Form 8-K - Current report

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): January 25, 2024

 

Summit Financial Group, Inc.

(Exact name of registrant as specified in its charter)

West Virginia	0-16587	55-0672148
(State or other jurisdiction of	(Commission File Number)	(IRS Employer
incorporation or organization)		Identification No.)

 

300 North Main Street
Moorefield West Virginia		26836
(Address of principal executive offices)		(Zip Code)

 

[phone]

(Registrant's telephone number, including area code)

 

Not Applicable

(Former name or address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class			Trading Symbol(s)			Name of each exchange on which registered
Common Stock, Par Value $2.50 per share			SMMF			NASDAQ Global Select Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

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Item 2.02. Results of Operations and Financial Condition.

 

On January 25, 2024, Summit Financial Group, Inc. (“Summit”) issued a News Release announcing its earnings for the three months and year ended December 31, 2023. This News Release is furnished as Exhibit 99.1 and is incorporated herein by reference.

 

 

 

Item 9.01 Financial Statements and Exhibits

 

(d) Exhibits

 

Exhibit Number	Description
99.1	News Release issued on January 25, 2024
104	Cover Page Interactive Data File (Embedded within the Inline XBRL document)

 

 

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SIGNATURES

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	SUMMIT FINANCIAL GROUP, INC.
Date: January 25, 2024	By: /s/ Julie R. Markwood
	Julie R. Markwood
	Executive Vice President and Chief Accounting Officer

 

 

EXHIBIT 99.1

 

 

FOR RELEASE 6:00 AM ET, January 25, 2024

 

Contact:    Robert S. Tissue, Executive Vice President & CFO

Telephone:    [phone]

Email:        [e-mail]

 

SUMMIT FINANCIAL GROUP REPORTS EARNINGS OF $1.11 PER SHARE FOR FOURTH QUARTER 2023

 

MOOREFIELD, WV – January 25, 2024 (GLOBE NEWSWIRE) – Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ: SMMF) today reported financial results for the fourth quarter of 2023, highlighting robust core operating performance marked by continued notable strength in its net interest margin. The Company’s continued success underscores its position as an exceptional community bank, reflecting a sound strategy and solid operational execution.

 

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

 

Key Highlights for the Fourth Quarter and Year 2023

 

●	Our pending merger with Burke & Herbert Financial Services Corp. (“Burke & Herbert”) was approved by both Burke & Herbert’s and Summit’s shareholders on December 6, 2023. The transaction is expected to close in late Q1 2024 following receipt of Federal regulatory approval.

 

●

Tangible Book Value Per Common Share (“TBVPCS”) increased by $1.67 to $23.89 during the fourth quarter of 2023, representing a 7.5 percent increase. This increase was primarily due to retained earnings and the increase in the fair value of available for sale securities reflected in accumulated other comprehensive loss. For 2023, TBVPCS increased by $2.19.

 

●	Our net interest margin (“NIM”) decreased 12 basis points to 3.76 percent from the linked quarter.  For the year 2023, NIM increased 11 basis points.

 

●	The fourth quarter saw a modest increase in total loans, excluding mortgage warehouse lines of credit and acquired loans, registering an increase of 2.85 percent (11.4 percent annualized). This performance was further underscored by year-over-year growth of 8.3 percent.

 

 

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●	Summit's core deposits experienced modest decline in the fourth quarter of 2023, down 1.1 percent from the linked quarter and, excluding acquired Provident State Bank, Inc. (“PSB”) deposits, increased 1.5 percent during full-year 2023.

 

●	The Company’s provision for credit losses totaled $1.50 million in the fourth quarter of 2023 compared to $1.25 million in the linked quarter.

 

●	Summit’s efficiency ratio was 47.33 percent compared to 47.15 percent in the linked quarter, indicating optimized use of resources.  For full year 2023, the efficiency ratio was 47.51 percent compared to 47.76 percent in 2022.

 

●

Annualized non-interest expense ratio decreased to 2.05 percent of average assets from 2.10 percent in the previous quarter and increased from 1.92 percent in the same quarter last year.  Excluding acquisition-related expenses, annualized non-interest expense would have been 1.98 percent of average assets in Q4 2023 and 2.01 percent of average assets for Q3 2023.

 

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

 

Results from Operations

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

Balance Sheet

 

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

 

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

 

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

 

 

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

 

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

 

Asset Quality

 

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

 

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

 

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

 

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

 

About the Company

 

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

 

 

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Non-GAAP Financial Measures

 

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

 

Forward-Looking Statements

 

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

 

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

 

 

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SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)

Quarterly Performance Summary (unaudited) -- Q4 2023 vs Q4 2022

 

		For the Quarter Ended								Percent
Dollars in thousands		12/31/2023				12/31/2022				Change
Statements of Income
Interest income
Loans, including fees		$	59,856			$	43,589				37.3	%
Securities			6,538				4,181				56.4	%
Other			122				70				74.3	%
Total interest income			66,516				47,840				39.0	%
Interest expense
Deposits			21,417				10,194				110.1	%
Borrowings			4,306				3,293				30.8	%
Total interest expense			25,723				13,487				90.7	%
Net interest income			40,793				34,353				18.7	%
Provision for credit losses			1,500				1,500				0.0	%
Net interest income after provision for credit losses			39,293				32,853				19.6	%
Noninterest income
Trust and wealth management fees			952				750				26.9	%
Mortgage origination revenue			65				286				-77.3	%
Service charges on deposit accounts			1,866				1,526				22.3	%
Bank card revenue			1,837				1,513				21.4	%
Net gains on equity investments			365				280				30.4	%
Net realized gains/(losses) on debt securities		15				(24		)		n/m
Bank owned life insurance and annuity income			499				367				36.0	%
Other income			202				167				21.0	%
Total noninterest income			5,801				4,865				19.2	%
Noninterest expense
Salaries and employee benefits			11,374				10,532				8.0	%
Net occupancy expense			1,554				1,328				17.0	%
Equipment expense			2,342				1,769				32.4	%
Professional fees			529				386				37.0	%
Advertising and public relations			432				280				54.3	%
Amortization of intangibles			995				351				183.5	%
FDIC premiums			670				352				90.3	%
Bank card expense			809				679				19.1	%
Foreclosed properties expense, net of (gains)/losses			16				159				-89.9	%
Acquisition-related expense		839				81				n/m
Other expenses			4,347				2,932				48.3	%
Total noninterest expense			23,907				18,849				26.8	%
Income before income taxes			21,187				18,869				12.3	%
Income tax expense			4,590				3,783				21.3	%
Net income			16,597				15,086				10.0	%
Preferred stock dividends		225				225				n/a
Net income applicable to common shares		$	16,372			$	14,861				10.2	%

 

 

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SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)

Quarterly Performance Summary (unaudited) -- Q4 2023 vs Q4 2022

 

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

 

NOTES

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

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

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

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

 

 

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SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)

Annual Performance Summary (unaudited) -- 2023 vs 2022

 

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

 

 

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SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)

Annual Performance Summary (unaudited) -- 2023 vs 2022

 

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

 

NOTES

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

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

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

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

 

 

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SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)

Five Quarter Performance Summary (unaudited)

 

		For the Quarter Ended
Dollars in thousands		12/31/2023				9/30/2023				6/30/2023				3/31/2023				12/31/2022
Statements of Income
Interest income
Loans, including fees		$	59,856			$	58,102			$	54,413			$	45,485			$	43,589
Securities			6,538				6,357				6,247				4,819				4,181
Other			122				235				203				171				70
Total interest income			66,516				64,694				60,863				50,475				47,840
Interest expense
Deposits			21,417				19,924				17,851				14,000				10,194
Borrowings			4,306				3,497				2,699				2,286				3,293
Total interest expense			25,723				23,421				20,550				16,286				13,487
Net interest income			40,793				41,273				40,313				34,189				34,353
Provision for credit losses			1,500				1,250				8,000				1,500				1,500
Net interest income after provision for credit losses			39,293				40,023				32,313				32,689				32,853
Noninterest income
Trust and wealth management fees			952				819				854				811				750
Mortgage origination revenue			65				172				169				171				286
Service charges on deposit accounts			1,866				1,775				1,943				1,392				1,526
Bank card revenue			1,837				1,907				1,987				1,568				1,513
Net gains on equity investments			365				180				150				45				280
Net realized gains/(losses) on debt securities			15				(12	)			(211	)			(59	)			(24	)
Bank owned life insurance and annuity income			499				311				431				336				367
Other income			202				113				100				122				167
Total noninterest income			5,801				5,265				5,423				4,386				4,865
Noninterest expense
Salaries and employee benefits			11,374				11,959				12,156				10,807				10,532
Net occupancy expense			1,554				1,436				1,528				1,333				1,328
Equipment expense			2,342				2,361				2,361				2,030				1,769
Professional fees			529				400				471				376				386
Advertising and public relations			432				247				264				170				280
Amortization of intangibles			995				998				999				343				351
FDIC premiums			670				716				742				330				352
Bank card expense			809				972				951				696				679
Foreclosed properties expense, net of (gains)/losses			16				10				48				15				159
Acquisition-related expenses			839				1,110				4,163				331				81
Other expenses			4,347				3,953				3,641				2,968				2,932
Total noninterest expense			23,907				24,162				27,324				19,399				18,849
Income before income taxes			21,187				21,126				10,412				17,676				18,869
Income tax expense			4,590				4,794				2,203				3,575				3,783
Net income			16,597				16,332				8,209				14,101				15,086
Preferred stock dividends			225				225				225				225				225
Net income applicable to common shares		$	16,372			$	16,107			$	7,984			$	13,876			$	14,861

 

 

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SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)

Five Quarter Performance Summary (unaudited)

 

		For the Quarter Ended
		12/31/2023				9/30/2023				6/30/2023				3/31/2023				12/31/2022
Per Share Data
Earnings per common share
Basic		$	1.12			$	1.10			$	0.54			$	1.09			$	1.16
Diluted		$	1.11			$	1.09			$	0.54			$	1.08			$	1.16
Cash dividends per common share		$	0.22			$	0.22			$	0.20			$	0.20			$	0.20
Common stock dividend payout ratio			19.5	%			19.8	%			36.7	%			18.1	%			16.9	%
Average common shares outstanding
Basic			14,676,383				14,672,176				14,668,923				12,783,851				12,775,703
Diluted			14,718,790				14,714,211				14,703,636				12,830,102				12,837,637
Common shares outstanding at period end			14,683,457				14,674,852				14,672,147				12,786,404				12,783,646
Performance Ratios
Return on average equity			15.74	%			15.66	%			7.99	%			15.55	%			17.50	%
Return on average tangible equity (C)			20.01	%			20.03	%			10.86	%			19.10	%			21.75	%
Return on average tangible common equity (D)			20.91	%			20.95	%			11.37	%			20.10	%			22.96	%
Return on average assets			1.42	%			1.42	%			0.73	%			1.43	%			1.54	%
Net interest margin (A)			3.76	%			3.88	%			3.89	%			3.83	%			3.80	%
Efficiency ratio (B)			47.33	%			47.15	%			47.90	%			48.00	%			46.40	%

 

NOTES

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

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

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

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

 

 

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SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)

Selected Balance Sheet Data (unaudited)

 

Dollars in thousands, except per share amounts		12/31/2023				9/30/2023				6/30/2023				3/31/2023				12/31/2022
Assets
Cash and due from banks		$	21,834			$	23,159			$	23,341			$	16,488			$	16,469
Interest bearing deposits other banks			30,398				36,398				39,902				54,328				28,248
Debt securities, available for sale			502,762				511,403				512,038				431,933				405,201
Debt securities, held to maturity			94,227				94,715				95,200				95,682				96,163
Equity investments			10,958				31,241				30,818				29,867				29,494
Other investments			21,130				19,579				16,014				12,696				16,029
Loans, net			3,633,522				3,551,686				3,506,880				3,059,099				3,043,919
Property held for sale			3,729				4,505				4,742				5,128				5,067
Premises and equipment, net			63,038				62,721				60,967				54,491				53,981
Goodwill and other intangible assets, net			74,430				75,425				76,423				61,807				62,150
Cash surrender value of life insurance policies and annuities			85,679				85,076				84,790				72,019				71,640
Derivative financial instruments			33,145				44,527				39,951				34,758				40,506
Other assets			59,470				63,773				61,204				49,111				47,825
Total assets		$	4,634,322			$	4,604,208			$	4,552,270			$	3,977,407			$	3,916,692
Liabilities and Shareholders' Equity
Deposits		$	3,715,148			$	3,754,495			$	3,735,034			$	3,299,846			$	3,169,879
Short-term borrowings			302,957				258,054				232,150				140,150				225,999
Long-term borrowings and subordinated debentures, net			124,008				123,892				123,776				123,660				123,543
Other liabilities			52,001				51,315				48,136				44,205				42,741
Total liabilities			4,194,114				4,187,756				4,139,096				3,607,861				3,562,162
Preferred stock and related surplus			14,920				14,920				14,920				14,920				14,920
Common stock and related surplus			129,990				130,508				130,227				90,939				90,696
Retained earnings			302,783				289,641				276,762				271,712				260,393
Accumulated other comprehensive loss			(7,485	)			(18,617	)			(8,735	)			(8,025	)			(11,479	)
Total shareholders' equity			440,208				416,452				413,174				369,546				354,530
Total liabilities and shareholders' equity		$	4,634,322			$	4,604,208			$	4,552,270			$	3,977,407			$	3,916,692
Book value per common share		$	28.96			$	27.36			$	27.14			$	27.73			$	26.57
Tangible book value per common share (A)		$	23.89			$	22.22			$	21.93			$	22.90			$	21.70
Tangible common equity to tangible assets (B)			7.7	%			7.2	%			7.2	%			7.5	%			7.2	%

 

NOTES

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

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

 

 

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SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)

Loan Composition (unaudited)

 

Dollars in thousands		12/31/2023				9/30/2023				6/30/2023				3/31/2023				12/31/2022
Commercial		$	503,842			$	511,951			$	511,457			$	498,268			$	501,844
Mortgage warehouse lines			108,848				114,734				118,785				86,240				130,390
Commercial real estate
Owner occupied			545,108				547,886				566,447				469,560				467,050
Non-owner occupied			1,254,337				1,217,029				1,193,927				1,036,358				1,004,368
Construction and development
Land and development			145,258				114,354				117,371				102,351				106,362
Construction			374,026				349,049				309,709				290,556				282,935
Residential real estate
Conventional			505,398				497,076				483,998				395,312				386,874
Jumbo			116,614				113,837				117,219				111,475				92,103
Home equity			81,126				81,967				86,050				70,167				71,986
Consumer			43,756				44,288				44,429				36,531				35,372
Other			3,299				6,748				3,169				3,117				3,534
Total loans, net of unearned fees			3,681,612				3,598,919				3,552,561				3,099,935				3,082,818
Less allowance for loan credit losses			48,090				47,233				45,681				40,836				38,899
Loans, net		$	3,633,522			$	3,551,686			$	3,506,880			$	3,059,099			$	3,043,919
Unfunded loan commitments		$	950,001			$	943,508			$	957,278			$	907,757			$	925,657

 

 

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SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)

Deposit Composition (unaudited)

 

Dollars in thousands		12/31/2023				9/30/2023				6/30/2023				3/31/2023				12/31/2022
Core deposits
Non interest bearing checking		$	593,576			$	630,055			$	679,139			$	552,716			$	553,616
Interest bearing checking			2,164,522				2,144,737				2,024,341				1,886,011				1,743,299
Savings			450,526				477,348				512,129				462,631				496,751
Time deposits			473,687				469,530				465,026				327,037				343,423
Total core deposits			3,682,311				3,721,670				3,680,635				3,228,395				3,137,089
Brokered deposits			32,837				32,825				54,399				71,451				32,790
Total deposits		$	3,715,148			$	3,754,495			$	3,735,034			$	3,299,846			$	3,169,879
Estimated uninsured deposits (A)		$	1,291,467			$	1,283,610			$	1,189,908			$	933,703			$	946,188

 

(A) - Excludes uninsured public funds otherwise secured or collateralized as required by law

 

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)

Regulatory Capital Ratios (unaudited)

 

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

 

 

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SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)

Asset Quality Information (unaudited)

 

		For the Quarter Ended
Dollars in thousands		12/31/2023				9/30/2023				6/30/2023				3/31/2023				12/31/2022
Gross loan charge-offs		$	444			$	227			$	4,009			$	164			$	250
Gross loan recoveries			(632	)			(108	)			(118	)			(227	)			(249	)
Net loan charge-offs (recoveries)		$	(188	)		$	119			$	3,891			$	(63	)		$	1
Net loan charge-offs (recoveries) to average loans (annualized)			-0.02	%			0.01	%			0.44	%			-0.01	%			0.00	%
Allowance for loan credit losses		$	48,090			$	47,233			$	45,681			$	40,836			$	38,899
Allowance for loan credit losses as a percentage of period end loans			1.31	%			1.31	%			1.29	%			1.32	%			1.26	%
Allowance for credit losses on unfunded loan commitments ("ULC'")		$	7,742			$	6,912			$	7,332			$	6,572			$	6,947
Allowance for credit losses on ULC as a percentage of period end ULC			0.81	%			0.73	%			0.81	%			0.72	%			0.75	%
Nonperforming assets:
Nonperforming loans
Commercial		$	1,088			$	783			$	254			$	402			$	93
Commercial real estate			5,675				6,402				5,970				1,700				1,750
Residential construction and development			708				750				772				813				851
Residential real estate			4,831				4,787				4,298				4,322				5,117
Consumer			137				124				46				65				12
Total nonperforming loans			12,439				12,846				11,340				7,302				7,823
Foreclosed properties
Commercial real estate			297				297				297				297				297
Commercial construction and development			1,253				2,187				2,187				2,187				2,187
Residential construction and development			1,924				1,924				2,161				2,293				2,293
Residential real estate			255				97				97				351				290
Total foreclosed properties			3,729				4,505				4,742				5,128				5,067
Total nonperforming assets		$	16,168			$	17,351			$	16,082			$	12,430			$	12,890
Nonperforming loans to period end loans			0.34	%			0.36	%			0.32	%			0.24	%			0.25	%
Nonperforming assets to period end assets			0.35	%			0.38	%			0.35	%			0.31	%			0.33	%

 

 

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)

Loans Past Due 30-89 Days (unaudited)

 

Dollars in thousands		12/31/2023				9/30/2023				6/30/2023				3/31/2023				12/31/2022
Commercial		$	1,152			$	3,300			$	1,006			$	463			$	3,168
Commercial real estate			1,711				781				513				1,000				641
Construction and development			570				793				161				3,459				317
Residential real estate			6,114				4,620				4,933				2,311				6,231
Consumer			401				440				389				252				253
Other			43				37				17				13				22
Total		$	9,991			$	9,971			$	7,019			$	7,498			$	10,632

 

 

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SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)

Average Balance Sheet, Interest Earnings & Expenses and Average Rates

Q4 2023 vs Q3 2023 vs Q4 2022 (unaudited)

 

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

(1) For purposes of this table, nonaccrual loans are included in average loan balances.

(2) Interest income on tax-exempt securities and loans has been adjusted assuming a Federal tax rate of 21% for all periods presented. The tax equivalent adjustment resulted in an increase in interest income of $389,000, $385,000 and $391,000 for Q4 2023, Q3 2023 and Q4 2022, respectively.

 

 

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SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)

Average Balance Sheet, Interest Earnings & Expenses and Average Rates

YTD 2023 vs YTD 2022 (unaudited)

 

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

 

 

(1) For purposes of this table, nonaccrual loans are included in average loan balances.

(2) Interest income on tax-exempt securities and loans has been adjusted assuming a Federal tax rate of 21% for all periods presented. The tax equivalent adjustment resulted in an increase in interest income of $1,539,000 and $1,273,000 for YTD 2023 and YTD 2022 periods, respectively.

 

 

Document And Entity Information	Jan. 25, 2024
Document Information [Line Items]
Entity, Registrant Name	Summit Financial Group, Inc.
Document, Type	8-K
Document, Period End Date	Jan. 25, 2024
Entity, Incorporation, State or Country Code	WV
Entity, File Number	0-16587
Entity, Tax Identification Number	55-0672148
Entity, Address, Address Line One	300 North Main Street
Entity, Address, City or Town	Moorefield
Entity, Address, State or Province	WV
Entity, Address, Postal Zip Code	26836
City Area Code	304
Local Phone Number	530-1000
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock
Trading Symbol	SMMF
Security Exchange Name	NASDAQ
Entity, Emerging Growth Company	false
Amendment Flag	false
Entity, Central Index Key	0000811808

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