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Summit Financial Group, Inc. Announces Completion of First Closing With Castle Creek, Termination of Bank MOU
Posted: 11/26/2014 | Castle Creek

MOOREFIELD, W.Va.–(GLOBE NEWSWIRE)–As previously disclosed, on August 22, 2014, Summit Financial Group, Inc. (the “Company” or “Summit”) (Nasdaq:SMMF) entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Castle Creek Capital Partners V, LP (“Castle Creek”). Pursuant to the Purchase Agreement, following the satisfaction or waiver of the conditions set forth in the Purchase Agreement, Castle Creek agreed to acquire in a private placement (the “Private Placement”) shares of common stock of the Company (“Common Stock”) in an amount that is expected to approximate 9.9% of the outstanding Common Stock of the Company following consummation of the Private Placement at the price of $9.75 per share. The Private Placement will consist of two closings.

Summit today announced that it has completed the first closing contemplated under the Purchase Agreement whereby Castle Creek purchased 819,384 shares of Common Stock at an aggregate purchase price of $8.0 million.

Consummation of the second closing under the Purchase Agreement for the purchase of 237,753 additional shares of Common Stock at an aggregate purchase price of $2.3 million is conditioned upon, among other things, the conversion into shares of Common Stock of all outstanding shares of the Company’s 8% Non-Cumulative Convertible Preferred Stock, Series 2009 and 8% Non-Cumulative Convertible Preferred Stock, Series 2011. Summit management anticipates the second closing will occur in the first quarter of 2015.

The Company has also agreed under the terms of the Purchase Agreement to commence, following the second closing of the sale of Common Stock to Castle Creek under the Purchase Agreement, a rights offering (the “Rights Offering”) to the holders of record of the Common Stock as of a date selected by Summit’s Board of Directors. In the Rights Offering, all holders of Common Stock as of the record date, excluding Castle Creek, will be offered non-transferable rights (“Rights”) to purchase shares of Common Stock at the same per share purchase price of $9.75 used in the Private Placement to Castle Creek. The aggregate number of shares that will be offered for sale in connection with the Rights Offering is 256,410 and, if all shares offered are purchased, the Company expects to yield total gross proceeds of $2.5 million, prior to any fees and expenses associated with the sale. The Rights will be distributed to all of the holders of the Common Stock, excluding Castle Creek, on a pro rata basis, based on the number of shares of Common Stock owned by each shareholder as of the record date used in connection with the Rights Offering. The Company expects the Rights Offering to occur during the second quarter of 2015.

H. Charles Maddy, III, President and Chief Executive Officer of Summit, commented, “We are delighted that Castle Creek, a highly-respected institutional investor in community banks, has chosen to make a significant investment in Summit. Castle Creek’s long-term commitment to Summit positions us well for the future. Higher consolidated capital levels resulting from this investment and the rights offering contemplated under the purchase agreement should give us flexibility and strength to evaluate opportunities for future growth earlier than previously planned.”*

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*The statement quoted above was made by an executive of a Castle Creek portfolio company.

The portfolio company executive has not received compensation for the above statement and this statement is solely his opinion and representative of his experience with Castle Creek. Other portfolio company executives may not necessarily share the same view. An executive in a Castle Creek portfolio company may have an incentive to make a statement that portrays Castle Creek in a positive light as a result of the executive's ongoing relationship with Castle Creek and any influence that Castle Creek may have or had over the governance of the portfolio company and the compensation of its executives. It should not be assumed that Castle Creek's investment in the referenced portfolio company has been or will ultimately be profitable.