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Form 8-K SUMMIT FINANCIAL GROUP, For: Jul 29

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August 2, 2021 1:29 PM EDT

EXHIBIT 99.1
image_0.jpg

FOR RELEASE 6:00 AM ET, July 29, 2021

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

SUMMIT FINANCIAL GROUP REPORTS SECOND QUARTER 2021 EPS OF $0.80, GROWTH IN LOANS AND REVENUE, AND LOWER CREDIT COSTS

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

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

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

Highlights for Q2 2021

•Total loans, excluding mortgage warehouse lines of credit and PPP loans, increased 3.7 percent (14.8 percent annualized) during the quarter, 9.6 percent (19.2 percent annualized) year-to-date and 22.0 percent since June 30, 2020.

•Net interest income increased 2.1 percent compared to the linked quarter, and increased 16.2 percent from the year-ago period, primarily due to loan growth and lower funding costs.


•Net interest margin (“NIM”) decreased 10 basis points to 3.55 percent from the linked quarter, as yield on interest earning assets decreased 16 basis points while the cost of deposits and other funding declined 8 basis points.

•Recorded an efficiency ratio of 49.09 percent and maintained non-interest expense at 2.09 percent of average assets.

•Provision for credit losses declined to $1.0 million. Allowance for loan credit losses at period end equaled $33.9 million, or 1.39 percent of total loans and 148.2 percent of nonperforming loans.

•Announced the acquisition of substantially all of MVB Bank’s Southern West Virginia community banking operations including four full-service branches and two drive-up locations in and around the state’s largest cities of Charleston and Huntington, approximately $163.1 million in deposits, and $53.9 million in loans, with an accretive transaction that closed earlier this month.

•Raised $15.0 million in growth capital through a previously disclosed private placement of 6% Fixed-Rate Non-Cumulative Perpetual Preferred Stock to provide flexibility for executing our strategic plan.

Results from Operations

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

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

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

Total noninterest expense increased to $17.0 million in the second quarter of 2021, up 3.7 percent from $16.4 million in the linked quarter and 12.1 percent from $15.2 million for the prior-year second quarter, reflecting acquisition-related expenses primarily from Summit’s recently


completed Southern West Virginia branch acquisition, as well as ongoing operating costs for its April 2020 branch acquisitions in West Virginia’s Eastern Panhandle and its December 2020 purchase of Kentucky’s WinFirst Bank.

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

Balance Sheet

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

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

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

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

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

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

Tangible book value per common share increased to $19.01 as of June 30, 2021 compared to $17.50 at December 31, 2020 and $16.63 at June 30, 2020. Summit had 12,963,057


outstanding common shares at the end of the second quarter of 2021 compared to 12,942,004 at year end 2020.

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

Asset Quality

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

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

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

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


Loan Balances Modified Due to COVID-19 as of 6/30/2021
Dollars in thousandsTotal Loan Balance as of 6/30/2021Loans Modified to Interest Only PaymentsLoans Modified to Payment DeferralTotal Loans ModifiedPercentage
 of Loans
 Modified
Hospitality Industry$116,745 $866 $— $866 0.7 %
Non-Owner Occupied Retail Stores143,931 7,223 — 7,223 5.0 %
Owner-Occupied Retail Stores141,703 — — — — %
Restaurants11,895 — — — — %
Oil & Gas Industry17,158 — — — — %
Other Commercial Loans1,315,074 581 — 581 — %
Total Commercial Loans1,746,506 8,670 — 8,670 0.5 %
Residential 1-4 Family Personal279,970 — — — — %
Residential 1-4 Family Rentals189,963 — — — — %
Home Equity Loans72,956 — — — — %
Total Residential Real Estate Loans542,889 — — — — %
Consumer Loans32,731 — — — — %
Mortgage Warehouse Loans105,288 — — — — %
Credit Cards and Overdrafts2,356 — — — — %
Total Loans$2,429,770 $8,670 $— $8,670 0.4 %


About the Company

Summit Financial Group, Inc. is the $3.27 billion financial holding company for Summit Community Bank, Inc. Its talented bankers serve commercial and individual clients throughout West Virginia, the Washington, D.C. metropolitan area, Virginia, and Kentucky. Summit’s focus on in-market commercial lending and providing other business banking services in dynamic markets is designed to leverage its highly efficient operations and core deposits in strong legacy locations. Residential and consumer lending, trust and wealth management, and other retail financial services are offered through convenient digital and mobile banking platforms, including MySummit.bank, and 46 full-service branch locations. More information on Summit Financial Group, Inc. (NASDAQ: SMMF), headquartered in West Virginia’s Eastern Panhandle in Moorefield, is available at SummitFGI.com.

FORWARD-LOOKING STATEMENTS

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

Although we believe the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially. Factors that might cause such a difference include: the effect of the COVID-19 pandemic, including the negative impacts and disruptions on the communities we serve, and the domestic and global economy, which may have an adverse effect on our business; current and future economic and market conditions, including the effects of declines in housing prices, high unemployment rates, U.S. fiscal debt, budget and tax matters, geopolitical matters, and any slowdown in global economic growth; fiscal and monetary policies of the Federal Reserve; future provisions for credit losses on loans and debt securities; changes in nonperforming assets; changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; the successful integration of operations of our acquisitions; changes in banking laws and regulations; changes in tax laws; the impact of technological advances; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; and changes in the national and local economies. We undertake no obligation to revise these statements following the date of this press release.


SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary (unaudited) -- Q2 2021 vs Q2 2020
 For the Quarter Ended  Percent
Dollars in thousands6/30/20216/30/2020 Change
Statements of Income
 Interest income
    Loans, including fees $27,697 $25,624 8.1 %
    Securities 2,202 2,253 -2.3 %
    Other 56 60 -6.7 %
 Total interest income 29,955 27,937 7.2 %
 Interest expense
    Deposits 2,136 4,186 -49.0 %
    Borrowings 1,008 685 47.2 %
 Total interest expense 3,144 4,871 -35.5 %
 Net interest income 26,811 23,066 16.2 %
 Provision for credit losses1,000 3,000 n/m
 Net interest income after provision for credit losses25,811 20,066 28.6 %
 Noninterest income
    Trust and wealth management fees683 582 17.4 %
    Mortgage origination revenue898 641 40.1 %
    Service charges on deposit accounts1,093 882 23.9 %
    Bank card revenue1,519 1,087 39.7 %
    Realized securities gains127 — n/a
    Bank owned life insurance and annuity income275 275 — %
    Other income 120 131 -8.4 %
Total noninterest income4,715 3,598 31.0 %
 Noninterest expense
    Salaries and employee benefits8,230 7,655 7.5 %
    Net occupancy expense1,131 977 15.8 %
    Equipment expense1,598 1,360 17.5 %
    Professional fees428 417 2.6 %
    Advertising and public relations138 93 48.4 %
    Amortization of intangibles382 410 -6.8 %
    FDIC premiums488 110 343.6 %
    Bank card expense685 560 22.3 %
    Foreclosed properties expense, net746 240 210.8 %
    Acquisition-related expenses454 637 -28.7 %
    Other expenses2,756 2,738 0.7 %
Total noninterest expense17,036 15,197 12.1 %
 Income before income taxes13,490 8,467 59.3 %
 Income tax expense2,930 1,518 93.0 %
 Net income$10,560 $6,949 52.0 %
 Preferred stock dividends 139 — n/a
Net income applicable to common shares$10,421 $6,949 50.0 %



SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary (unaudited) -- Q2 2021 vs Q2 2020
 For the Quarter Ended  Percent
 6/30/20216/30/2020 Change
 Per Share Data
 Earnings per common share
    Basic$0.80 $0.54 48.1 %
    Diluted$0.80 $0.54 48.1 %
 Cash dividends$0.17 $0.17 — %
 Dividend payout ratio21.2 %31.7 %-33.1 %
 Average common shares outstanding
    Basic12,952,357 12,911,979 0.3 %
    Diluted13,013,714 12,943,804 0.5 %
 Common shares outstanding at period end12,963,057 12,922,045 0.3 %
 Performance Ratios
 Return on average equity13.67 %10.75 %27.2 %
 Return on average tangible equity17.03 %13.57 %25.5 %
 Return on average tangible common equity17.59 %13.57 %29.6 %
 Return on average assets1.29 %1.02 %26.5 %
 Net interest margin (A)3.55 %3.68 %-3.5 %
 Efficiency ratio (B)49.09 %51.97 %-5.5 %
NOTE (A) - Presented on a tax-equivalent basis assuming a federal tax rate of 21%.
NOTE (B) - Computed on a tax equivalent basis excluding acquisition-related expenses, gains/losses on sales of assets, write-downs of OREO properties to fair value and amortization of intangibles.



SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Six Month Performance Summary (unaudited) -- 2021 vs 2020
For the Six Months Ended Percent
Dollars in thousands6/30/20216/30/2020 Change
Statements of Income
 Interest income
    Loans, including fees $55,234 $50,859 8.6 %
    Securities 4,359 4,563 -4.5 %
    Other 123 158 -22.2 %
 Total interest income 59,716 55,580 7.4 %
 Interest expense
    Deposits 4,632 9,537 -51.4 %
    Borrowings 2,022 1,534 31.8 %
 Total interest expense 6,654 11,071 -39.9 %
 Net interest income 53,062 44,509 19.2 %
 Provision for credit losses2,500 8,250 n/m
 Net interest income after provision for credit losses50,562 36,259 39.4 %
 Noninterest income
    Trust and wealth management fees1,321 1,247 5.9 %
    Mortgage origination revenue1,896 855 121.8 %
    Service charges on deposit accounts2,193 2,145 2.2 %
    Bank card revenue2,860 2,020 41.6 %
    Realized securities gains602 1,038 -42.0 %
    Bank owned life insurance income and annuity income573 539 6.3 %
    Other income 244 255 -4.3 %
Total noninterest income9,689 8,099 19.6 %
 Noninterest expense
    Salaries and employee benefits16,665 15,160 9.9 %
    Net occupancy expense2,305 1,860 23.9 %
    Equipment expense3,180 2,789 14.0 %
    Professional fees766 804 -4.7 %
    Advertising and public relations228 244 -6.6 %
    Amortization of intangibles787 839 -6.2 %
    FDIC premiums765 275 178.2 %
    Bank card expense1,259 1,063 18.4 %
    Foreclosed properties expense, net972 1,207 -19.5 %
    Acquisition-related expenses893 1,425 -37.3 %
    Other expenses5,649 4,529 24.7 %
Total noninterest expense33,469 30,195 10.8 %
 Income before income taxes 26,782 14,163 89.1 %
 Income tax expense5,863 2,708 116.5 %
 Net income $20,919 $11,455 82.6 %
 Preferred stock dividends 139 — n/a
Net income applicable to common shares$20,780 $11,455 81.4 %



SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Six Month Performance Summary (unaudited) -- 2021 vs 2020
 For the Six Months Ended Percent
 6/30/20216/30/2020 Change
 Per Share Data
 Earnings per common share
    Basic$1.61 $0.89 80.9 %
    Diluted$1.60 $0.88 81.8 %
 Cash dividends$0.34 $0.34 — %
 Dividend payout ratio21.3 %38.6 %-44.9 %
 Average common shares outstanding
    Basic12,947,228 12,940,590 0.1 %
    Diluted13,007,889 12,983,146 0.2 %
 Common shares outstanding at period end12,963,057 12,922,045 0.3 %
 Performance Ratios
 Return on average equity14.09 %8.83 %59.6 %
 Return on average tangible equity17.75 %10.99 %61.5 %
 Return on average tangible common equity18.06 %10.99 %64.3 %
 Return on average assets1.30 %0.78 %66.7 %
 Net interest margin (A)3.60 %3.72 %-3.2 %
 Efficiency ratio (B)49.44 %51.70 %-4.4 %
NOTE (A) - Presented on a tax-equivalent basis assuming a federal tax rate of 21%.
NOTE (B) - Computed on a tax equivalent basis excluding acquisition-related expenses gains/losses on sales of assets, write-downs of OREO properties to fair value and amortization of intangibles.



SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Five Quarter Performance Summary (unaudited)
For the Quarter Ended
 Dollars in thousands6/30/20213/31/202112/31/20209/30/20206/30/2020
Statements of Income
 Interest income
    Loans, including fees $27,697 $27,538 $27,897 $26,807 $25,624 
    Securities 2,202 2,157 2,228 2,382 2,253 
    Other 56 67 51 57 60 
 Total interest income 29,955 29,762 30,176 29,246 27,937 
 Interest expense
    Deposits 2,136 2,496 2,956 3,552 4,186 
    Borrowings 1,008 1,014 1,014 928 685 
 Total interest expense 3,144 3,510 3,970 4,480 4,871 
    Net interest income26,811 26,252 26,206 24,766 23,066 
 Provision for credit losses1,000 1,500 3,000 3,250 3,000 
 Net interest income after provision for credit losses25,811 24,752 23,206 21,516 20,066 
 Noninterest income
    Trust and wealth management fees683 638 626 622 582 
    Mortgage origination revenue898 998 1,163 780 641 
    Service charges on deposit accounts1,093 1,100 1,305 1,138 882 
    Bank card revenue1,519 1,341 1,237 1,237 1,087 
    Realized securities gains127 476 912 1,522 — 
    Bank owned life insurance and annuity income275 298 233 795 275 
    Other income 120 123 301 113 131 
Total noninterest income4,715 4,974 5,777 6,207 3,598 
 Noninterest expense
   Salaries and employee benefits8,230 8,435 8,250 7,869 7,655 
   Net occupancy expense1,131 1,174 1,046 1,057 977 
   Equipment expense1,598 1,581 1,502 1,474 1,360 
   Professional fees428 338 370 364 417 
   Advertising and public relations138 90 207 145 93 
   Amortization of intangibles382 405 409 412 410 
   FDIC premiums488 277 261 320 110 
   Bank card expense685 573 573 589 560 
   Foreclosed properties expense, net746 227 676 607 240 
   Acquisition-related expenses454 440 218 28 637 
   Other expenses2,756 2,893 3,094 2,644 2,738 
Total noninterest expense17,036 16,433 16,606 15,509 15,197 
 Income before income taxes13,490 13,293 12,377 12,214 8,467 
 Income tax expense2,930 2,933 2,126 2,594 1,518 
 Net income$10,560 $10,360 $10,251 $9,620 $6,949 
 Preferred stock dividends 139 — — — — 
Net income applicable to common shares$10,421 $10,360 $10,251 $9,620 $6,949 


SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Five Quarter Performance Summary (unaudited)
For the Quarter Ended
 6/30/20213/31/202112/31/20209/30/20206/30/2020
 Per Share Data
 Earnings per common share
    Basic $0.80 $0.80 $0.79 $0.74 $0.54 
    Diluted $0.80 $0.80 $0.79 $0.74 $0.54 
Cash dividends$0.17 $0.17 $0.17 $0.17 $0.17 
Dividend payout ratio21.2 %20.6 %21.5 %22.9 %31.7 %
 Average common shares outstanding
    Basic 12,952,357 12,942,099 12,932,768 12,922,158 12,911,979 
    Diluted 13,013,714 13,002,062 12,980,041 12,949,584 12,943,804 
Common shares outstanding at period end12,963,057 12,950,714 12,942,004 12,932,415 12,922,045 
 Performance Ratios
 Return on average equity13.67 %14.51 %14.90 %14.38 %10.75 %
 Return on average tangible equity 17.03 %18.49 %18.70 %18.12 %13.57 %
 Return on average tangible common equity17.59 %18.49 %18.70 %18.12 %13.57 %
 Return on average assets 1.29 %1.31 %1.37 %1.31 %1.02 %
 Net interest margin (A)3.55 %3.65 %3.76 %3.64 %3.68 %
 Efficiency ratio (B)49.09 %49.79 %49.38 %48.95 %51.97 %
NOTE (A) - Presented on a tax-equivalent basis assuming a federal tax rate of 21%.
NOTE (B) - Computed on a tax equivalent basis excluding acquisition-related expenses, gains/losses on sales of assets, write-downs of OREO properties to fair value and amortization of intangibles.




SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Selected Balance Sheet Data (unaudited)
 Dollars in thousands, except per share amounts6/30/20213/31/202112/31/20209/30/20206/30/2020
 Assets
Cash and due from banks$18,707 $20,732 $19,522 $16,257 $16,572 
Interest bearing deposits other banks176,282 155,865 80,265 92,729 26,218 
Debt securities, available for sale345,742 311,384 286,127 297,989 322,539 
Debt securities, held to maturity98,995 99,457 99,914 91,600 80,497 
Loans, net2,395,885 2,418,029 2,379,907 2,222,450 2,192,541 
Property held for sale13,170 13,918 15,588 17,831 17,954 
Premises and equipment, net53,104 53,289 52,537 52,880 51,847 
Goodwill and other intangible assets53,858 54,239 55,123 48,101 48,513 
Cash surrender value of life insurance
     policies and annuities		60,087 59,740 59,438 57,029 55,315 
Other assets56,703 61,482 57,963 49,996 49,355 
   Total assets$3,272,533 $3,248,135 $3,106,384 $2,946,862 $2,861,351 
 Liabilities and Shareholders' Equity
Deposits$2,729,205 $2,725,010 $2,595,651 $2,451,891 $2,451,769 
Short-term borrowings140,146 140,145 140,146 140,145 90,945 
Long-term borrowings and
     subordinated debentures		49,710 49,681 49,652 50,292 20,297 
Other liabilities38,265 39,854 39,355 32,571 34,909 
Shareholders' equity - preferred14,920 — — — — 
Shareholders' equity - common300,287 293,445 281,580 271,963 263,431 
   Total liabilities and shareholders' equity$3,272,533 $3,248,135 $3,106,384 $2,946,862 $2,861,351 
Book value per common share$23.16 $22.66 $21.76 $21.03 $20.39 
Tangible book value per common share$19.01 $18.47 $17.50 $17.31 $16.63 
Tangible common equity to tangible assets7.7 %7.5 %7.4 %7.7 %7.6 %

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Regulatory Capital Ratios (unaudited)
 6/30/20213/31/202112/31/20209/30/20206/30/2020
Summit Financial Group, Inc.
CET1 Risk-based Capital9.6 %9.3 %9.3 %9.9 %9.7 %
Tier 1 Risk-based Capital10.9 %10.1 %10.0 %10.7 %10.5 %
Total Risk Based Capital13.0 %12.1 %12.1 %12.9 %11.3 %
Tier 1 Leverage8.9 %8.5 %8.6 %8.7 %9.0 %
Summit Community Bank, Inc.
CET1 Risk-based Capital11.9 %11.1 %11.1 %11.8 %10.5 %
Tier 1 Risk-based Capital11.9 %11.1 %11.1 %11.8 %10.5 %
Total Risk Based Capital12.9 %12.0 %12.0 %12.7 %11.4 %
Tier 1 Leverage9.7 %9.3 %9.5 %9.6 %9.0 %



SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Loan Composition (unaudited)
Dollars in thousands6/30/20213/31/202112/31/20209/30/20206/30/2020
Commercial$326,468 $348,022 $306,885 $350,985 $323,788 
Mortgage warehouse lines105,288 187,995 251,810 243,730 252,472 
Commercial real estate
     Owner occupied392,164 358,200 351,860 312,502 336,143 
     Non-owner occupied784,415 735,594 685,565 618,624 593,167 
Construction and development
     Land and development102,670 106,312 107,342 97,343 92,706 
     Construction140,788 126,011 91,100 66,878 48,116 
Residential real estate
     Conventional398,239 411,103 425,519 368,009 371,225 
     Jumbo71,694 65,851 74,185 73,836 76,360 
     Home equity72,956 77,684 81,588 82,991 88,929 
Consumer32,732 32,924 33,906 34,655 34,640 
Other2,356 2,375 2,393 2,251 2,161 
Total loans, net of unearned fees2,429,770 2,452,071 2,412,153 2,251,804 2,219,707 
Less allowance for credit losses33,885 34,042 32,246 29,354 27,166 
Loans, net$2,395,885 $2,418,029 $2,379,907 $2,222,450 $2,192,541 

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Deposit Composition (unaudited)
Dollars in thousands6/30/20213/31/202112/31/20209/30/20206/30/2020
Core deposits
Non interest bearing checking
$503,097 $505,264 $440,819 $420,070 $443,190 
Interest bearing checking
1,005,725 988,204 934,185 867,442 830,258 
Savings
677,000 656,514 621,168 598,564 561,029 
Time deposits
441,139 456,431 460,443 414,542 422,286 
Total core deposits2,626,961 2,606,413 2,456,615 2,300,618 2,256,763 
Brokered deposits
23,521 39,125 55,454 64,120 90,279 
Other non-core time deposits
78,723 79,472 83,582 87,153 104,727 
Total deposits$2,729,205 $2,725,010 $2,595,651 $2,451,891 $2,451,769 



SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Asset Quality Information (unaudited)
For the Quarter Ended
 Dollars in thousands6/30/20213/31/202112/31/20209/30/20206/30/2020
Gross loan charge-offs$343 $354 $434 $1,259 $218 
Gross loan recoveries(141)(165)(195)(245)(269)
Net loan charge-offs/(recoveries)$202 $189 $239 $1,014 $(51)
Net loan charge-offs to average loans (annualized)0.03 %0.03 %0.04 %0.18 %-0.01 %
Allowance for loan credit losses$33,885 $34,042 $32,246 $29,354 $27,166 
Allowance for loan credit losses as a percentage
    of period end loans		1.39 %1.39 %1.34 %1.30 %1.22 %
Allowance for credit losses on unfunded loan
     commitments		$4,660 $3,705 $4,190 $3.525 $3,477 
Nonperforming assets:
   Nonperforming loans
       Commercial$968 $848 $525 $553 $754 
       Commercial real estate14,430 17,137 14,237 4,313 5,822 
       Residential construction and development621 626 235 2 14 
       Residential real estate6,800 6,667 5,264 5,104 5,873 
       Consumer38 54 74 31 29 
       Other— — — — 35 
Total nonperforming loans22,857 25,332 20,335 10,003 12,527 
   Foreclosed properties
       Commercial real estate2,281 2,281 2,581 2,500 1,774 
       Commercial construction and development3,146 3,884 4,154 4,154 4,511 
       Residential construction and development6,859 7,129 7,791 10,330 10,645 
       Residential real estate884 624 1,062 847 1,024 
Total foreclosed properties13,170 13,918 15,588 17,831 17,954 
  Other repossessed assets— — — — — 
Total nonperforming assets$36,027 $39,250 $35,923 $27,834 $30,481 
Nonperforming loans to period end loans0.94 %1.03 %0.84 %0.44 %0.56 %
Nonperforming assets to period end assets1.10 %1.21 %1.16 %0.94 %1.07 %
Troubled debt restructurings
Performing
$20,799 $20,462 $21,375 $22,232 $22,117 
Nonperforming
1,235 3,828 3,127 2,988 3,003 
Total troubled debt restructurings
$22,034 $24,290 $24,502 $25,220 $25,120 



Loans Past Due 30-89 Days (unaudited)
For the Quarter Ended
 Dollars in thousands 6/30/20213/31/202112/31/20209/30/20206/30/2020
Commercial$414 $335 $1 $147 $196 
Commercial real estate733 508 274 1,740 1,231 
Construction and development1,911 330 47 422 8 
Residential real estate3,594 2,146 4,405 4,464 2,763 
Consumer404 96 233 160 164 
Other— 3 5 2 3 
Total$7,056 $3,418 $4,965 $6,935 $4,365 


SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q2 2021 vs Q1 2021 vs Q2 2020 (unaudited)
Q2 2021Q1 2021Q2 2020
Average Earnings/Yield/AverageEarnings /Yield /AverageEarnings /Yield /
Dollars in thousandsBalancesExpenseRateBalancesExpenseRateBalancesExpenseRate
ASSETS
Interest earning assets
  Loans, net of unearned interest (1)
    Taxable$2,455,757 $27,593 4.51 %$2,355,705 $27,419 4.72 %$2,118,158 $25,466 4.84 %
    Tax-exempt (2)11,370 132 4.66 %12,679 151 4.83 %17,244 200 4.66 %
  Securities
    Taxable285,092 1,351 1.90 %266,289 1,295 1.97 %248,792 1,453 2.35 %
    Tax-exempt (2)147,703 1,078 2.93 %144,880 1,091 3.05 %120,385 1,012 3.38 %
Interest bearing deposits other banks and Federal funds sold154,677 56 0.15 %166,531 67 0.16 %41,776 60 0.58 %
Total interest earning assets3,054,599 30,210 3.97 %2,946,084 30,023 4.13 %2,546,355 28,191 4.45 %
Noninterest earning assets
  Cash & due from banks19,095 17,961 16,672 
  Premises & equipment53,210 53,317 50,457 
  Other assets170,470 167,343 140,355 
  Allowance for credit losses(34,674)(32,706)(25,799)
    Total assets$3,262,700 $3,151,999 $2,728,040 
 LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
  Interest bearing
    demand deposits$995,673 $371 0.15 %$960,190 $394 0.17 %$764,852 $369 0.19 %
  Savings deposits665,735 634 0.38 %642,241 645 0.41 %512,634 1,200 0.94 %
  Time deposits562,605 1,131 0.81 %583,723 1,457 1.01 %625,717 2,617 1.68 %
  Short-term borrowings140,146 464 1.33 %140,146 469 1.36 %95,744 499 2.10 %
Long-term borrowings and
     subordinated debentures		49,694 544 4.39 %49,664 545 4.45 %20,299 186 3.69 %
Total interest bearing liabilities2,413,853 3,144 0.52 %2,375,964 3,510 0.60 %2,019,246 4,871 0.97 %
Noninterest bearing liabilities
  Demand deposits503,116 451,957 417,992 
  Other liabilities36,842 38,393 32,238 
    Total liabilities2,953,811 2,866,314 2,469,476 
Shareholders' equity - preferred11,254 — — 
Shareholders' equity - common297,635 285,685 258,564 
Total liabilities and
  shareholders' equity
$3,262,700 $3,151,999 $2,728,040 
NET INTEREST EARNINGS$27,066 $26,513 $23,320 
NET INTEREST MARGIN3.55 %3.65 %3.68 %
(1) For purposes of this table, nonaccrual loans are included in average loan balances.
(2) Interest income on tax-exempt securities and loans has been adjusted assuming a Federal tax rate of 21% for all periods presented. The tax equivalent adjustment resulted in an increase in interest income of $255,000, $261,000 and $254,000 for Q2 2021, Q1 2021 and Q2 2020, respectively.


SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
YTD 2021 vs YTD 2020 (unaudited)
YTD 2021YTD 2020
AverageEarnings /Yield /AverageEarnings /Yield /
Dollars in thousandsBalancesExpenseRateBalancesExpenseRate
ASSETS
Interest earning assets
  Loans, net of unearned interest (1)
    Taxable$2,406,007 $55,012 4.61 %$2,026,814 $50,555 5.02 %
    Tax-exempt (2)12,021 281 4.71 %16,059 385 4.82 %
  Securities
    Taxable275,742 2,646 1.94 %253,840 3,211 2.54 %
    Tax-exempt (2)146,300 2,168 2.99 %95,313 1,710 3.61 %
Interest bearing deposits other banks
   and Federal funds sold		160,592 123 0.15 %38,712 159 0.83 %
Total interest earning assets3,000,662 60,230 4.05 %2,430,738 56,020 4.63 %
Noninterest earning assets
  Cash & due from banks18,592 15,548 
  Premises & equipment53,263 48,303 
  Other assets168,510 130,604 
  Allowance for loan losses(33,696)(24,342)
    Total assets$3,207,331 $2,600,851 
 LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
  Interest bearing
    demand deposits$978,029 $765 0.16 %$704,404 $1,449 0.41 %
  Savings deposits654,053 1,279 0.39 %480,827 2,537 1.06 %
  Time deposits573,107 2,588 0.91 %620,409 5,550 1.80 %
  Short-term borrowings140,146 933 1.34 %107,675 1,129 2.11 %
Long-term borrowings and
     subordinated debentures		49,679 1,089 4.42 %20,301 405 4.01 %
Total interest bearing liabilities2,395,014 6,654 0.56 %1,933,616 11,070 1.15 %
Noninterest bearing liabilities
  Demand deposits477,766 378,667 
  Other liabilities37,614 29,106 
    Total liabilities2,910,394 2,341,389 
Shareholders' equity - preferred5,658 — 
Shareholders' equity - common291,279 259,462 
Total liabilities and
  shareholders' equity
$3,207,331 $2,600,851 
NET INTEREST EARNINGS$53,576 $44,950 
NET INTEREST MARGIN3.60 %3.72 %
(1) For purposes of this table, nonaccrual loans are included in average loan balances.
(2) Interest income on tax-exempt securities and loans has been adjusted assuming a Federal tax rate of 21%. The tax equivalent adjustment resulted in an increase in interest income of $514,000 and $440,000 for the YTD 2021 and YTD 2020, respectively.


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