Summit Financial Group Inc. (SMMF, Financial) filed Annual Report for the period ended 2011-12-31.
Summit Finl Gp has a market cap of $27.8 million; its shares were traded at around $3.9 with a P/E ratio of 3.9 and P/S ratio of 0.4.
Net interest income on a fully tax equivalent basis totaled $41,369,000, $41,222,000, and $44,840,000 for the years ended December 31, 2011, 2010, and 2009, respectively, representing an increase of 0.4% in 2011 and a decrease of 8.1% in 2010. During 2011, the volumes of both interest earning assets and interest bearing liabilities declined, but these reductions were more than offset by lower yields on both interest earning assets and interest bearing liabilities. The 2010 decrease was driven by reductions in interest earning assets, reflecting significantly weak demand for new loans and planned reductions in our balance sheet made to enhance our capital ratios. Total average earning assets decreased 3.97% to $1,342,905,000 at December 31, 2011 from $1,398,452,000 at December 31, 2010. Total average interest bearing liabilities decreased 4.18% to $1,281,841,000 at December 31, 2011, compared to $1,337,816,000 at December 31, 2010. As identified in Table II, tax equivalent net interest income increased $147,000 in 2011 and decreased $3,618,000 during 2010.
Our net interest margin was 3.08% for 2011 compared to 2.95% and 2.96% for 2010 and 2009, respectively. Our net interest margin increased 13 basis points in 2011 and decreased 1 basis point in 2010. The continuing low interest rate environment throughout 2011 and 2010 has served to positively impact our net interest margin due to our liability sensitive balance sheet. During 2011, the cost of interest bearing liabilities decreased 52 basis points, which more than offset the 37 basis point decrease in the yield on interest earning assets while the cost of interest bearing funds decreased 27 basis points in 2010, which virtually offset the 24 basis point reduction in the yield on interest earning assets. Late in third quarter 2010, and into fourth quarter 2010, we reduced or repriced over $100 million of our higher-rate long-term borrowings which has had a favorable impact on our net interest margin by reducing our cost of funds. See Tables I and II for further details regarding changes in volumes and rates of average assets and liabilities and how those changes affect our net interest income.
Capital Compliance: Our capital position has significantly improved. This is primarily attributable to an increase in retained earnings due to our return to profitability in 2011, a decline in total assets, and various capital raises over the past three years. Stated as a percentage of total assets, our equity ratio was 7.1% and 6.1% at December 31, 2011 and 2010, respectively. At December 31, 2011, we had Tier 1 risk-based, Total risk-based and Tier 1 leverage capital in excess of the minimum levels required to be considered “well capitalized” of $47.3 million, $31.5 million, and $37.5 million, respectively. Our subsidiary bank, Summit Community Bank, had Tier 1 risk-based, Total risk-based and Tier 1 leverage capital in excess of the minimum “well capitalized” levels of $66.4 million, $37.8 million, and $56.6 million, respectively. We intend to maintain both Summit s and its subsidiary bank s capital ratios at levels that would be considered to be “well capitalized” in accordance with regulatory capital guidelines. See Note 16 of the accompanying consolidated financial statements for further discussion of our regulatory capital.
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Summit Finl Gp has a market cap of $27.8 million; its shares were traded at around $3.9 with a P/E ratio of 3.9 and P/S ratio of 0.4.
Highlight of Business Operations:
OREO Valuations: At December 31, 2011, we had OREO totaling $63,938,000, which is carried on the balance sheet at the lower of the investment in the real estate or its fair value less estimated selling costs. The fair value of OREO is determined generally utilizing current “as is” appraisals performed by an independent, licensed appraiser applying an income or market value approach using observable market data. Updated appraisals of OREO are generally obtained if the existing appraisal is more than 18 months old, or more frequently if there is a known deterioration in value. However, if a current appraisal is not available, the original appraised value is discounted, as appropriate, to compensate for the estimated depreciation in the value of the real estate since the date of its original appraisal. Such discounts are generally estimated based upon management s knowledge of sales of similar property within the applicable market area and its knowledge of other real estate market-related data as well as general economic trends. Upon foreclosure, any fair value adjustment is charged against the allowance for loan losses. Subsequent fair value adjustments are recorded in the period incurred and included in other noninterest income in the consolidated statements of income.Net interest income on a fully tax equivalent basis totaled $41,369,000, $41,222,000, and $44,840,000 for the years ended December 31, 2011, 2010, and 2009, respectively, representing an increase of 0.4% in 2011 and a decrease of 8.1% in 2010. During 2011, the volumes of both interest earning assets and interest bearing liabilities declined, but these reductions were more than offset by lower yields on both interest earning assets and interest bearing liabilities. The 2010 decrease was driven by reductions in interest earning assets, reflecting significantly weak demand for new loans and planned reductions in our balance sheet made to enhance our capital ratios. Total average earning assets decreased 3.97% to $1,342,905,000 at December 31, 2011 from $1,398,452,000 at December 31, 2010. Total average interest bearing liabilities decreased 4.18% to $1,281,841,000 at December 31, 2011, compared to $1,337,816,000 at December 31, 2010. As identified in Table II, tax equivalent net interest income increased $147,000 in 2011 and decreased $3,618,000 during 2010.
Our net interest margin was 3.08% for 2011 compared to 2.95% and 2.96% for 2010 and 2009, respectively. Our net interest margin increased 13 basis points in 2011 and decreased 1 basis point in 2010. The continuing low interest rate environment throughout 2011 and 2010 has served to positively impact our net interest margin due to our liability sensitive balance sheet. During 2011, the cost of interest bearing liabilities decreased 52 basis points, which more than offset the 37 basis point decrease in the yield on interest earning assets while the cost of interest bearing funds decreased 27 basis points in 2010, which virtually offset the 24 basis point reduction in the yield on interest earning assets. Late in third quarter 2010, and into fourth quarter 2010, we reduced or repriced over $100 million of our higher-rate long-term borrowings which has had a favorable impact on our net interest margin by reducing our cost of funds. See Tables I and II for further details regarding changes in volumes and rates of average assets and liabilities and how those changes affect our net interest income.
Capital Compliance: Our capital position has significantly improved. This is primarily attributable to an increase in retained earnings due to our return to profitability in 2011, a decline in total assets, and various capital raises over the past three years. Stated as a percentage of total assets, our equity ratio was 7.1% and 6.1% at December 31, 2011 and 2010, respectively. At December 31, 2011, we had Tier 1 risk-based, Total risk-based and Tier 1 leverage capital in excess of the minimum levels required to be considered “well capitalized” of $47.3 million, $31.5 million, and $37.5 million, respectively. Our subsidiary bank, Summit Community Bank, had Tier 1 risk-based, Total risk-based and Tier 1 leverage capital in excess of the minimum “well capitalized” levels of $66.4 million, $37.8 million, and $56.6 million, respectively. We intend to maintain both Summit s and its subsidiary bank s capital ratios at levels that would be considered to be “well capitalized” in accordance with regulatory capital guidelines. See Note 16 of the accompanying consolidated financial statements for further discussion of our regulatory capital.
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