Summit Financial Group Reports Second Quarter 2012 Results
Summit Financial Group, Inc. (“Company” or “Summit”) (Nasdaq:SMMF) today reported second quarter 2012 net income applicable to common shares of $719,000, or $0.09 per diluted share, compared with $831,000, or $0.11 per diluted share, for the second quarter of 2011. Second quarter 2012 results, as compared to the same period in 2011, were positively impacted by a lower provision for loan losses and reductions in noninterest expenses, and negatively impacted by higher charges to write-down foreclosed properties to estimated fair values and realized losses on the sales of assets, principally foreclosed properties.
Excluding from second quarter 2012 nonrecurring items (on a pre-tax basis) consisting of realized securities gains of $320,000, losses on sales of assets of $523,000, charges for other-than-temporary impairment (“OTTI”) of securities of $106,000 and write-downs of foreclosed properties of $1.63 million, and from second quarter 2011 realized securities gains of $318,000, gains on sales of assets of $77,000, OTTI of securities of $532,000, and write-downs of foreclosed properties of $689,000, pro forma second quarter 2012 earnings were approximately $1.94 million, or $0.22 per diluted share, compared to $1.35 million, or $0.17 per diluted share, for the year-ago period.
For the six months ended June 30, 2012, Summit recorded net income applicable to common shares of $2.22 million, or $0.27 per diluted share, compared with $509,000, or $0.07 per diluted share, for the comparable 2011 six-month period.
Excluding from the six month period ended June 30, 2012 nonrecurring items (on a pre-tax basis) comprised of realized securities gains of $1.49 million, losses on sales of assets of $599,000, OTTI charges of $335,000 and write-downs of foreclosed properties of $3.54 million, and from the 2011 first six-month period realized securities gains of $1.95 million, gain on sale of assets of $147,000, OTTI charges of $1.76 million and write-downs of foreclosed properties of $4.13 million, pro forma earnings for first six months of 2011 were approximately $4.11 million, or $0.47 per diluted share, compared to $2.90 million, or $0.40 per diluted share, for the 2011 six month period.
Highlights for Q2 2012 include:
Achieved fifth consecutive quarter of positive quarterly earnings. Earnings continue to be positively impacted by reduced provisions for loan losses. Net interest margin remained unchanged compared to Q1 2012 and increased 11 basis points compared to Q2 2011. Recorded charges of $1.63 million and $106,000, respectively, to write-down foreclosed properties and to recognize OTTI of securities, which were partially offset by $320,000 in realized securities gains. Noninterest expenses remained well-controlled, declining 6.1 percent from the year-ago quarter. Summit’s leverage capital ratio is at its highest level in five years and its total risk-based capital ratio is at highest level in eleven years.
H. Charles Maddy III, President and Chief Executive Officer of Summit, commented, “We are pleased by our continued progress having now achieved five consecutive quarters of profitability; I am particularly happy relative to our improved net interest margin, our increase in core noninterest income and our decrease in noninterest expenses during the first half of 2012. At the same time, we expect that our earnings will remain choppy in the near term as our foreclosed properties are re-appraised and written-down to estimated fair values on an ongoing basis. Reducing our portfolio of problem assets remains job one, and we did make some modest progress in this regard during Q2 2012. However, dispositions of foreclosed properties remain difficult as the recovery of our real estate markets to more normal levels is frustratingly slow — particularly with respect to commercial and residential development properties.”