021. The allowance for credit losses on unfunded loan commitments increased $1.12 million during the most recent quarter, principally as result of the recent strong volumes of construction loan commitments having a higher historical loss ratio than do our other loans as a whole.

    The allowance for loan credit losses stood at 1.14 percent of total loans at March 31, 2022 compared to 1.17 percent at year-end 2021 and 1.39 percent at March 31, 2021. The allowance was 278.0 percent of nonperforming loans at March 31, 2022, compared to 254.4 percent at year-end 2021 and 134.4 percent at March 31, 2021.

    As of March 31, 2022, NPAs consisting of nonperforming loans, foreclosed properties and repossessed assets, totaled $18.6 million, or 0.51 percent of assets, compared to $22.6 million, or 0.63 percent of assets at the end 2021 and $39.3 million or 1.21 percent of assets on March 31, 2021.

    About the Company

    Summit Financial Group, Inc. is the $3.64 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 MySummitBank.com and 45 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)
    Q1 2022 vs Q1 2021
        
      For the Quarter EndedPercent
    Dollars in thousands3/31/20223/31/2021Change
    Statements of Income   
     Interest income   
     Loans, including fees$30,224 $27,5389.8%
     Securities 2,623  2,15721.6%
     Other 46  67-31.3%
     Total interest income 32,893  29,76210.5%
     Interest expense   
     Deposits 1,727  2,496-30.8%
     Borrowings 1,612  1,01459.0%
     Total interest expense 3,339  3,510-4.9%
     Net interest income 29,554  26,25212.6%
     Provision for credit losses 1,950  1,50030.0%
     Net interest income after provision for credit losses 27,604  24,75211.5%
         
     Noninterest income   
     Trust and wealth management fees 757  63818.7%
     Mortgage origination revenue 339  998-66.0%
     Service charges on deposit accounts 1,401  1,10027.4%
     Bank card revenue 1,491  1,34111.2%
     Gains on equity investments 372  -n/a
     Realized gains/(losses) on debt securities (152) 476-131.9%
     Bank owned life insurance and annuity income 283  298-5.0%
     Other income 54  123-56.1%
     Total noninterest income 4,545  4,974-8.6%
     Noninterest expense   
     Salaries and employee benefits 9,700  8,43515.0%
     Net occupancy expense 1,242  1,1745.8%
     Equipment expense 1,843  1,58116.6%
     Professional fees 362  3387.1%
     Advertising and public relations 172  9091.1%
     Amortization of intangibles 378  405-6.7%
     FDIC premiums 390  27740.8%
     Bank card expense 714  57324.6%
     Foreclosed properties expense, net of (gains)/losses (90) 227-139.6%
     Acquisition-related expense 29  440-93.4%
     Other expenses 2,459  2,893-15.0%
     Total noninterest expense 17,199  16,4334.7%
     Income before income taxes 14,950  13,29312.5%
     Income taxes 3,257  2,93311.0%
     Net income 11,693  10,36012.9%
     Preferred stock dividends 225  -n/a
         
     Net income applicable to common shares$11,468 $10,36010.7%



    SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)  
    Quarterly Performance Summary (unaudited)   
    Q1 2022 vs Q1 2021  
         
      For the Quarter EndedPercent
      3/31/20223/31/2021Change
    Per Share Data   
     Earnings per common share   
     Basic$0.90 $0.80 12.5%
     Diluted$0.90 $0.80 12.5%
         
     Cash dividends per common share$0.18 $0.17 5.9%
     Common stock dividend payout ratio 19.7% 20.6%-4.8%
         
     Average common shares outstanding   
     Basic 12,745,297  12,942,099 -1.5%
     Diluted 12,801,903  13,002,062 -1.5%
         
     Common shares outstanding at period end 12,753,094  12,950,714 -1.5%
         
    Performance Ratios   
     Return on average equity 14.20% 14.51%-2.1%
     Return on average tangible equity (C) 18.02% 18.49%-2.5%
     Return on average tangible common equity (D) 18.74% 18.49%1.4%
     Return on average assets 1.30% 1.31%-0.8%
     Net interest margin (A) 3.61% 3.65%-1.1%
     Efficiency ratio (B) 49.44% 49.54%-0.2%
         

    NOTES

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

    (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.

    (C) – Return on average tangible equity = (Net income + Amortization of intangibles [after-tax]) / (Average shareholders’ equity – Average intangible assets).

    (D) – Return on average tangible common equity = (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 thousands3/31/202212/31/20219/30/20216/30/20213/31/2021
    Statements of Income     
     Interest income     
     Loans, including fees$30,224 $28,979 $28,416 $27,697 $27,538
     Securities 2,623  2,763  2,348  2,202  2,157
     Other 46  75  118  56  67
     Total interest income 32,893  31,817  30,882  29,955  29,762
     Interest expense     
     Deposits 1,727  1,718  1,832  2,136  2,496
     Borrowings 1,612  1,267  1,013  1,008  1,014
     Total interest expense 3,339  2,985  2,845  3,144  3,510
     Net interest income 29,554  28,832  28,037  26,811  26,252
     Provision for credit losses 1,950  1,500  -  1,000  1,500
     Net interest income after provision for credit losses 27,604  27,332  28,037  25,811  24,752
                    
     Noninterest income     
     Trust and wealth management fees 757  847  718  683  638
     Mortgage origination revenue 339  1,361  742  898  998
     Service charges on deposit accounts 1,401  1,501  1,338  1,093  1,100
     Bank card revenue 1,491  1,528  1,509  1,519  1,341
     Gains on equity investments 372  202  -  -  -
     Realized gains/(losses) on debt securities, net (152) (109) (68) 127  476
     Bank owned life insurance and annuity income 283  293  160  275  298
     Other income 54  330  168  120  123
     Total noninterest income 4,545  5,953  4,567  4,715  4,974
                    
     Noninterest expense     
     Salaries and employee benefits 9,700  8,977  8,745  8,230  8,435
     Net occupancy expense 1,242  1,265  1,254  1,131  1,174
     Equipment expense 1,843  1,902  1,908  1,598  1,581
     Professional fees 362  438  374  428  338
     Advertising and public relations 172  216  254  138  90
     Amortization of intangibles 378  387  390  382  405
     FDIC premiums 390  330  354  488  277
     Bank card expense 714  703  705  685  573
     Foreclosed properties expense, net of (gains)/losses (90) 403  370  746  227
     Acquisition-related expenses 29  57  273  454  440
     Other expenses 2,459  3,250  2,716  2,756  2,893
     Total noninterest expense 17,199  17,928  17,343  17,036  16,433
                    
     Income before income taxes 14,950  15,357  15,261  13,490  13,293
     Income tax expense 3,257  2,777  3,023  2,930  2,933
                    
     Net income 11,693  12,580  12,238  10,560  10,360
     Preferred stock dividends 225  225  225  139  -
           
     Net income applicable to common shares$11,468 $12,355 $12,013 $10,421 $10,360



    SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
    Five Quarter Performance Summary (unaudited)
          
      For the Quarter Ended
      3/31/202212/31/20219/30/20216/30/20213/31/2021
    Per Share Data     
     Earnings per common share     
     Basic$0.90 $0.96 $0.93 $0.80 $0.80 
     Diluted$0.90 $0.95 $0.92 $0.80 $0.80 
           
     Cash dividends per common share$0.18 $0.18 $0.18 $0.17 $0.17 
     Common stock dividend payout ratio 19.7% 18.5% 19.1% 21.2% 20.6%
           
     Average common shares outstanding     
     Basic 12,745,297  12,916,555  12,964,575  12,952,357  12,942,099 
     Diluted 12,801,903  12,976,181  13,018,672  13,013,714  13,002,062 
           
     Common shares outstanding at period end 12,753,094  12,743,125  12,976,693  12,963,057  12,950,714 
           
    Performance Ratios     
     Return on average equity 14.20% 15.48% 15.30% 13.67% 14.51%
     Return on average tangible equity (C) 18.02% 19.72% 19.51% 17.03% 18.49%
     Return on average tangible common equity (D) 18.74% 20.55% 20.34% 17.59% 18.49%
     Return on average assets 1.30% 1.42% 1.42% 1.29% 1.31%
     Net interest margin (A) 3.61% 3.49% 3.47% 3.55% 3.65%
     Efficiency ratio (B) 49.44% 48.85% 49.52% 48.82% 49.54%

    NOTES

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

    (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.

    (C) – Return on average tangible equity = (Net income + Amortization of intangibles [after-tax]) / (Average shareholders’ equity – Average intangible assets).

    (D) – Return on average tangible common equity = (Net income applicable to common shares + 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 3/31/202212/31/20219/30/20216/30/20213/31/2021
     Assets      
     Cash and due from banks$18,404 $21,006 $21,247 $18,707 $20,732 
     Interest bearing deposits other banks 42,853  57,452  189,862  176,282  155,865 
     Debt securities, available for sale 374,855  401,103  424,741  345,742  311,384 
     Debt securities, held to maturity 97,589  98,060  98,528  98,995  99,457 
     Equity investments 20,574  20,202  -  -  - 
     Other investments 10,974  11,304  10,649  10,661  10,776 
     Loans, net 2,817,998  2,729,093  2,521,704  2,395,885  2,418,029 
     Property held for sale 6,900  9,858  12,450  13,170  13,918 
     Premises and equipment, net 55,713  56,371  56,818  53,104  53,289 
     Goodwill and other intangible assets 63,212  63,590  63,977  53,858  54,239 
     Cash surrender value of life insurance policies and annuities 70,825  60,613  60,241  60,087  59,740 
     Derivative financial instruments 24,455  11,187  10,380  9,885  13,923 
     Other assets                 39,339                  36,880                  38,354                  36,157                  36,783 
     Total assets$         3,643,691 $         3,576,719 $         3,508,951 $         3,272,533 $         3,248,135 
     Liabilities and Shareholders' Equity      
     Deposits$3,008,063 $2,943,089 $2,955,940 $2,729,205 $2,725,010 
     Short-term borrowings 140,146  140,146  140,146  140,146  140,145 
     Long-term borrowings and subordinated debentures 123,260  123,159  49,739  49,710  49,681 
     Other liabilities 41,756  42,852  39,837  38,265  39,854 
     Shareholders' equity - preferred 14,920  14,920  14,920  14,920  - 
     Shareholders' equity - common               315,546                312,553                308,369                300,287                293,445 
     Total liabilities and shareholders' equity$         3,643,691 $         3,576,719 $         3,508,951 $         3,272,533 $         3,248,135 
           
     Book value per common share$24.74 $24.53 $23.76 $23.16 $22.66 
     Tangible book value per common share (A)$19.79 $19.54 $18.83 $19.01 $18.47 
     Tangible common equity to tangible assets (B) 7.0% 7.1% 7.1% 7.7% 7.5%

     

    NOTES
    (A) – Tangible book value per share = (Common shareholders’ equity – Intangible assets) / Common shares outstanding.
    (B) – Tangible common equity to tangible assets = (Common shareholders’ equity – Intangible assets) / (Total assets – Intangible assets).



    SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)   
    Regulatory Capital Ratios (unaudited)
           
      3/31/202212/31/20219/30/20216/30/20213/31/2021
    Summit Financial Group, Inc.     
     CET1 Risk-based Capital 8.3% 8.4% 9.0% 9.6% 9.3%
     Tier 1 Risk-based Capital 9.3% 9.5% 10.2% 10.9% 10.1%
     Total Risk-based Capital 13.5% 13.8% 12.1% 13.0% 12.1%
     Tier 1 Leverage 8.4% 8.3% 8.4% 8.9% 8.5%
           
    Summit Community Bank, Inc.     
     CET1 Risk-based Capital 11.6% 11.9% 11.2% 11.9% 11.1%
     Tier 1 Risk-based Capital 11.6% 11.9% 11.2% 11.9% 11.1%
     Total Risk-based Capital 12.5% 12.8% 12.1% 12.9% 12.0%
     Tier 1 Leverage 10.5% 10.4% 9.2% 9.7% 9.3%



    SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)    
    Loan Composition (unaudited)      
           
    Dollars in thousands3/31/202212/31/20219/30/20216/30/20213/31/2021 
           
    Commercial$447,482$ 365,301$ 317,855$ 326,468$ 348,022 
    Mortgage warehouse lines 164,895  227,869  161,628  105,288  187,995 
    Commercial real estate      
    Owner occupied 491,059  484,708  439,202  392,164  358,200 
    Non-owner occupied 910,174  866,031  835,071  784,415  735,594 
    Construction and development      
    Land and development 103,203  100,805  99,718  102,670  106,312 
    Construction 171,383  146,038  127,432  140,788  126,011 
    Residential real estate      
    Conventional 375,240  384,794  394,889  398,239  411,103 
    Jumbo 81,443  79,108  71,977  71,694  65,851 
    Home equity 70,770  72,112  71,496  72,956  77,684 
    Consumer 32,095  31,923  32,284  32,732  32,924 
    Other 2,877  2,702  2,558  2,356  2,375 
    Total loans, net of unearned fees 2,850,621  2,761,391  2,554,110  2,429,770  2,452,071 
    Less allowance for credit losses 32,623  32,298  32,406  33,885  34,042 
    Loans, net$2,817,998 $2,729,093 $2,521,704 $2,395,885 $2,418,029 
           
    Unfunded loan commitments$840,705 $688,493 $627,461 $535,587 $556,910 



    SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
    Deposit Composition (unaudited)
          
    Dollars in thousands3/31/202212/31/20219/30/20216/30/20213/31/2021
    Core deposits     
    Non-interest bearing checking $629,002 $568,986 $575,542 $503,097 $505,264
    Interest bearing checking  1,134,964  1,127,298  1,121,028  1,005,725  988,204
    Savings  702,069  698,156  693,686  677,000  656,514
    Time deposits  427,076  451,713  467,024  441,139  456,431
    Total core deposits  2,893,111  2,846,153  2,857,280  2,626,961  2,606,413
          
    Brokered time deposits  32,755  14,677  14,671  23,521  39,125
    Other non-core time deposits  82,197  82,259  83,989  78,723  79,472
    Total deposits $3,008,063 $2,943,089 $2,955,940 $2,729,205 $2,725,010



    SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)   
    Asset Quality Information (unaudited)
           
      For the Quarter Ended
    Dollars in thousands3/31/202212/31/20219/30/20216/30/20213/31/2021
           
     Gross loan charge-offs$618 $282 $528 $343 $354 
     Gross loan recoveries (109) (89) (158) (141) (165)
     Net loan charge-offs$509 $193 $370 $202 $189 
           
     Net loan charge-offs to average loans (annualized) 0.07% 0.03% 0.06% 0.03% 0.03%
           
     Allowance for loan credit losses$32,623 $32,298 $32,406 $33,885 $34,042 
     Allowance for loan credit losses as a percentage of period end loans 1.14% 1.17% 1.27% 1.39% 1.39%
           
     Allowance for credit losses on unfunded loan commitments ("ULC")$8,392 $7,275 $5,860 $4,660 $3,705 
     Allowance for credit losses on ULC as a percentage of period end ULC 1.00% 1.06% 0.93% 0.87% 0.67%
           
     Nonperforming assets:     
     Nonperforming loans     
     Commercial$433 $740 $459 $968 $848 
     Commercial real estate 4,765  4,603  4,643  14,430  17,137 
     Residential construction and development 968  1,560  448  621  626 
     Residential real estate 5,549  5,772  5,514  6,800  6,667 
     Consumer 20  21  48  38  54 
     Other -  -  -  -  - 
     Total nonperforming loans 11,735  12,696  11,112  22,857  25,332 
     Foreclosed properties     
     Commercial real estate 1,251  1,389  2,192  2,281  2,281 
     Commercial construction and development 2,332  2,332  2,925  3,146  3,884 
     Residential construction and development 3,018  5,561  6,712  6,859  7,129 
     Residential real estate 299  576  621  884  624 
     Total foreclosed properties 6,900  9,858  12,450  13,170  13,918 
     Other repossessed assets -  -  -  -  - 
     Total nonperforming assets$18,635 $22,554 $23,562 $36,027 $39,250 
           
     Nonperforming loans to period end loans 0.41% 0.46% 0.44% 0.94% 1.03%
     Nonperforming assets to period end assets 0.51% 0.63% 0.67% 1.10% 1.21%
           
     Troubled debt restructurings     
     Performing$18,971 $18,887 $20,535 $20,799 $20,462 
     Nonperforming 1,822  2,039  1,141  1,235  3,828 
     Total troubled debt restructurings$20,793 $20,926 $21,676 $22,034 $24,290 



    SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
    Loans Past Due 30-89 Days (unaudited)
           
    Dollars in thousands3/31/202212/31/20219/30/20216/30/20213/31/2021
           
     Commercial $388 $751 $304 $414 $335 
     Commercial real estate  1,446  683  281  733  508 
     Construction and development  645  45  1,215  1,911  330 
     Residential real estate  3,407  3,552  2,643  3,594  2,146 
     Consumer  69  190  193  404  96 
     Other  28  22  1  -  3 
     Total $5,983 $5,243 $4,637 $7,056 $3,418 



    SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)          
    Average Balance Sheet, Interest Earnings & Expenses and Average Rates       
    Q1 2022 vs Q4 2021 vs Q1 2021 (unaudited)          
     Q1 2022 Q4 2021 Q1 2021 
     AverageEarnings /Yield / AverageEarnings /Yield / AverageEarnings /Yield / 
    Dollars in thousandsBalancesExpenseRate BalancesExpenseRate BalancesExpenseRate 
                 
    ASSETS            
    Interest earning assets            
    Loans, net of unearned interest (1)           
    Taxable$2,771,842 $30,178  4.42% $2,640,975 $28,916  4.34% $2,355,705 $27,419  4.72% 
    Tax-exempt (2) 5,369  58  4.38%  6,888  81  4.67%  12,679  151  4.83% 
    Securities            
    Taxable 320,170  1,657  2.10%  349,541  1,806  2.05%  266,289  1,295  1.97% 
    Tax-exempt (2) 180,473  1,223  2.75%  177,757  1,212  2.71%  144,880  1,091  3.05% 
    Interest bearing deposits other banks and Federal funds sold 72,883  46  0.26%  132,471  75  0.22%  166,531  67  0.16% 
    Total interest earning assets 3,350,737  33,162  4.01%  3,307,632  32,090  3.85%  2,946,084  30,023  4.13% 
                 
    Noninterest earning assets            
    Cash & due from banks 19,226     21,037     17,961    
    Premises & equipment 56,043     56,566     53,317    
    Intangible assets 63,429     63,810     54,926    
    Other assets 142,719     126,635     112,417    
    Allowance for credit losses (32,462)    (32,691)    (32,706)   
    Total assets$3,599,692    $3,542,989    $3,151,999    
                 
     LIABILITIES AND SHAREHOLDERS' EQUITY          
                 
    Liabilities            
    Interest bearing liabilities            
    Interest bearing demand deposits$1,135,068 $465  0.17%  1,128,637  319  0.11% $960,190 $394  0.17% 
    Savings deposits 700,115  573  0.33%  692,893  590  0.34%  642,241  645  0.41% 
    Time deposits 542,360  689  0.52%  560,140  809  0.57%  583,723  1,457  1.01% 
    Short-term borrowings 140,230  373  1.08%  140,146  365  1.03%  140,146  469  1.36% 
    Long-term borrowings and subordinated debentures 123,203  1,239  4.08%  86,509  902  4.14%  49,664  545  4.45% 
    Total interest bearing liabilities 2,640,976  3,339  0.51%  2,608,325  2,985  0.45%  2,375,964  3,510  0.60% 
                 
    Noninterest bearing liabilities            
    Demand deposits 586,903     568,764     451,957    
    Other liabilities 42,493     40,905     38,393    
    Total liabilities 3,270,372     3,217,994     2,866,314    
                 
    Shareholders' equity - preferred 14,921     14,920     -    
    Shareholders' equity - common 314,399     310,075     285,685    
                 
    Total liabilities and shareholders' equity$3,599,692    $3,542,989    $3,151,999    
                 
    NET INTEREST EARNINGS $29,823   $29,105   $26,513  
                 
    NET INTEREST MARGIN    3.61%     3.49%     3.65% 
                 
    (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 $269,000, $273,000, and $260,000 for Q1 2022, Q4 2021 and Q1 2021, respectively.



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

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