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Summit Financial Group Reports First Quarter 2023 Earnings of $1.08 Per Share, Fueled by Continued Loan and Deposit Growth, and Improved Net Interest Margin
Source: Nasdaq GlobeNewswire / 27 Apr 2023 06:00:01 America/New_York
MOOREFIELD, W.Va., April 27, 2023 (GLOBE NEWSWIRE) -- Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ: SMMF) today reported financial results for the first quarter of 2023, revealing a strong earnings performance marked by notable growth in both loans and total revenue. The Company’s continued success underscores its position as a reliable partner in the financial services industry, 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 and Kentucky through Summit Community Bank, Inc., reported net income applicable to common shares of $13.9 million, or $1.08 per diluted share, for the first quarter of 2023, as compared to $14.9 million, or $1.16 per diluted share, for the fourth quarter of 2022 and $11.5 million, or $0.90 per diluted share, for the first quarter of 2022.
"We had a strong start to the year with impressive loan and deposit growth in the first quarter of 2023, increased tangible book value per common share, and improved net interest margin. We maintained strong credit quality and improved our provision for credit losses while achieving a low efficiency ratio through expense management,” noted H. Charles Maddy, III, President and Chief Executive Officer. “Despite challenging conditions, we remain optimistic about our growth prospects and are excited about our recent acquisition of PSB Holding Corp. and its bank subsidiary, Provident State Bank, Inc., which will enable us to expand our footprint in the Eastern Shore of Maryland and Delaware. I am confident that our bank is well-positioned to deliver long-term shareholder value through organic growth and strategic acquisitions."
Key Highlights for the First Quarter of 2023
- Despite concerns about the banking industry’s stability of deposit bases and adequacy of liquidity levels as result of recent bank failures, Summit’s core deposits grew 3.0 percent (11.8 percent annualized) during the first quarter of 2023.
- Total loans, excluding mortgage warehouse lines of credit and Paycheck Protection Program (“PPP”) lending, increased 2.1 percent (8.3 percent annualized) during the first quarter of 2023 and 12.5 percent since March 31, 2022.
- Tangible book value per common share (“TBVPS”) increased $1.20 (5.5 percent or 22.1 percent annualized) to $22.90 during the first quarter of 2023. This increase was due in part to unrealized net gains on debt securities available for sale, which added $0.59 per common share (net of deferred income taxes) recorded in Other Comprehensive Income (OCI), partially offset by a decrease in the fair values of derivative financial instruments hedging against higher interest rates, totaling $0.32 per common share (net of deferred income taxes) also recorded in OCI.
- Net interest margin (“NIM”) increased 3 basis points to 3.83 percent from the linked quarter and by 22 basis points from the prior-year quarter, driven by increased yields on interest-earning assets, which were partially offset by higher costs of deposits and other funding.
- Total noninterest expense increased 2.9 percent to $19.4 million in the first quarter of 2023, primarily due to acquisition-related expenses of $331,000 compared to $81,000 in the linked quarter. The annualized non-interest expense ratio increased slightly to 1.97 percent of average assets from 1.92 percent in the linked quarter and 1.91 percent in the year-ago period.
- The bank achieved an efficiency ratio of 48.00 percent, an improvement from 49.44 percent in the prior-year quarter.
- The bank incurred a provision for credit losses of $1.50 million in the first quarter of 2023, which increased the period-end allowance for loan credit losses to $40.8 million, or 1.32 percent of total loans and 559.2 percent of nonperforming loans.
- Nonperforming assets (“NPAs”) improved to 0.31 percent of total assets at period end, down 2 basis points during the quarter and down 20 basis points from the prior-year quarter.
- The Company completed its acquisition effective April 1, 2023, of PSB Holding Corp. and its bank subsidiary, Provident State Bank, Inc., headquartered in Preston, Maryland, expanding its footprint in the Eastern Shore of Maryland and Delaware.
Results from Operations
Net interest income totaled $34.2 million in the first quarter of 2023, an increase of 15.7 percent from the prior-year first quarter, and a slight decrease of 0.5 percent from the linked quarter. NIM for the first quarter 2023 was 3.83 percent compared to 3.80 percent for the linked quarter and 3.61 percent for the prior-year quarter. Excluding the impact of accretion and amortization of fair value acquisition accounting adjustments, Summit’s net interest margin would have been 3.82 percent for the first quarter of 2023, 3.78 percent for the linked quarter and 3.57 percent for the prior-year quarter.
Noninterest income, consisting primarily of service fee income from community banking activities and trust and wealth management fees, for first quarter 2023 was $4.39 million compared to $4.87 million for the linked quarter and $4.55 million for the comparable period of 2022. The Company recorded realized securities losses on debt securities of $59,000 in the first quarter of 2023 and $24,000 in the linked quarter. In addition, the Company recognized net gains on equity investments of $45,000 in the first quarter 2023 compared to $280,000 in the linked quarter.
Mortgage origination revenue decreased to $171,000 in the first quarter of 2023 compared to $286,000 in the linked quarter and $339,000 for the year-ago period reflecting continuing negative impact of higher interest rates on demand for new mortgage loans. Mortgage origination revenue included an increase in the fair value of mortgage servicing rights of $140,000 for the linked quarter.
Excluding gains and losses on debt securities and equity investments, noninterest income was $4.40 million for the first quarter of 2023 compared to $4.61 million for the fourth quarter of 2022 and $4.33 million in the first quarter of 2022.
Revenue from net interest income and noninterest income, excluding gains and losses on debt securities and equity investments, increased 13.9 percent from $33.9 million in the first quarter of 2022 and declined 1.0 percent to $38.6 million for first quarter 2023 compared to $39.0 million during the linked quarter.
Total noninterest expense increased to $19.4 million in the first quarter of 2023, up 2.9 percent from $18.8 million in the linked quarter and up 12.8 percent from $17.2 million for the prior-year first quarter.
Salary and benefit expenses of $10.8 million in the first quarter of 2023 increased from $10.5 million for the linked quarter and $9.70 million from the prior-year first quarter. This increase was primarily due to higher group health insurance premiums.
Acquisition-related expense were $331,000 for Q1 2023 compared to $81,000 for the linked quarter and $29,000 for Q1 2022.
Other expenses were very controlled at $2.97 million for Q1 2023 compared to $2.93 million for the linked quarter and $2.46 million in the year-ago period.
Summit’s efficiency ratio was 48.00 percent in the first quarter of 2023, down from 49.44 percent for the first quarter of 2022 and marginally higher compared to 46.40 percent in the linked quarter. Non-interest expense to average assets was 1.97 percent in first quarter of 2023 compared to 1.92 percent in the linked quarter and 1.91 percent in the year-ago quarter.
Balance Sheet
As of March 31, 2023, total assets were $4.0 billion, an increase of $60.7 million, or 1.6 percent since December 31, 2022.
Total loans net of unearned fees remained unchanged at $3.1 billion as of March 31, 2023, and December 31, 2022, and increased 8.7 percent from the first quarter of 2022. Excluding PPP and mortgage warehouse lending, total loans grew to $3.0 billion on March 31, 2023, up 2.1 percent (or 8.3 percent annualized) during the first quarter.
Total commercial loans, including commercial and industrial (C&I) and commercial real estate (CRE) but excluding PPP lending, remained at $2.0 billion on March 31, 2023, up 1.6 percent (6.3 percent annualized) during the first quarter.
Residential real estate and consumer lending totaled $613.5 million on March 31, 2023, up 4.6 percent (18.5 percent annualized) during the first quarter.
As of March 31, 2023, PPP balances were paid down to zero and mortgage warehouse lines of credit, sourced solely from a participation arrangement with a large regional bank, totaled $86.2 million compared to $130.4 million as of December 31, 2022, and $164.9 million at the year-ago period end.
Deposits totaled $3.3 billion on March 31, 2023, a 4.1 percent (or 16.4 percent annualized) increase during the first quarter. Core deposits increased 3.0 percent (11.8 percent annualized) during the first quarter 2023 to $3.2 billion. Interest bearing checking deposits grew $142.7 million or 8.2 percent during the quarter and was partially offset by $16.2 million or 5.5 percent decrease in core time deposits. Adjusted uninsured deposits (excluding uninsured public deposits otherwise secured or collateralized as required by law) were 29.3 percent of total deposits at March 31, 2023 compared to 29.8 percent at year-end 2022 and 24.8 percent at the year-ago period end.
Total shareholders’ equity was $369.5 million as of March 31, 2023, compared to $354.5 million at December 31, 2022. Summit paid a quarterly common dividend of $0.20 per share in the first quarter of 2023.
During the first quarter 2023, TBVPS increased $1.20 to $22.90. TBVPS was negatively impacted by unrealized net losses on interest rate caps and swaps held as hedges against higher interest rates totaling $0.32 per common share (net of deferred income taxes) recorded in OCI. However, these losses were more than offset by unrealized net gains on AFS debt securities of $0.59 per common share (net of deferred income taxes), also recorded in OCI, in the same period.
Summit had 12,786,404 outstanding common shares at March 31, 2023, compared to 12,783,646 at year-end 2022.
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 2023, no shares of Summit’s common stock were repurchased under the Plan.
Asset Quality
The Company recorded net loan recoveries of $63,000 during first quarter 2023 compared to net loan charge-offs (“NCOs”) of $1,000 in the fourth quarter of 2022. NCOs of $509,000 represented 0.07 percent of average loans annualized in the year-ago period.
Summit recorded a $1.50 million provision for credit losses in the first quarter of 2023, reflecting reserve build to support the Company’s loan growth and increasing forecasted economic uncertainty. The provision for credit losses was $1.50 million for the linked quarter and $1.95 million in the first quarter of 2022.
Summit’s allowance for loan credit losses was $40.8 million on March 31, 2023, $38.9 million at the end of the linked quarter, and $32.6 million on March 31, 2022.
The allowance for loan credit losses stood at 1.32 percent of total loans at March 31, 2023 compared to 1.26 percent at December 31, 2022. The allowance was 559.2 percent of nonperforming loans at March 31, 2023, compared to 497.2 percent at year-end 2022.
Summit’s allowance for credit losses on unfunded loan commitments was $6.57 million as of March 31, 2023, compared to $6.95 million at the end of the linked quarter. The allowance for credit losses on unfunded loan commitments decreased $375,000 during the most recent quarter, principally as a result of a change in the mix of unfunded commitments. Construction loan commitments, which on average have a higher historical loss ratio than do other loans, decreased, while commercial unfunded lines of credit, which carry a lower loss factor and lower utilization rates, increased.
As of March 31, 2023, nonperforming assets (“NPAs”), consisting of nonperforming loans, foreclosed properties, and repossessed assets, totaled $12.4 million, or 0.31 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 $4.0 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 53 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.
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.
Contact: Robert S. Tissue, Executive Vice President & CFO
Telephone: (304) 530-0552
Email: rtissue@summitfgi.comSUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) Quarterly Performance Summary (unaudited) Q1 2023 vs Q1 2022 For the Quarter Ended Percent Dollars in thousands 3/31/2023 3/31/2022 Change Statements of Income Interest income Loans, including fees $ 45,485 $ 30,224 50.5 % Securities 4,819 2,623 83.7 % Other 171 46 271.7 % Total interest income 50,475 32,893 53.5 % Interest expense Deposits 14,000 1,727 710.7 % Borrowings 2,286 1,612 41.8 % Total interest expense 16,286 3,339 387.8 % Net interest income 34,189 29,554 15.7 % Provision for credit losses 1,500 1,950 -23.1 % Net interest income after provision for credit losses 32,689 27,604 18.4 % Noninterest income Trust and wealth management fees 811 757 7.1 % Mortgage origination revenue 171 339 -49.6 % Service charges on deposit accounts 1,392 1,401 -0.6 % Bank card revenue 1,568 1,491 5.2 % Net gains on equity investments 45 372 -87.9 % Net realized losses on debt securities (59 ) (152 ) -61.2 % Bank owned life insurance and annuity income 336 283 18.7 % Other income 122 54 125.9 % Total noninterest income 4,386 4,545 -3.5 % Noninterest expense Salaries and employee benefits 10,807 9,700 11.4 % Net occupancy expense 1,333 1,242 7.3 % Equipment expense 2,030 1,843 10.1 % Professional fees 376 362 3.9 % Advertising and public relations 170 172 -1.2 % Amortization of intangibles 343 378 -9.3 % FDIC premiums 330 390 -15.4 % Bank card expense 696 714 -2.5 % Foreclosed properties expense, net of (gains)/losses 15 (90 ) -116.7 % Acquisition-related expense 331 29 1041.4 % Other expenses 2,968 2,459 20.7 % Total noninterest expense 19,399 17,199 12.8 % Income before income taxes 17,676 14,950 18.2 % Income taxes 3,575 3,257 9.8 % Net income 14,101 11,693 20.6 % Preferred stock dividends 225 225 n/a Net income applicable to common shares $ 13,876 $ 11,468 21.0 % SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) Quarterly Performance Summary (unaudited) Q1 2023 vs Q1 2022 For the Quarter Ended Percent 3/31/2023 3/31/2022 Change Per Share Data Earnings per common share Basic $ 1.09 $ 0.90 21.1 % Diluted $ 1.08 $ 0.90 20.0 % Cash dividends per common share $ 0.20 $ 0.18 11.1 % Common stock dividend payout ratio 18.1 % 19.7 % -8.1 % Average common shares outstanding Basic 12,783,851 12,745,297 0.3 % Diluted 12,830,102 12,801,903 0.2 % Common shares outstanding at period end 12,786,404 12,753,094 0.3 % Performance Ratios Return on average equity 15.55 % 14.20 % 9.5 % Return on average tangible equity (C)(E) 19.10 % 18.02 % 6.0 % Return on average tangible common equity (D)(E) 20.10 % 18.74 % 7.3 % Return on average assets 1.43 % 1.30 % 10.0 % Net interest margin (A) 3.83 % 3.61 % 6.1 % Efficiency ratio (B) 48.00 % 49.44 % -2.9 % 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 + Amortization of intangibles [after-tax]) / (Average common shareholders’ equity – Average intangible assets).
(E) – See Non-GAAP Financial Measures for additional information relating to the calculation of this item.
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) Five Quarter Performance Summary (unaudited) For the Quarter Ended Dollars in thousands 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Statements of Income Interest income Loans, including fees $ 45,485 $ 43,589 $ 38,784 $ 32,766 $ 30,224 Securities 4,819 4,181 3,497 2,752 2,623 Other 171 70 170 45 46 Total interest income 50,475 47,840 42,451 35,563 32,893 Interest expense Deposits 14,000 10,194 6,140 2,622 1,727 Borrowings 2,286 3,293 2,198 1,976 1,612 Total interest expense 16,286 13,487 8,338 4,598 3,339 Net interest income 34,189 34,353 34,113 30,965 29,554 Provision for credit losses 1,500 1,500 1,500 2,000 1,950 Net interest income after provision for credit losses 32,689 32,853 32,613 28,965 27,604 Noninterest income Trust and wealth management fees 811 750 725 745 757 Mortgage origination revenue 171 286 538 317 339 Service charges on deposit accounts 1,392 1,526 1,550 1,674 1,401 Bank card revenue 1,568 1,513 1,639 1,618 1,491 Net gains/(losses) on equity investments 45 280 283 (669 ) 372 Net realized losses on debt securities (59 ) (24 ) (242 ) (289 ) (152 ) Bank owned life insurance and annuity income 336 367 229 331 283 Other income 122 167 165 129 54 Total noninterest income 4,386 4,865 4,887 3,856 4,545 Noninterest expense Salaries and employee benefits 10,807 10,532 10,189 10,030 9,700 Net occupancy expense 1,333 1,328 1,301 1,258 1,242 Equipment expense 2,030 1,769 1,851 1,791 1,843 Professional fees 376 386 372 507 362 Advertising and public relations 170 280 276 165 172 Amortization of intangibles 343 351 354 355 378 FDIC premiums 330 352 292 190 390 Bank card expense 696 679 726 810 714 Foreclosed properties expense, net of (gains)/losses 15 159 26 141 (90 ) Acquisition-related expenses 331 81 - 4 29 Other expenses 2,968 2,932 3,834 2,358 2,459 Total noninterest expense 19,399 18,849 19,221 17,609 17,199 Income before income taxes 17,676 18,869 18,279 15,212 14,950 Income tax expense 3,575 3,783 3,856 3,198 3,257 Net income 14,101 15,086 14,423 12,014 11,693 Preferred stock dividends 225 225 225 225 225 Net income applicable to common shares $ 13,876 $ 14,861 $ 14,198 $ 11,789 $ 11,468 SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) Five Quarter Performance Summary (unaudited) For the Quarter Ended 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Per Share Data Earnings per common share Basic $ 1.09 $ 1.16 $ 1.11 $ 0.92 $ 0.90 Diluted $ 1.08 $ 1.16 $ 1.11 $ 0.92 $ 0.90 Cash dividends per common share $ 0.20 $ 0.20 $ 0.20 $ 0.18 $ 0.18 Common stock dividend payout ratio 18.1 % 16.9 % 17.7 % 19.1 % 19.7 % Average common shares outstanding Basic 12,783,851 12,775,703 12,766,473 12,754,724 12,745,297 Diluted 12,830,102 12,837,637 12,835,670 12,810,174 12,801,903 Common shares outstanding at period end 12,786,404 12,783,646 12,774,645 12,763,422 12,753,094 Performance Ratios Return on average equity 15.55 % 17.50 % 17.05 % 14.48 % 14.20 % Return on average tangible equity (C)(E) 19.10 % 21.75 % 21.33 % 18.28 % 18.02 % Return on average tangible common equity (D)(E) 20.10 % 22.96 % 22.20 % 19.00 % 18.74 % Return on average assets 1.43 % 1.54 % 1.51 % 1.30 % 1.30 % Net interest margin (A) 3.83 % 3.80 % 3.84 % 3.66 % 3.61 % Efficiency ratio (B) 48.00 % 46.40 % 47.95 % 47.45 % 49.44 % 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 + Amortization of intangibles [after-tax]) / (Average common shareholders’ equity – Average intangible assets).
(E) – See Non-GAAP Financial Measures for additional information relating to the calculation of this item.
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) Selected Balance Sheet Data (unaudited) Dollars in thousands, except per share amounts 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Assets Cash and due from banks $ 16,488 $ 16,469 $ 16,141 $ 17,921 $ 18,404 Interest bearing deposits other banks 54,328 28,248 29,510 31,680 42,853 Debt securities, available for sale 431,933 405,201 383,965 368,049 374,855 Debt securities, held to maturity 95,682 96,163 96,640 97,116 97,589 Equity investments 29,867 29,494 20,314 19,905 20,574 Other investments 12,696 16,029 18,105 18,329 10,974 Loans, net 3,059,099 3,043,919 3,038,377 2,941,813 2,817,998 Property held for sale 5,128 5,067 5,193 5,319 6,900 Premises and equipment, net 54,491 53,981 54,628 55,034 55,713 Goodwill and other intangible assets, net 61,807 62,150 62,502 62,856 63,212 Cash surrender value of life insurance policies and annuities 72,019 71,640 71,216 71,073 70,825 Derivative financial instruments 34,758 40,506 42,179 31,452 24,455 Other assets 49,111 47,825 48,529 42,252 39,339 Total assets $ 3,977,407 $ 3,916,692 $ 3,887,299 $ 3,762,799 $ 3,643,691 Liabilities and Shareholders' Equity Deposits $ 3,299,846 $ 3,169,879 $ 3,108,072 $ 2,975,304 $ 3,008,063 Short-term borrowings 140,150 225,999 273,148 291,447 140,146 Long-term borrowings and subordinated debentures, net 123,660 123,543 123,427 123,311 123,260 Other liabilities 44,205 42,741 40,978 38,846 41,756 Total liabilities 3,607,861 3,562,162 3,545,625 3,428,908 3,313,225 Preferred stock and related surplus 14,920 14,920 14,920 14,920 14,920 Common stock and related surplus 90,939 90,696 90,345 90,008 89,675 Retained earnings 271,712 260,393 248,084 236,438 226,944 Accumulated other comprehensive income (loss) (8,025 ) (11,479 ) (11,675 ) (7,475 ) (1,073 ) Total shareholders' equity 369,546 354,530 341,674 333,891 330,466 Total liabilities and shareholders' equity $ 3,977,407 $ 3,916,692 $ 3,887,299 $ 3,762,799 $ 3,643,691 Book value per common share $ 27.73 $ 26.57 $ 25.58 $ 24.99 $ 24.74 Tangible book value per common share (A)(C) $ 22.90 $ 21.70 $ 20.69 $ 20.07 $ 19.79 Tangible common equity to tangible assets (B)(C) 7.5 % 7.2 % 6.9 % 6.9 % 7.0 % NOTES
(A) – Tangible book value per share = (Common stock and related surplus plus Retained earnings plus Accumulated other comprehensive income/loss – Intangible assets) / Common shares outstanding.
(B) – Tangible common equity to tangible assets = (Common stock and related surplus plus Retained earnings plus Accumulated other comprehensive income/loss – Intangible assets) / (Total assets – Intangible assets).
(C) – See Non-GAAP Financial Measures for additional information relating to the calculation of this item.SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF) Loan Composition (unaudited) Dollars in thousands 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Commercial $ 498,268 $ 501,844 $ 512,771 $ 455,202 $ 447,482 Mortgage warehouse lines 86,240 130,390 194,740 171,399 164,895 Commercial real estate Owner occupied 469,560 467,050 473,298 502,152 491,059 Non-owner occupied 1,036,358 1,004,368 960,627 963,646 910,174 Construction and development Land and development 102,351 106,362 104,437 106,840 103,203 Construction 290,556 282,935 248,564 211,955 171,383 Residential real estate Conventional 395,312 386,874 382,203 377,980 375,240 Jumbo 111,475 92,103 87,449 79,803 81,443 Home equity 70,167 71,986 72,756 71,136 70,770 Consumer 36,531 35,372 35,116 33,816 32,095 Other 3,117 3,534 3,166 2,947 2,877 Total loans, net of unearned fees 3,099,935 3,082,818 3,075,127 2,976,876 2,850,621 Less allowance for loan credit losses 40,836 38,899 36,750 35,063 32,623 Loans, net $ 3,059,099 $ 3,043,919 $ 3,038,377 $ 2,941,813 $ 2,817,998 Unfunded loan commitments $ 907,757 $ 925,657 $ 889,854 $ 876,157 $ 840,705 SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF) Deposit Composition (unaudited) Dollars in thousands 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Core deposits Non-interest bearing checking $ 552,716 $ 553,616 $ 619,067 $ 600,791 $ 629,002 Interest bearing checking 1,886,011 1,743,299 1,475,643 1,238,368 1,134,964 Savings 462,631 496,751 582,922 645,099 702,069 Time deposits 278,410 294,630 338,668 386,562 427,076 Total core deposits 3,179,768 3,088,296 3,016,300 2,870,820 2,893,111 Brokered time deposits 71,451 32,790 32,778 32,767 32,755 Other non-core time deposits 48,627 48,793 58,994 71,717 82,197 Total deposits $ 3,299,846 $ 3,169,879 $ 3,108,072 $ 2,975,304 $ 3,008,063 Estimated uninsured deposits (A) $ 966,175 $ 946,188 $ 757,038 $ 762,466 $ 744,686 (A) - Excludes uninsured public funds otherwise secured or collateralized as required by law SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF) Regulatory Capital Ratios (unaudited) 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Summit Financial Group, Inc. CET1 Risk-based Capital 8.9 % 8.6 % 8.2 % 8.2 % 8.3 % Tier 1 Risk-based Capital 9.8 % 9.5 % 9.2 % 9.2 % 9.3 % Total Risk-based Capital 14.0 % 13.5 % 13.1 % 13.3 % 13.5 % Tier 1 Leverage 8.7 % 8.5 % 8.4 % 8.4 % 8.4 % Summit Community Bank, Inc. CET1 Risk-based Capital 11.9 % 11.6 % 11.3 % 11.4 % 11.6 % Tier 1 Risk-based Capital 11.9 % 11.6 % 11.3 % 11.4 % 11.6 % Total Risk-based Capital 13.1 % 12.6 % 12.2 % 12.4 % 12.5 % Tier 1 Leverage 10.6 % 10.4 % 10.3 % 10.4 % 10.5 % SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) Asset Quality Information (unaudited) For the Quarter Ended Dollars in thousands 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Gross loan charge-offs $ 164 $ 250 $ 265 $ 306 $ 618 Gross loan recoveries (227 ) (249 ) (257 ) (147 ) (109 ) Net loan charge-offs $ (63 ) $ 1 $ 8 $ 159 $ 509 Net loan charge-offs to average loans (annualized) -0.01 % 0.00 % 0.00 % 0.02 % 0.07 % Allowance for loan credit losses $ 40,836 $ 38,899 $ 36,750 $ 35,063 $ 32,623 Allowance for loan credit losses as a percentage of period end loans 1.32 % 1.26 % 1.19 % 1.18 % 1.14 % Allowance for credit losses on unfunded loan commitments ("ULC") $ 6,572 $ 6,947 $ 7,597 $ 7,792 $ 8,392 Allowance for credit losses on ULC as a percentage of period end ULC 0.72 % 0.75 % 0.85 % 0.89 % 1.00 % Nonperforming assets: Nonperforming loans Commercial $ 402 $ 93 $ 347 $ 345 $ 433 Commercial real estate 1,700 1,750 1,860 2,703 4,765 Residential construction and development 813 851 902 1,053 968 Residential real estate 4,322 5,117 6,083 6,799 5,549 Consumer 65 12 8 37 20 Total nonperforming loans 7,302 7,823 9,200 10,937 11,735 Foreclosed properties Commercial real estate 297 297 297 440 1,251 Commercial construction and development 2,187 2,187 2,332 2,332 2,332 Residential construction and development 2,293 2,293 2,293 2,293 3,018 Residential real estate 351 290 271 254 299 Total foreclosed properties 5,128 5,067 5,193 5,319 6,900 Other repossessed assets - - - - - Total nonperforming assets $ 12,430 $ 12,890 $ 14,393 $ 16,256 $ 18,635 Nonperforming loans to period end loans 0.24 % 0.25 % 0.30 % 0.37 % 0.41 % Nonperforming assets to period end assets 0.31 % 0.33 % 0.37 % 0.43 % 0.51 % SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) Loans Past Due 30-89 Days (unaudited) Dollars in thousands 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Commercial $ 463 $ 3,168 $ 1,329 $ 989 $ 388 Commercial real estate 1,000 641 1,550 4,084 1,446 Construction and development 3,459 317 236 821 645 Residential real estate 2,311 6,231 2,824 3,452 3,407 Consumer 252 253 216 196 69 Other 13 22 4 14 28 Total $ 7,498 $ 10,632 $ 6,159 $ 9,556 $ 5,983 SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) Average Balance Sheet, Interest Earnings & Expenses and Average Rates Q1 2023 vs Q4 2022 vs Q1 2022 (unaudited) Q1 2023 Q4 2022 Q1 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 $ 3,087,068 $ 45,421 5.97 % $ 3,100,595 $ 43,549 5.57 % $ 2,771,842 $ 30,178 4.42 % Tax-exempt (2) 6,086 81 5.40 % 4,525 52 4.56 % 5,369 58 4.38 % Securities Taxable 314,004 3,412 4.41 % 280,114 2,747 3.89 % 320,170 1,657 2.10 % Tax-exempt (2) 216,430 1,781 3.34 % 219,245 1,813 3.28 % 180,473 1,223 2.75 % Interest bearing deposits other banks and Federal funds sold 34,330 171 2.02 % 25,785 70 1.08 % 72,883 46 0.26 % Total interest earning assets 3,657,918 50,866 5.64 % 3,630,264 48,231 5.27 % 3,350,737 33,162 4.01 % Noninterest earning assets Cash & due from banks 17,387 16,892 19,226 Premises & equipment 54,112 54,431 56,043 Intangible assets 62,024 62,336 63,429 Other assets 190,533 191,926 142,719 Allowance for loan credit losses (39,507 ) (37,377 ) (32,462 ) Total assets $ 3,942,467 $ 3,918,472 $ 3,599,692 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Interest bearing liabilities Interest bearing demand deposits 1,819,505 10,796 2.41 % 1,615,275 7,848 1.93 % $ 1,135,068 $ 465 0.17 % Savings deposits 480,207 1,917 1.62 % 529,039 1,651 1.24 % 700,115 573 0.33 % Time deposits 389,252 1,287 1.34 % 399,101 695 0.69 % 542,360 689 0.52 % Short-term borrowings 166,365 824 2.01 % 276,823 1,868 2.68 % 140,230 373 1.08 % Long-term borrowings and subordinated debentures 123,599 1,462 4.80 % 123,488 1,425 4.58 % 123,203 1,239 4.08 % Total interest bearing liabilities 2,978,928 16,286 2.22 % 2,943,726 13,487 1.82 % 2,640,976 3,339 0.51 % Noninterest bearing liabilities Demand deposits 557,209 586,617 586,903 Other liabilities 43,508 43,378 42,493 Total liabilities 3,579,645 3,573,721 3,270,372 Shareholders' equity - preferred 14,920 14,920 14,921 Shareholders' equity - common 347,902 329,831 314,399 Total liabilities and shareholders' equity $ 3,942,467 $ 3,918,472 $ 3,599,692 NET INTEREST EARNINGS $ 34,580 $ 34,744 $ 29,823 NET INTEREST MARGIN 3.83 % 3.80 % 3.61 % (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 $391,000, $391,000, and $269,000 for Q1 2023, Q4 2022 and Q1 2022, respectively.