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): April 30, 2020

 

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)
 
(I.R.S. Employer
incorporation or organization)
 
 
 
Identification No.)

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

Registrant’s telephone number, including area code: (304) 530-1000

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
SMMF
NASDAQ Global Select Market






Indicate by check mark whether the registrant is an emerging growth company as defined by 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. ¨  





Section 2 - Financial Information

Item 2.02. Results of Operations and Financial Condition

On April 30 2020, Summit Financial Group, Inc. (“Summit”) issued a News Release announcing its earnings for the three months ended March 31, 2020. This News Release is furnished as Exhibit 99 and is incorporated herein by reference.
 

Section 9 - Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits

(d)    Exhibits
99


SIGNATURES
 
Pursuant to the requirements of the Securities and 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: April 30, 2020
 
By: /s/ Julie R. Markwood          
 
 
Julie R. Markwood
 
 
Senior Vice President & Chief Accounting Officer


    


Exhibit


EXHIBIT 99
FOR RELEASE 6:00 AM ET, April 30, 2020

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

SUMMIT FINANCIAL GROUP REPORTS FIRST QUARTER 2020 RESULTS
Q1 2020 Diluted EPS $0.35 compared to $0.65 for Q4 2019 and $0.56 for Q1 2019
MOOREFIELD, WV - April 30, 2020 (GLOBE NEWSWIRE) - Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ: SMMF) today reported first quarter 2020 net income of $4.51 million, or $0.35 per diluted share. In comparison, earnings for fourth quarter 2019 were $8.15 million, or $0.65 per diluted share, and for first quarter 2019, $7.09 million, or $0.56 per diluted share. Summit achieved returns on average assets and average tangible equity in first quarter 2020 of 0.73 percent and 8.55 percent, respectively, compared to 1.27 percent and 14.80 percent, respectively, in the same period of 2019.
“Despite the unprecedented challenges posed by the COVID-19 crisis and its resulting business conditions, Summit produced solid core earnings this past quarter”, commented H. Charles Maddy, III, President and Chief Executive Officer of Summit. “As we navigate the COVID-19 crisis, we believe our Company is well-prepared to endure its impacts. The Company has strong levels of capital and liquidity, diversified revenue streams, a sound credit record and an experienced management team. I am extremely proud of the diligent efforts and steadfast commitment put forth by our management and employees to maintain operational continuity and a high level of client service during this crisis. We are very concerned about the health and welfare of our employees, clients, shareholders and communities, and are supporting all our stakeholders throughout this crisis in a thoughtful, disciplined and compassionate manner. We especially appreciate our employees’ efforts in this uncertain time, and we will continue to persevere.”
Highlights for Q1 2020

Provision for credit losses of $5.25 million in Q1 2020 compared to $500,000 in Q4 2019 and $250,000 in Q1 2019; the increase in this quarter’s provision resulted principally due to the estimated potential future economic impact of the COVID-19 crisis.

Net interest income increased 32.6 percent (annualized) compared to Q4 2019 and increased 15.5 percent versus the same period in 2019, primarily due to loan growth and lower funding costs.

Despite volatile markets, net interest margin in Q1 2020 increased 13 basis points to 3.76 percent as compared to the linked quarter, as yields on interest earning assets declined 11 basis points while deposit and other funding costs declined 23 basis points.




Loan balances, excluding mortgage warehouse lines of credit, increased $53.2 million during the quarter, including $39.8 million in loans acquired from Cornerstone; excluding mortgage warehouse lines of credit and acquired Cornerstone loans, loans increased $13.4 million during the quarter, or 3.0 percent (annualized).

Mortgage warehouse lines of credit increased $40.6 million during the quarter.

Efficiency ratio improved to 51.41 percent compared to 52.25 percent in the linked quarter and 56.63 percent for Q1 2019.

Realized securities gains of $1.04 million in Q1 2020 compared to $403,000 in the linked quarter.

Merger expenses were $788,000 in Q1 2020 compared to $98,000 in the linked quarter.

Net foreclosed properties expenses increased to $966,000 in Q1 2020 compared to $262,000 in Q4 2019; this is primarily the result of write downs of foreclosed properties to fair values totaling $946,000 in Q1 2020 compared to $497,000 in Q4 2019, while realized net gains on sales of foreclosed properties were $61,000 during Q1 2020 compared to $312,000 in Q4 2019.

Nonperforming assets as a percentage of total assets improved to 1.16 percent from 1.28 percent for the linked quarter and 1.53 percent at the end of Q1 2019.

COVID-19 Impacts
Operations
As the COVID-19 related events unfolded throughout Q1 2020, Summit implemented various plans, strategies and protocols to protect our employees, maintain services for clients, assure the functional continuity of our operating systems, controls and processes, and mitigate financial risks posed by changing market conditions. In order to protect employees and assure workforce continuity and operational redundancy, we imposed business travel restrictions, enhanced our sanitizing protocols within our facilities and physically separated, to the extent possible, our critical operations workforce that cannot work remotely. To limit the risk of virus spread, the Company implemented drive-thru only and by appointment operating protocols throughout its bank branch network. We also maintained active communications with our critical vendors to assure all mission-critical activities and functions are being performed in line with our client-service standards.
Capital and Liquidity
Although there is a high degree of uncertainty around the magnitude and duration of the economic impact of the COVID-19 pandemic, management believes that our financial position, including high levels of capital and liquidity, will allow us to successfully endure the negative economic impacts of the crisis. Our capital management activities, coupled with our historically strong earnings performance and prudent dividend practices, have allowed us to build and maintain strong capital reserves. At March 31, 2020, all of Summit’s regulatory capital ratios significantly exceeded well-capitalized standards. More specifically, the Company bank subsidiary’s Tier 1 Leverage Ratio, a common measure to evaluate a financial institutions capital strength, was 10.2% at March 31, 2020, which represents over two times its well-capitalized regulatory minimum of 5.0%.
In addition, management believes the Company’s liquidity position is strong. The Company’s bank subsidiary maintains a funding base largely comprised of core noninterest bearing demand deposit accounts and low cost interest-bearing transactional deposit accounts with clients that operate or reside within the footprint of its branch bank network. At March 31, 2020, the




Company’s cash and cash equivalent balances were $41.5 million. In addition, Summit maintains an available-for-sale securities portfolio, comprised primarily of highly liquid U.S. agency securities, highly-rated municipal securities and U.S. agency-backed mortgage backed securities, which serves as a ready source of liquidity. At March 31, 2020, the Company’s available-for-sale securities portfolio totaled $305.0 million, $205.8 million of which was unpledged as collateral. The Company bank subsidiary’s unused borrowing capacity at the Federal Home Loan Bank of Pittsburgh at March 31, 2020 was $689.2 million, and it maintained $177.1 million of borrowing availability at the Federal Reserve Bank of Richmond’s discount window. The Company has not experienced significant draws on clients’ available commercial lines of credit and home equity lines of credit due to the COVID-19 crisis, nor has it observed any significant or unusual client activity that portends unmanageable levels of stress on the our liquidity profile.
Summit is participating in the Paycheck Protection Program (“PPP”), a $660 billion low-interest business loan program funded by the U.S. Treasury Department and administered by the U.S. Small Business Administration. The PPP Loan Program provides U.S. government guarantees for lenders, as well as loan forgiveness incentives for borrowers that predominately utilize the loan proceeds to cover employee compensation-related business costs. Through April 28, 2020, Summit had approved 468 PPP loans totaling $83.8 million. While we anticipate high levels of client utilization of the PPP loan program, our liquidity resources are adequate to meet the funding requirements of these loans.
Lending
We have taken actions to identify and assess our COVID-19 related credit exposures by asset classes and borrower types. We implemented a loan modification program to assist both consumer and business borrowers that are experiencing or expect to experience financial hardships due to COVID-19 related challenges. Accordingly, the following table summarizes the aggregate balances of loans the Company has modified as result of COVID-19 through April 24, 2020 classified by types of loans and impacted borrowers.
 
 
Loan Balances Modified Due to COVID-19 through 4/24/2020
Dollars in thousands
Total Loan
Balance as of
3/31/2020
Loans Modified
to Interest Only
Payments (6
Months or Less)
Loans Modified
to Payment
Deferral (3
Months)
Total Loans
Modified
Percentage of
Loans Modified
Hospitality Industry
$
120,201

$
56,006

$
45,778

$
101,784

84.7
%
Non-Owner Occupied Retail Stores
107,420

34,774

12,518

47,292

44.0
%
Owner-Occupied Retail Stores
118,535

21,103

8,715

29,818

25.2
%
Restaurants
7,416

2,173

1,765

3,938

53.1
%
Oil & Gas Industry
32,297

914

4,425

5,339

16.5
%
Other Commercial Loans
898,310

78,836

29,061

107,897

12.0
%
Total Commercial Loans
1,284,179

193,806

102,262

296,068

23.1
%
Residential 1-4 Family Personal
276,189

3,278

13,061

16,339

5.9
%
Residential 1-4 Family Rentals
167,295

15,467

4,841

20,308

12.1
%
Home Equity Loans
75,170


402

402

0.5
%
Total Residential Real Estate Loans
518,654

18,745

18,304

37,049

7.1
%
Consumer Loans
35,344

365

613

978

2.8
%
Mortgage Warehouse Loans
166,826




0.0
%
Credit Cards and Overdrafts
2,266




0.0
%
Total Loans
$
2,007,269

$
212,916

$
121,179

$
334,095

16.6
%






Modified loans with deferred payments will continue to accrue interest during the deferral period unless otherwise classified as nonperforming. Consistent with bank regulatory guidance, borrowers that were otherwise current on loan payments that were granted COVID-19 related financial hardship payment deferrals will continue to be reported as current loans throughout the agreed upon deferral periods. COVID-19 related loan modifications are also deemed to be insignificant borrower concessions, and therefore, such modified loans were not classified as troubled-debt restructured loans as of March 31, 2020. We anticipate that the amounts of COVID-19 related loan modifications will continue to increase during Q2 2020.
The COVID-19 crisis is expected to continue to impact our financial results, as well as demand for our services and products during the second quarter of 2020 and potentially beyond. The short and long-term implications of the COVID-19 crisis, and related monetary and fiscal stimulus measures, on our future revenues, earnings results, allowance for credit losses, capital reserves and liquidity are unknown at present.
CECL Adoption and Asset Quality
Effective January 1, 2020, we adopted ASU No. 2016-13, Financial Instruments - Credit Losses, also known as Current Expected Credit Losses (“CECL”). Upon the adoption of CECL, the Company recorded a net cumulative-effect adjustment that decreased retained earnings by $6.76 million. This adjustment was the result of a $6.93 million net increase in the allowance for credit losses (“ACL”), from $13.07 million at December 31, 2019 to $20.00 million upon adoption (including a $470,000 reclassification from loans to the ACL for purchased credit deteriorated (“PCD”) loans now accounted for in the ACL), a $2.43 million increase in other liabilities to provide an allowance for off-balance sheet credit exposures, offset by an increase to deferred income tax assets of $2.13 million.
The table below summarizes the changes in the ACL prior to CECL adoption through March 31, 2020.
Dollars in thousands
Allowance
for Loan
Losses at
December
31, 2019
Impact of
CECL
Adoption
Allowance
for Loan
Credit
Losses at
January 1,
2020
Provision
for Loan
Credit
Losses for
Q1 2020
Cornerstone
Day 1 PCD
Loan Credit
Marks
Loan Net
Charge-offs
for Q1 2020
Allowance
for Loan
Credit
Losses at
March 31,
2020
Balance
$ 13,074
$ 6,927
 $ 20,001
$ 4,699
$ 409
$ (501)
$ 24,608
% Changes
NA
53.0%
NA
35.9%
3.1%
-3.8%
88.2%
We have recorded no allowance for credit losses relative to the Company’s available-for-sale debt securities or its other instruments carried at amortized cost.
First quarter 2020 net loan charge-offs were $501,000, or 0.10 percent of average loans annualized, while $4.7 million was added to the allowance for loan credit losses through the provision for loan credit losses. The allowance for loan credit losses stood at 1.23 percent of total loans at March 31, 2020, compared to 0.68 percent at year-end 2019.
As of March 31, 2020, nonperforming assets (“NPAs”), consisting of nonperforming loans, foreclosed properties and repossessed assets, improved to $29.1 million, or 1.16 percent of assets. This compares to $30.8 million, or 1.28 percent of assets at the linked quarter-end and $34.4 million, or 1.53 percent of assets at the end of Q1 2019.
Merger & Acquisition Activity
Summit completed its acquisition of Cornerstone Financial Services, Inc. (“Cornerstone”) and its subsidiary, Cornerstone Bank, headquartered in West Union, West Virginia on January 1, 2020 and converted substantially all of its data processing systems to that of Summit’s on March 21, 2020; accordingly, Cornerstone’s results of operations are included in Summit’s consolidated results of operations from the date of acquisition, and therefore Summit’s first quarter 2020 results reflect increased levels of average balances, income and expenses compared to its first




quarter 2019 and fourth quarter 2019 results. At consummation, Cornerstone had total assets of $195.0 million, loans of $39.8 million, and deposits of $173.0 million.
On April 24, 2020, Summit’s bank subsidiary, Summit Community Bank completed its acquisition of four branch banking offices located in the Eastern Panhandle of West Virginia from MVB Bank, Inc., a bank subsidiary of MVB Financial Corp. (NASDAQ: MVBF). Summit assumed approximately $195.0 million in deposits and acquired approximately $35.3 million in loans in conjunction with this purchase.
Results of Operations

Total revenue for first quarter 2020, consisting of net interest income and noninterest income, increased 13.8 percent to $25.9 million, principally as a result of higher net interest income compared to $22.8 million for the first quarter 2019.
For the first quarter of 2020, net interest income was $21.4 million, an increase of 15.5 percent from the $18.6 million reported in the prior-year first quarter and an 8.1 percent increase compared to the linked quarter. The net interest margin for first quarter 2020 increased to 3.76 percent compared to 3.63 percent for the linked quarter and 3.66 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 3.70 percent for Q1 2020, 3.60 percent for Q4 2019 and 3.64 percent for Q1 2019.
Noninterest income, consisting primarily of service fee income from community banking activities and trust and wealth management fees, for first quarter 2020 was $4.50 million compared to $4.23 million for the comparable period of 2019. Excluding realized securities gains, noninterest income was $3.46 million for first quarter 2020, compared to $4.23 million reported for first quarter 2019 and was $4.00 million for the linked quarter. The lower levels of 2020 noninterest income compared to 2019 periods are primarily due to the elimination of insurance commission revenue as result of SIS’ sale in Q2 2019.
We recorded a $5.25 million provision for credit losses during first quarter 2020 compared to $500,000 for the linked quarter and $250,000 for the comparable period of 2019. As result of the adoption of CECL, the provision for credit losses now represents an estimate of the full amount of expected credit losses relative to loans, whereas under the pre-CECL incurred loss accounting method, the provision was only an estimate of probable existing loan losses. Our Q1 2020 provision for credit losses reflects a change in our CECL computational model’s forecasted economic conditions over the next four quarters from “major improvement” as of January 1, 2020 to “major risk” as of March 31, 2020 due to the COVID-19 crisis.
Q1 2020 total noninterest expense increased 8.2 percent to $15.0 million compared to $13.9 million for the prior-year first quarter and increased 14.0 percent compared to the linked quarter. Our increased noninterest expense is principally due to expenses associated with the acquired Cornerstone operations, higher writedowns of foreclosed properties and increased merger expenses. This increase is partially offset by income related to our deferred director compensation plan of $483,000 recognized in Q1 2020 compared to deferred director compensation plan expense of $484,000 and $239,000 recorded in Q1 2019 and Q4 2019, respectively. Under our director deferred compensation plans, directors optionally elect to defer their director fees into a "phantom" investment plan whereby the Company recognizes expense or benefit relative to the phantom returns or losses of such investments. As result of the stock market’s deterioration during Q1 2020, we recognized income related to deferred director compensation this quarter.
Balance Sheet
At March 31, 2020, total assets were $2.51 billion, an increase of $109.8 million, or 4.6 percent since December 31, 2019. Total loans, net of unearned fees and allowance for loan credit losses, were $1.98 billion at March 31, 2020, up $82.2 million, or 4.3 percent, from the $1.90 billion reported at year-end 2019. Loans, excluding mortgage warehouse lines of credit and




acquired Cornerstone loans, increased $13.4 million during the quarter, or 3.0 percent (on an annualized basis).
At March 31, 2020, core deposits were $1.83 billion, an increase of $144.6 million or 8.6 percent during first quarter 2020 -- as checking deposits increased $94.8 million or 10.6 percent, core time deposits increased by $10.9 million or 2.9 percent and savings deposits increased $38.9 million or 9.3 percent. Excluding acquired deposits, Q1 2020 core deposit growth was $3.44 million or 2.0 percent.
Shareholders’ equity was $256.0 million as of March 31, 2020 compared to $247.8 million at December 31, 2019. In conjunction with the acquisition of Cornerstone on January 1, 2020, Summit issued 570,000 shares of common stock valued at $15.4 million to the former Cornerstone shareholders.
Tangible book value per common share decreased to $17.17 at March 31, 2020 compared to $18.11 at December 31, 2019. Summit had 12,920,244 outstanding common shares at March 31, 2020 compared to 12,408,542 at year end 2019.
As announced this quarter, 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 Q1 2020, 66,611 shares of our common stock were repurchased under the Plan at an average price of 19.21 per share.
About the Company
Summit Financial Group, Inc. is a $2.51 billion financial holding company headquartered in Moorefield, West Virginia. Summit provides community banking services primarily in the Eastern Panhandle, Southern and North Central regions of West Virginia and the Northern, Shenandoah Valley and Southwestern regions of Virginia, through its bank subsidiary, Summit Community Bank, Inc., which operates thirty-nine banking locations.

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 crisis, 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) -- Q1 2020 vs Q1 2019
 
 
 
 
 
 
 For the Quarter Ended
 
 Percent
Dollars in thousands
3/31/2020
 
3/31/2019
 
 Change
Statements of Income
 
 
 
 
 
 Interest income
 
 
 
 
 
    Loans, including fees
$
25,235

 
$
23,051

 
9.5
 %
    Securities
2,310

 
2,586

 
-10.7
 %
    Other
98

 
231

 
-57.6
 %
 Total interest income
27,643

 
25,868

 
6.9
 %
 Interest expense
 
 
 
 
 
    Deposits
5,351

 
5,564

 
-3.8
 %
    Borrowings
849

 
1,731

 
-51.0
 %
 Total interest expense
6,200

 
7,295

 
-15.0
 %
 
 
 
 
 
 
 Net interest income
21,443

 
18,573

 
15.5
 %
 Provision for credit losses
5,250

 
250

 
2000.0
 %
 Net interest income after provision for credit losses
16,193

 
18,323

 
-11.6
 %
 
 
 
 
 
 
 Noninterest income
 
 
 
 
 
    Insurance commissions
7

 
1,174

 
-99.4
 %
    Trust and wealth management fees
665

 
586

 
13.5
 %
    Service charges on deposit accounts
1,263

 
1,180

 
7.0
 %
    Bank card revenue
933

 
814

 
14.6
 %
    Realized securities gains (losses)
1,038

 
(3
)
 
n/m

    Bank owned life insurance income
264

 
238

 
10.9
 %
    Other income
332

 
241

 
37.8
 %
Total noninterest income
4,502

 
4,230

 
6.4
 %
 Noninterest expense
 
 
 
 
 
    Salaries and employee benefits
7,672

 
7,347

 
4.4
 %
    Net occupancy expense
883

 
924

 
-4.4
 %
    Equipment expense
1,429

 
1,179

 
21.2
 %
    Professional fees
387

 
403

 
-4.0
 %
    Advertising and public relations
152

 
153

 
-0.7
 %
    Amortization of intangibles
429

 
476

 
-9.9
 %
    FDIC premiums
165

 

 
n/a

    Bank card expense
503

 
439

 
14.6
 %
    Foreclosed properties expense, net
966

 
384

 
151.6
 %
    Merger-related expenses
788

 
63

 
1150.8
 %
    Other expenses
1,625

 
2,492

 
-34.8
 %
Total noninterest expense
14,999

 
13,860

 
8.2
 %
 Income before income taxes
5,696

 
8,693

 
-34.5
 %
 Income tax expense
1,190

 
1,601

 
-25.7
 %
 Net income
$
4,506

 
$
7,092

 
-36.5
 %





SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
 
 
 
 
 
Quarterly Performance Summary (unaudited) -- Q1 2020 vs Q1 2019
 
 
 
 
 
 
 
 
 
 
 
 
 For the Quarter Ended
 
 Percent
 
3/31/2020
 
3/31/2019
 
 Change
 Per Share Data
 
 
 
 
 
 Earnings per common share
 
 
 
 
 
    Basic
$
0.35

 
$
0.56

 
-37.5
 %
    Diluted
$
0.35

 
$
0.56

 
-37.5
 %
 
 
 
 
 
 
 Cash dividends
$
0.17

 
$
0.14

 
21.4
 %
 Dividend payout ratio
49.1
%
 
25.0
%
 
96.4
 %
 
 
 
 
 
 
 Average common shares outstanding
 
 
 
 
 
    Basic
12,975,429

 
12,717,501

 
2.0
 %
    Diluted
13,028,409

 
12,778,644

 
2.0
 %
 
 
 
 
 
 
 Common shares outstanding at period end
12,920,244

 
12,661,528

 
2.0
 %
 
 
 
 
 
 
 Performance Ratios
 
 
 
 
 
 Return on average equity
6.92
%
 
12.28
%
 
-43.6
 %
 Return on average tangible equity
8.55
%
 
14.80
%
 
-42.2
 %
 Return on average assets
0.73
%
 
1.27
%
 
-42.5
 %
 Net interest margin (A)
3.76
%
 
3.66
%
 
2.7
 %
 Efficiency ratio (B)
51.41
%
 
56.63
%
 
-9.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
NOTE (A) - Presented on a tax-equivalent basis assuming a federal tax rate of 21%.
 
 
 
 
 
 
NOTE (B) - Computed on a tax equivalent basis excluding merger-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 thousands
3/31/2020
 
12/31/2019
 
9/30/2019
 
6/30/2019
 
3/31/2019
Statements of Income
 
 
 
 
 
 
 
 
 
 Interest income
 
 
 
 
 
 
 
 
 
    Loans, including fees
$
25,235

 
$
24,772

 
$
24,940

 
$
24,352

 
$
23,051

    Securities
2,310

 
2,195

 
2,184

 
2,396

 
2,586

    Other
98

 
105

 
125

 
134

 
231

 Total interest income
27,643

 
27,072

 
27,249

 
26,882

 
25,868

 Interest expense
 
 
 
 
 
 
 
 
 
    Deposits
5,351

 
5,952

 
6,214

 
5,967

 
5,564

    Borrowings
849

 
1,292

 
1,615

 
1,652

 
1,731

 Total interest expense
6,200

 
7,244

 
7,829

 
7,619

 
7,295

 
 
 
 
 
 
 
 
 
 
    Net interest income
21,443

 
19,828

 
19,420

 
19,263

 
18,573

 Provision for credit losses
5,250

 
500

 
500

 
300

 
250

 Net interest income after provision for credit losses
16,193

 
19,328

 
18,920

 
18,963

 
18,323

 
 
 
 
 
 
 
 
 
 
 Noninterest income
 
 
 
 
 
 
 
 
 
    Insurance commissions
7

 
90

 
40

 
606

 
1,174

    Trust and wealth management fees
665

 
734

 
632

 
612

 
586

    Service charges on deposit accounts
1,263

 
1,377

 
1,312

 
1,224

 
1,180

    Bank card revenue
933

 
906

 
924

 
893

 
814

    Realized securities gains (losses)
1,038

 
403

 
453

 
1,086

 
(3
)
    Gain on sale of Summit Insurance Services, LLC

 

 

 
1,906

 

    Bank owned life insurance income
264

 
310

 
247

 
248

 
238

    Other income
332

 
584

 
151

 
235

 
241

Total noninterest income
4,502

 
4,404

 
3,759

 
6,810

 
4,230

 Noninterest expense
 
 
 
 
 
 
 
 
 
   Salaries and employee benefits
7,672

 
7,099

 
7,044

 
7,576

 
7,347

   Net occupancy expense
883

 
815

 
799

 
880

 
924

   Equipment expense
1,429

 
1,278

 
1,296

 
1,219

 
1,179

   Professional fees
387

 
412

 
388

 
475

 
403

   Advertising and public relations
152

 
214

 
177

 
155

 
153

   Amortization of intangibles
429

 
401

 
404

 
420

 
476

   FDIC premiums
165

 

 

 
88

 

   Bank card expense
503

 
454

 
455

 
473

 
439

   Foreclosed properties expense, net
966

 
262

 
305

 
1,545

 
384

   Merger-related expenses
788

 
98

 
74

 
382

 
63

   Other expenses
1,625

 
2,126

 
1,864

 
2,116

 
2,492

Total noninterest expense
14,999

 
13,159

 
12,806

 
15,329

 
13,860

 Income before income taxes
5,696

 
10,573

 
9,873

 
10,444

 
8,693

 Income tax expense
1,190

 
2,424

 
1,812

 
1,880

 
1,601

 Net income
$
4,506

 
$
8,149

 
$
8,061

 
$
8,564

 
$
7,092






SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Five Quarter Performance Summary (unaudited)
 
 
 
 
 
 
 
 
 
 
 
For the Quarter Ended
 
3/31/2020
 
12/31/2019
 
9/30/2019
 
6/30/2019
 
3/31/2019
 Per Share Data
 
 
 
 
 
 
 
 
 
 Earnings per common share
 
 
 
 
 
 
 
 
 
    Basic
$
0.35

 
$
0.66

 
$
0.65

 
$
0.68

 
$
0.56

    Diluted
$
0.35

 
$
0.65

 
$
0.65

 
$
0.68

 
$
0.56

 
 
 
 
 
 
 
 
 
 
Cash dividends
$
0.17

 
$
0.15

 
$
0.15

 
$
0.15

 
$
0.14

Dividend payout ratio
49.1
%
 
22.3
%
 
23.0
%
 
21.9
%
 
25.0
%
 
 
 
 
 
 
 
 
 
 
 Average common shares outstanding
 
 
 
 
 
 
 
 
 
    Basic
12,975,429

 
12,400,932

 
12,412,982

 
12,539,095

 
12,717,501

    Diluted
13,028,409

 
12,458,702

 
12,467,777

 
12,600,071

 
12,778,644

 
 
 
 
 
 
 
 
 
 
Common shares outstanding at period end
12,920,244

 
12,408,542

 
12,400,804

 
12,449,986

 
12,661,528

 
 
 
 
 
 
 
 
 
 
 Performance Ratios
 
 
 
 
 
 
 
 
 
 Return on average equity
6.92
%
 
13.32
%
 
13.51
%
 
14.62
%
 
12.28
%
 Return on average tangible equity
8.55
%
 
15.25
%
 
15.55
%
 
17.02
%
 
14.80
%
 Return on average assets
0.73
%
 
1.39
%
 
1.41
%
 
1.52
%
 
1.27
%
 Net interest margin (A)
3.76
%
 
3.63
%
 
3.63
%
 
3.72
%
 
3.66
%
 Efficiency ratio (B)
51.41
%
 
52.25
%
 
52.91
%
 
56.45
%
 
56.63
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTE (A) - Presented on a tax-equivalent basis assuming a federal tax rate of 21%.
 
 
 
 
 
 
 
 
 
 
NOTE (B) - Computed on a tax equivalent basis excluding merger-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 amounts
3/31/2020
 
12/31/2019
 
9/30/2019
 
6/30/2019
 
3/31/2019
 
 
 
 
 
 
 
 
 
 
 Assets
 
 
 
 
 
 
 
 
 
Cash and due from banks
$
18,633

 
$
28,137

 
$
12,374

 
$
13,481

 
$
14,265

Interest bearing deposits other banks
22,821

 
33,751

 
40,296

 
42,994

 
43,689

Securities
305,045

 
276,355

 
265,347

 
269,920

 
297,126

Loans, net
1,982,661

 
1,900,425

 
1,838,891

 
1,805,850

 
1,725,064

Property held for sale
18,287

 
19,276

 
20,979

 
21,390

 
24,393

Premises and equipment, net
47,078

 
44,168

 
43,592

 
42,896

 
39,345

Goodwill and other intangible assets
34,132

 
23,022

 
23,182

 
23,585

 
29,349

Cash surrender value of life insurance policies
46,497

 
43,603

 
43,216

 
42,976

 
42,714

Other assets
38,168

 
34,755

 
35,732

 
36,022

 
33,696

   Total assets
$
2,513,322

 
$
2,403,492

 
$
2,323,609

 
$
2,299,114

 
$
2,249,641

 
 
 
 
 
 
 
 
 
 
 Liabilities and Shareholders' Equity
 
 
 
 
 
 
 
 
 
Deposits
$
2,044,914

 
$
1,913,237

 
$
1,832,285

 
$
1,797,493

 
$
1,789,032

Short-term borrowings
161,745

 
199,345

 
206,694

 
225,343

 
186,292

Long-term borrowings and
     subordinated debentures
20,301

 
20,306

 
20,311

 
20,315

 
20,319

Other liabilities
30,337

 
22,840

 
21,897

 
20,262

 
20,368

Shareholders' equity
256,025

 
247,764

 
242,422

 
235,701

 
233,630

   Total liabilities and shareholders' equity
$
2,513,322

 
$
2,403,492

 
$
2,323,609

 
$
2,299,114

 
$
2,249,641

 
 
 
 
 
 
 
 
 
 
Book value per common share
$
19.82

 
$
19.97

 
$
19.55

 
$
18.93

 
$
18.45

Tangible book value per common share
$
17.17

 
$
18.11

 
$
17.68

 
$
17.04

 
$
16.13

Tangible common equity to tangible assets
9.0
%
 
9.4
%
 
9.5
%
 
9.3
%
 
9.2
%

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Regulatory Capital Ratios (unaudited)
 
 
 
 
 
 
 
 
 
 
 
3/31/2020
 
12/31/2019
 
9/30/2019
 
6/30/2019
 
3/31/2019
Summit Financial Group, Inc.
 
 
 
 
 
 
 
 
 
CET1 Risk-based Capital
10.8
%
 
11.1
%
 
11.2
%
 
11.1
%
 
11.4
%
Tier 1 Risk-based Capital
11.7
%
 
12.1
%
 
12.2
%
 
12.1
%
 
12.5
%
Total Risk Based Capital
12.5
%
 
12.7
%
 
12.8
%
 
12.8
%
 
13.2
%
Tier 1 Leverage
10.2
%
 
10.5
%
 
10.4
%
 
10.4
%
 
10.2
%
 
 
 
 
 
 
 
 
 
 
Summit Community Bank, Inc.
 
 
 
 
 
 
 
 
 
CET1 Risk-based Capital
11.7
%
 
12.1
%
 
12.2
%
 
11.9
%
 
12.3
%
Tier 1 Risk-based Capital
11.7
%
 
12.1
%
 
12.2
%
 
11.9
%
 
12.3
%
Total Risk Based Capital
12.5
%
 
12.7
%
 
12.9
%
 
12.6
%
 
13.0
%
Tier 1 Leverage
10.2
%
 
10.6
%
 
10.4
%
 
10.2
%
 
10.0
%





SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Loan Composition (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dollars in thousands
3/31/2020
 
12/31/2019
 
9/30/2019
 
6/30/2019
 
3/31/2019
 
 
 
 
 
 
 
 
 
 
Commercial
$
224,659

 
$
207,138

 
$
199,391

 
$
204,138

 
$
189,248

Mortgage warehouse lines
166,826

 
126,237

 
145,039

 
101,607

 
49,355

Commercial real estate
 
 
 
 
 
 
 
 
 
     Owner occupied
331,486

 
276,218

 
255,828

 
262,901

 
256,671

     Non-owner occupied
580,619

 
629,206

 
567,670

 
574,677

 
585,809

Construction and development
 
 
 
 
 
 
 
 
 
     Land and development
92,332

 
84,112

 
69,589

 
67,769

 
64,192

     Construction
43,121

 
37,523

 
56,255

 
46,975

 
36,040

Residential real estate
 
 
 
 
 
 
 
 
 
     Non-jumbo
378,540

 
354,963

 
359,399

 
360,752

 
359,107

     Jumbo
64,944

 
70,947

 
69,815

 
70,171

 
69,313

     Home equity
75,170

 
76,568

 
78,493

 
81,373

 
80,370

Consumer
36,611

 
36,470

 
36,982

 
36,715

 
36,046

Other
12,961

 
14,117

 
13,371

 
11,924

 
12,045

Total loans, net of unearned fees
2,007,269

 
1,913,499

 
1,851,832

 
1,819,002

 
1,738,196

Less allowance for credit losses
24,608

 
13,074

 
12,941

 
13,152

 
13,132

Loans, net
$
1,982,661

 
$
1,900,425

 
$
1,838,891

 
$
1,805,850

 
$
1,725,064


SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Deposit Composition (unaudited)
 
 
 
 
 
 
 
 
 
 
Dollars in thousands
3/31/2020
 
12/31/2019
 
9/30/2019
 
6/30/2019
 
3/31/2019
Core deposits
 
 
 
 
 
 
 
 
 
Non interest bearing checking
$
337,446

 
$
260,553

 
$
241,999

 
$
234,397

 
$
258,679

Interest bearing checking
648,214

 
630,352

 
602,059

 
588,948

 
560,800

Savings
457,010

 
418,096

 
305,891

 
301,403

 
310,646

Time deposits
384,062

 
373,125

 
371,178

 
365,275

 
359,141

Total core deposits
1,826,732

 
1,682,126

 
1,521,127

 
1,490,023

 
1,489,266

 
 
 
 
 
 
 
 
 
 
Brokered deposits
111,156

 
150,554

 
227,369

 
222,901

 
218,913

Other non-core time deposits
107,026

 
80,557

 
83,789

 
84,569

 
80,853

Total deposits
$
2,044,914

 
$
1,913,237

 
$
1,832,285

 
$
1,797,493

 
$
1,789,032






SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Asset Quality Information (unaudited)
 
 
 For the Quarter Ended
 Dollars in thousands
3/31/2020
 
12/31/2019
 
9/30/2019
 
6/30/2019
 
3/31/2019
 
 
 
 
 
 
 
 
 
 
Gross loan charge-offs
$
698

 
$
455

 
$
843

 
$
391

 
$
414

Gross loan recoveries
(197
)
 
(88
)
 
(132
)
 
(111
)
 
(249
)
Net loan charge-offs
$
501

 
$
367

 
$
711

 
$
280

 
$
165

 
 
 
 
 
 
 
 
 
 
Net loan charge-offs to average loans (annualized)
0.10
%
 
0.08
%
 
0.16
%
 
0.06
%
 
0.04
%
 
 
 
 
 
 
 
 
 
 
Allowance for loan credit losses
$
24,608

 
$
13,074

 
$
12,941

 
$
13,152

 
$
13,132

Allowance for loan credit losses as a percentage
    of period end loans
1.23
%
 
0.68
%
 
0.70
%
 
0.72
%
 
0.76
%
 
 
 
 
 
 
 
 
 
 
Nonperforming assets:
 
 
 
 
 
 
 
 
 
   Nonperforming loans
 
 
 
 
 
 
 
 
 
       Commercial
$
560

 
$
764

 
$
835

 
$
948

 
$
729

       Commercial real estate
5,644

 
5,800

 
7,037

 
6,544

 
2,981

       Residential construction and development
11

 
326

 
191

 
66

 
24

       Residential real estate
4,343

 
4,404

 
4,461

 
5,657

 
5,928

       Consumer
65

 
116

 
115

 
160

 
182

       Other
100

 
100

 
100

 
100

 
130

Total nonperforming loans
10,723

 
11,510

 
12,739

 
13,475

 
9,974

   Foreclosed properties
 
 
 
 
 
 
 
 
 
       Commercial real estate
1,866

 
1,930

 
1,514

 
1,544

 
1,841

       Commercial construction and development
4,511

 
4,601

 
4,909

 
4,910

 
6,326

       Residential construction and development
10,774

 
11,169

 
12,847

 
13,132

 
14,347

       Residential real estate
1,136

 
1,576

 
1,709

 
1,804

 
1,879

Total foreclosed properties
18,287

 
19,276

 
20,979

 
21,390

 
24,393

  Other repossessed assets
49

 
17

 
16

 
12

 
34

Total nonperforming assets
$
29,059

 
$
30,803

 
$
33,734

 
$
34,877

 
$
34,401

 
 
 
 
 
 
 
 
 
 
Nonperforming loans to period end loans
0.53
%
 
0.60
%
 
0.69
%
 
0.74
%
 
0.57
%
Nonperforming assets to period end assets
1.16
%
 
1.28
%
 
1.45
%
 
1.52
%
 
1.53
%
 
 
 
 
 
 
 
 
 
 
Troubled debt restructurings
 
 
 
 
 
 
 
 
 
Performing
$
22,966

 
$
23,339

 
$
23,420

 
$
23,266

 
$
27,845

Nonperforming
2,831

 
2,337

 
2,443

 
2,915

 

Total troubled debt restructurings
$
25,797

 
$
25,676

 
$
25,863

 
$
26,181

 
$
27,845


Loans Past Due 30-89 Days (unaudited)
 
 For the Quarter Ended
 Dollars in thousands
3/31/2020
 
12/31/2019
 
9/30/2019
 
6/30/2019
 
3/31/2019
 
 
 
 
 
 
 
 
 
 
Commercial
$
160

 
$
111

 
$
390

 
$
375

 
$
264

Commercial real estate
2,106

 
1,196

 
312

 
1,719

 
4,128

Construction and development
53

 
236

 
65

 
235

 
179

Residential real estate
5,178

 
4,775

 
5,573

 
5,670

 
2,944

Consumer
222

 
269

 
365

 
234

 
432

Other
7

 
25

 
63

 
9

 
52

Total
$
7,726

 
$
6,612

 
$
6,768

 
$
8,242

 
$
7,999





SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
 
 
 
 
 
 
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
 
 
 
 
Q1 2020 vs Q4 2019 vs Q1 2019 (unaudited)
 
 
 
 
 
 
 
 
 
 
 
Q1 2020
 
Q4 2019
 
Q1 2019
 
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
$
1,935,473

 
$
25,089

 
5.21
%
 
$
1,853,197

 
$
24,622

 
5.27
%
 
$
1,712,286

 
$
22,907

 
5.43
%
    Tax-exempt (2)
14,873

 
185

 
5.00
%
 
15,738

 
189

 
4.76
%
 
14,907

 
184

 
5.01
%
  Securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Taxable
258,889

 
1,757

 
2.73
%
 
218,375

 
1,654

 
3.00
%
 
195,932

 
1,687

 
3.49
%
    Tax-exempt (2)
70,239

 
699

 
4.00
%
 
69,276

 
686

 
3.93
%
 
114,831

 
1,139

 
4.02
%
Interest bearing deposits other banks
   and Federal funds sold
35,648

 
98

 
1.11
%
 
32,779

 
105

 
1.27
%
 
51,187

 
230

 
1.82
%
Total interest earning assets
2,315,122

 
27,828

 
4.83
%
 
2,189,365

 
27,256

 
4.94
%
 
2,089,143

 
26,147

 
5.08
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest earning assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Cash & due from banks
14,422

 
 
 
 
 
12,932

 
 
 
 
 
12,825

 
 
 
 
  Premises & equipment
46,151

 
 
 
 
 
44,136

 
 
 
 
 
38,404

 
 
 
 
  Other assets
120,846

 
 
 
 
 
103,481

 
 
 
 
 
113,340

 
 
 
 
  Allowance for credit losses
(20,452
)
 
 
 
 
 
(13,055
)
 
 
 
 
 
(13,309
)
 
 
 
 
    Total assets
$
2,476,089

 
 
 
 
 
$
2,336,859

 
 
 
 
 
$
2,240,403

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest bearing liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Interest bearing
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    demand deposits
$
643,955

 
$
1,081

 
0.68
%
 
$
619,939

 
$
1,378

 
0.88
%
 
$
556,766

 
$
1,663

 
1.21
%
  Savings deposits
449,021

 
1,337

 
1.20
%
 
351,653

 
1,201

 
1.35
%
 
310,848

 
898

 
1.17
%
  Time deposits
615,102

 
2,933

 
1.92
%
 
641,160

 
3,373

 
2.09
%
 
654,404

 
3,003

 
1.86
%
  Short-term borrowings
119,607

 
630

 
2.12
%
 
188,007

 
1,062

 
2.24
%
 
200,297

 
1,472

 
2.98
%
Long-term borrowings and
     subordinated debentures
20,304

 
219

 
4.34
%
 
20,308

 
230

 
4.49
%
 
20,321

 
259

 
5.17
%
Total interest bearing liabilities
1,847,989

 
6,200

 
1.35
%
 
1,821,067

 
7,244

 
1.58
%
 
1,742,636

 
7,295

 
1.70
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest bearing liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Demand deposits
339,340

 
 
 
 
 
248,159

 
 
 
 
 
248,354

 
 
 
 
  Other liabilities
28,400

 
 
 
 
 
22,856

 
 
 
 
 
18,322

 
 
 
 
    Total liabilities
2,215,729

 
 
 
 
 
2,092,082

 
 
 
 
 
2,009,312

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shareholders' equity - common
260,360

 
 
 
 
 
244,777

 
 
 
 
 
231,091

 
 
 
 
Total liabilities and
  shareholders' equity
$
2,476,089

 
 
 
 
 
$
2,336,859

 
 
 
 
 
$
2,240,403

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NET INTEREST EARNINGS
 
 
$
21,628

 
 
 
 
 
$
20,012

 
 
 
 
 
$
18,852

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NET INTEREST MARGIN
 
 
 
 
3.76
%
 
 
 
 
 
3.63
%
 
 
 
 
 
3.66
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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 $185,000, $184,000 and $279,000 for Q1 2020, Q4 2019 and Q1 2019, respectively.