8-K

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 20, 2006

Summit Financial Group, Inc.

(Exact name of registrant as specified in its charter)

West Virginia	0-16587	55-0672148
(State or Other Jurisdiction)	(Commission File Number)	(I.R.S. Employer Identification)

300 North Main Street

Moorefield, WV 26836

(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code

(304) 530-1000

Not Applicable

(Former name or former 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))

Section 2 - Financial Information

Item 2.02. Results of Operations and Financial Condition.

On April 20, 2006, Summit Financial Group, Inc. (“Summit”) issued a News Release announcing its earnings for the first quarter of 2006. 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

(c)   Exhibits

99News Release issued on April 20, 2006

SIGNATURE

Pursuant to the requirements of the Securities 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 20, 2006	By:/s/ Julie R. Cook
	Julie R. Cook
	Vice President and
	Chief Accounting Officer

EX-99

Exhibit 99

FOR RELEASE 6:00 AM EDT, THURSDAY, APRIL 20, 2006

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

SUMMIT FINANCIAL GROUP REPORTS Q1 2006 DILUTED EPS OF $0.41, UP 20.6%

MOOREFIELD, WV—April 20, 2006--Summit Financial Group, Inc. (Nasdaq: SMMF) today reported first quarter 2006 net income of $3.0 million, or $0.41 per diluted share, compared with $2.4 million or $0.34 per diluted share for the first quarter of 2005. On a per share basis, earnings increased 20.6 percent over the prior-year period. First quarter 2006 results reflect strong revenue growth, both from community banking and mortgage banking activities, and controlled expense growth. For the first quarter of 2006, the returns on average shareholders' equity and average assets were 15.60 percent and 1.05 percent, respectively, compared with prior-year period ratios of 14.53 percent and 1.08 percent.

H. Charles Maddy, III, President and Chief Executive Officer, commented, “We are pleased with our strong quarterly results. Our northern Virginia markets continue to generate good lending opportunities, a trend we anticipate will continue. We are further pleased that asset quality, which remains excellent, has not been compromised by our loan growth. Our positive trends in both loans and core deposits make us optimistic regarding growth prospects for 2006.”

Mr. Maddy continued, “We typically experience a slowdown in mortgage originations for the fourth and first quarters, and the past two quarters have been no exception. Since inception, however, our quarterly originations have been increasing year-over-year, despite rising interest rates. We believe this reflects very favorably on Summit and our understanding of our products, our markets, and our clientele.”

FIRST QUARTER CONSOLIDATED RESULTS

Total revenue for the first quarter of 2006, consisting of net interest income plus non-interest income, was $16.2 million, an increase of 17.3 percent over the first quarter of 2005. Net interest income increased 20.6 percent above the prior-year period, to $8.6 million, reflecting 26.6 percent growth in average earning assets, partially offset by a 20 basis point decline in the net interest margin to 3.39 percent (unchanged from the previous quarter’s net interest margin of 3.39 percent). Mr. Maddy noted that funding costs continue to pressure margins, as loan growth surpassed growth in retail deposits, requiring continued reliance on higher cost brokered deposits.

Non-interest income was $7.6 million, an increase of 13.8 percent over the prior-year period. Mortgage origination revenue from Summit Mortgage, the Company's mortgage banking unit, increased 12.4 percent, while bank service fees, insurance commissions and other income grew 15.4 percent, 55.4 percent, and 22.4 percent respectively.

Non-interest expense for the first quarter of 2006 was $11.5 million, a 14.5 percent increase over the $10.1 million reported for the first quarter of 2005. Salaries and employee benefits grew $616,000 or 13.6 percent and represented the largest category of expense growth, followed by other expense, which grew $440,000 or 25.9%. The efficiency ratio improved to 69.16 percent for the first quarter of 2006, from 70.26 percent for the prior-year period.

Asset quality remains strong.  Net charge-offs were $62,000 for the first quarter of 2006, equivalent to an annualized 0.03 percent of average loans. Nonperforming assets were $2.3 million, or 0.20 percent of assets at March 31, 2006, unchanged on a percentage basis from twelve months ago. At period-end, the allowance for losses was 0.77 percent of loans.

Assets at March 31, 2006 were $1.14 billion, an increase of 25.4 percent over the last twelve months. The increase was driven by portfolio loan growth of $202.3 million, up 32.2 percent, to $831.5 million, which consisted principally of increases in the commercial real estate and construction and development loan portfolios.

Deposits at March 31, 2006 were $730.7 million, an increase of $193.3 million, or 36.0 percent from twelve months ago. Checking and savings accounts increased 30.9 percent year-over-year. Mr. Maddy added, “Deposit gathering continues to be a primary focus for us. We have intensified our efforts to build our core deposit base, which includes a more competitive line of products and a retail compensation structure tied to core deposit growth. These initiatives are yielding measurable success.”

Shareholders' equity at period end was $75.8 million, an increase of 14.2 percent over the last twelve months. Common shares outstanding totaled 7,134,920 at March 31, 2006.

OPERATING SEGMENT RESULTS

Community Banking Financial Performance

Net income for the first quarter of 2006 increased 23.3 percent over the prior-year period to $2.9 million. Total revenue increased 20.5 percent to $9.5 million, while non-interest expense increased 18.9 percent to $5.0 million. The Community Banking segment's efficiency ratio was 53.76 percent for the first quarter of 2006 compared with 52.90 percent for the prior-year first quarter.

Mortgage Banking Financial Performance

For the first quarter of 2006, net income was $333,000 compared with $226,000 for the first quarter of 2005, an increase of 47.3 percent. Mortgage banking fees generated from loan sales were $6.6 million, up 12.4 percent from the $5.9 million reported in the prior-year period, reflecting a 14.4 percent increase in loan sales to $76.0 million. Mortgage origination revenue per loan sold increased 2.5 percent, to $4,600, as did the average loan size, up 4.3 percent to $53,700.

Loan originations in the first quarter of 2006 were $73.0 million, a seasonal decline of 6.8 percent from the linked quarter but 5.9 percent ahead of the prior-year first quarter. Non-interest expense, primarily associated with loan originations, totaled $6.2 million, an 11.3 percent increase over the $5.6 million incurred in the prior-year period. Expenses per loan originated increased 5.1 percent in first quarter 2006 compared to first quarter 2005.

ABOUT THE COMPANY

Summit Financial Group, Inc., a financial holding company with total assets of $1.1 billion, operates fourteen banking locations through its two wholly-owned community banks: Summit Community Bank, headquartered in Moorefield, West Virginia; and Shenandoah Valley National Bank in Winchester, Virginia. Summit also operates Summit Mortgage, a residential mortgage loan originator headquartered in Chesapeake, Virginia and Summit Insurance Services, LLC in Moorefield, West Virginia.

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 changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; 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 economy. We undertake no obligation to revise these statements following the date of this press release.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary -- Q1 2006 vs Q1 2005
	For the Quarter Ended						Percent
Dollars in thousands, except per share amounts	3/31/2006			3/31/2005			Change
Condensed Statements of Income
Interest income
Loans, including fees	$	15,492		$	10,010			54.8	%
Securities		2,647			2,258			17.2	%
Other		24			25			-4.0	%
Total interest income		18,163			12,293			47.8	%
Interest expense
Deposits		5,153			2,517			104.7	%
Borrowings		4,379			2,621			67.1	%
Total interest expense		9,532			5,138			85.5	%
Net interest income		8,631			7,155			20.6	%
Provision for loan losses		395			330			19.7	%
Net interest income after provision
for loan losses		8,236			6,825			20.7	%
Noninterest income
Insurance commissions		230			148			55.4	%
Service fee income		631			547			15.4	%
Mortgage origination revenue		6,584			5,856			12.4	%
Securities gains (losses)		-			-			n/a
Other income		142			116			22.4	%
Total noninterest income		7,587			6,667			13.8	%
Noninterest expense
Salaries and employee benefits		5,158			4,542			13.6	%
Net occupancy expense		571			429			33.1	%
Equipment expense		520			493			5.5	%
Postage expense		1,791			1,567			14.3	%
Advertising		1,339			1,325			1.1	%
Other expenses		2,139			1,699			25.9	%
Total noninterest expense		11,518			10,055			14.5	%
Income before income taxes		4,305			3,437			25.3	%
Income taxes		1,334			1,026			30.0	%
Net income	$	2,971		$	2,411			23.2	%
Per Share Data
Basic earnings	$	0.42		$	0.34			23.5	%
Diluted earnings	$	0.41		$	0.34			20.6	%
Average shares outstanding
Basic		7,128,076			7,039,783			1.3	%
Diluted		7,192,924			7,171,099			0.3	%
Performance Ratios
Return on average equity		15.60	%		14.53	%		7.4	%
Return on average assets		1.05	%		1.08	%		-2.8	%
Net interest margin - taxable equivalent		3.39	%		3.59	%		-5.6	%
Efficiency ratio consolidated(A)		69.16	%		70.26	%		-1.6	%
Efficiency ratio excluding mortgage banking (A)		53.76	%		52.90	%		1.6	%

NOTE: (A) - Computed on a tax equivalent basis excluding nonrecurring income and expense items and amortization of intangibles.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Five Quarter Performance Summary
	For the Quarter Ended
Dollars in thousands, except per share amounts	3/31/2006			12/31/2005			9/30/2005			6/30/2005			3/31/2005
Condensed Statements of Income
Interest income
Loans, including fees	$	15,492		$	14,260		$	12,527		$	11,205		$	10,010
Securities		2,647			2,368			2,283			2,291			2,258
Other		24			30			27			28			25
Total interest income		18,163			16,658			14,837			13,524			12,293
Interest expense
Deposits		5,153			4,450			3,509			2,926			2,517
Borrowings		4,379			3,971			3,518			2,994			2,621
Total interest expense		9,532			8,421			7,027			5,920			5,138
Net interest income		8,631			8,237			7,810			7,604			7,155
Provision for loan losses		395			300			424			425			330
Net interest income after provision
for loan losses		8,236			7,937			7,386			7,179			6,825
Noninterest income
Insurance commissions		230			247			222			235			148
Service fee income		631			680			711			651			547
Mortgage origination revenue		6,584			6,098			7,304			7,113			5,856
Securities gains (losses)		-			(1,434	)		39			5			-
Other income		142			(65	)		189			211			116
Total noninterest income		7,587			5,526			8,465			8,215			6,667
Noninterest expense
Salaries and employee benefits		5,158			4,944			5,435			5,394			4,542
Net occupancy expense		571			510			479			463			429
Equipment expense		520			470			465			483			493
Postage expense		1,791			1,387			1,451			1,458			1,567
Advertising		1,339			1,168			1,164			1,222			1,325
Other expenses		2,139			1,960			1,884			1,855			1,699
Total noninterest expense		11,518			10,439			10,878			10,875			10,055
Income before income taxes		4,305			3,024			4,973			4,519			3,437
Income taxes		1,334			582			1,700			1,403			1,026
Net income	$	2,971		$	2,442		$	3,273		$	3,116		$	2,411
Per Share Data
Basic earnings	$	0.42		$	0.34		$	0.46		$	0.44		$	0.34
Diluted earnings	$	0.41		$	0.34		$	0.45		$	0.43		$	0.34
Average shares outstanding
Basic		7,128,076			7,125,994			7,125,483			7,081,044			7,039,783
Diluted		7,192,924			7,198,068			7,211,331			7,205,377			7,171,099
Performance Ratios
Return on average equity		15.60	%		13.15	%		18.24	%		18.21	%		14.53	%
Return on average assets		1.05	%		0.92	%		1.33	%		1.34	%		1.08	%
Net interest margin - taxable equivalent		3.39	%		3.39	%		3.47	%		3.61	%		3.59	%
Efficiency ratio consolidated (A)		69.16	%		65.50	%		65.40	%		66.98	%		70.26	%
Efficiency ratio excluding mortgage banking (A)		53.76	%		50.73	%		53.75	%		54.15	%		52.90	%

NOTE: (A) - Computed on a tax equivalent basis excluding nonrecurring income and expense items and amortization of intangibles.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Segment Information
For the Quarter Ended March 31, 2006
	Community			Mortgage			Parent
Dollars in thousands	Banking			Banking			and Other			Eliminations			Total
Condensed Statements of Income
Interest income	$	17,900		$	562		$	12		$	(311	)	$	18,163
Interest expense		9,163			311			369			(311	)		9,532
Net interest income		8,737			251			(357	)		-			8,631
Provision for loan losses		325			70			-			-			395
Net interest income after provision
for loan losses		8,412			181			(357	)		-			8,236
Noninterest income		810			6,584			1,690			(1,497	)		7,587
Noninterest expense		4,992			6,232			1,791			(1,497	)		11,518
Income before income taxes		4,230			533			(458	)		-			4,305
Income taxes		1,315			200			(181	)		-			1,334
Net income	$	2,915		$	333		$	(277	)	$	-		$	2,971
Intersegment revenue (expense)	$	(1,104	)	$	(385	)	$	1,489		$	-		$	-
Average assets	$	1,116,002		$	22,598		$	97,819		$	(109,706	)	$	1,126,713

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Segment Information
For the Quarter Ended March 31, 2005
	Community			Mortgage			Parent
Dollars in thousands	Banking			Banking			and Other			Eliminations			Total
Condensed Statements of Income
Interest income	$	12,204		$	302		$	7		$	(220	)	$	12,293
Interest expense		4,971			218			169			(220	)		5,138
Net interest income		7,233			84			(162	)		-			7,155
Provision for loan losses		330			-			-			-			330
Net interest income after provision
for loan losses		6,903			84			(162	)		-			6,825
Noninterest income		689			5,856			1,298			(1,176	)		6,667
Noninterest expense		4,198			5,597			1,436			(1,176	)		10,055
Income before income taxes		3,394			343			(300	)		-			3,437
Income taxes		1,029			117			(120	)		-			1,026
Net income	$	2,365		$	226		$	(180	)	$	-		$	2,411
Intersegment revenue (expense)	$	(906	)	$	(263	)	$	1,169		$	-		$	-
Average assets	$	883,731		$	19,386		$	78,885		$	(89,841	)	$	892,161

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Selected Balance Sheet Data
	For the Quarter Ended
Dollars in thousands, except per share amounts	3/31/2006		12/31/2005		9/30/2005		6/30/2005		3/31/2005
Assets	$	1,137,692	$	1,109,532	$	1,029,103	$	946,487	$	907,264
Securities		233,805		223,772		215,757		209,561		209,223
Loans held for sale, net		12,343		16,585		12,695		16,994		15,766
Loans, net		825,022		793,767		729,431		659,792		623,863
Intangible assets		3,310		3,348		3,385		3,423		3,461
Retail deposits		560,551		545,104		521,503		487,885		482,696
Brokered time deposits		170,185		128,797		107,416		77,282		54,716
Short-term borrowings		136,483		182,028		139,681		127,974		129,697
Long-term borrowings and
subordinated debentures		183,136		170,501		179,383		176,796		165,384
Shareholders' equity		75,816		73,803		72,429		69,838		66,400
Book value per share	$	10.63	$	10.36	$	10.16	$	9.80	$	9.43

Loan Composition
Dollars in thousands	3/31/2006		12/31/2005		9/30/2005		6/30/2005		3/31/2005
Commercial	$	66,564	$	63,206	$	60,723	$	59,067	$	56,394
Commercial real estate		275,896		266,228		*		*		*
Construction and development		165,026		141,207		*		*		*
Residential real estate		282,013		285,597		*		*		*
Consumer		37,357		36,863		37,431		36,993		37,066
Other		6,382		8,598		8,824		9,233		7,458
Total loans		833,238		801,699		736,992		666,948		630,501
Less unearned fees and interest		1,731		1,780		1,640		1,459		1,322
Total loans net of unearned fees and interest		831,507		799,919		735,352		665,489		629,179
Less allowance for loan losses		6,485		6,152		5,921		5,697		5,316
Loans, net	$	825,022	$	793,767	$	729,431	$	659,792	$	623,863

* - Due to reclassification of real estate loans to include construction and development category, real estate loan balances prior to 12/31/05 conforming to the new classifications is not available.

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Retail Deposit Composition
Dollars in thousands	3/31/2006		12/31/2005		9/30/2005		6/30/2005		3/31/2005
Non interest bearing checking	$	62,860	$	62,631	$	69,346	$	63,207	$	57,008
Interest bearing checking		214,572		200,638		169,893		145,626		134,500
Savings		39,474		44,681		45,868		47,407		50,647
Time deposits		243,645		237,154		236,396		231,645		240,541
Total retail deposits	$	560,551	$	545,104	$	521,503	$	487,885	$	482,696

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Mortgage Banking Segment Loan Activity
	For the Quarter Ended
Dollars in thousands	3/31/2006		12/31/2005		9/30/2005		6/30/2005		3/31/2005
Loans originated
Amount	$	72,967	$	78,297	$	83,860	$	83,616	$	68,929
Number		1,386		1,443		1,567		1,578		1,308
Loans sold
Amount	$	76,375	$	73,903	$	87,071	$	81,422	$	66,761
Number		1,421		1,376		1,566		1,549		1,295

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Asset Quality Information
	For the Quarter Ended
Dollars in thousands	3/31/2006			12/31/2005			9/30/2005			6/30/2005			3/31/2005
Net loan charge-off's	$	62		$	70		$	200		$	44		$	87
Net loan charge-off's to average loans (annualized)		0.03	%		0.04	%		0.11	%		0.03	%		0.05	%
Allowance for loan losses	$	6,485		$	6,152		$	5,921		$	5,697		$	5,316
Allowance for loan losses as a percentage
of period end loans		0.77	%		0.75	%		0.79	%		0.83	%		0.82	%
Nonperforming assets:
Nonperforming loans	$	1,972		$	1,382		$	1,017		$	911		$	836
Foreclosed properties and
other repossessed assets		346			395			862			949			608
Nonaccrual securities		-			-			-			326			334
Total	$	2,318		$	1,777		$	1,879		$	2,186		$	1,778
Nonperforming loans to period end loans		0.23	%		0.17	%		0.14	%		0.13	%		0.13	%
Nonperforming assets to period end assets		0.20	%		0.16	%		0.18	%		0.23	%		0.20	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q1 2006 vs Q1 2005
	Q1 2006								Q1 2005
	Average			Earnings /		Yield /			Average			Earnings /		Yield /
Dollars in thousands	Balances			Expense		Rate			Balances			Expense		Rate
ASSETS
Interest earning assets
Loans, net of unearned interest
Taxable	$	829,381		$	15,392		7.53	%	$	623,652		$	9,901		6.44	%
Tax-exempt		8,244			150		7.38	%		9,108			164		7.30	%
Securities
Taxable		186,586			2,135		4.64	%		162,314			1,730		4.32	%
Tax-exempt		44,077			767		7.06	%		47,876			794		6.73	%
Interest bearing deposits other banks
and Federal funds sold		2,294			24		4.24	%		2,717			25		3.73	%
Total interest earning assets		1,070,582			18,468		7.00	%		845,667			12,614		6.05	%
Noninterest earning assets
Cash & due from banks		14,449								14,513
Premises & equipment		23,361								20,740
Other assets		24,659								16,442
Allowance for loan losses		(6,338	)							(5,201	)
Total assets	$	1,126,713							$	892,161
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	204,161		$	1,543		3.07	%	$	127,994		$	425		1.35	%
Savings deposits		43,067			73		0.69	%		50,727			79		0.63	%
Time deposits		374,170			3,537		3.83	%		298,514			2,013		2.73	%
Short-term borrowings		172,380			1,964		4.62	%		116,898			754		2.62	%
Long-term borrowings and
subordinated debentures		184,051			2,415		5.32	%		170,203			1,867		4.45	%
		977,829			9,532		3.95	%		764,336			5,138		2.73	%
Noninterest bearing liabilities
Demand deposits		63,308								56,130
Other liabilities		9,395								5,316
Total liabilities		1,050,532								825,782
Shareholders' equity		76,181								66,379
Total liabilities and
shareholders' equity	$	1,126,713							$	892,161
NET INTEREST EARNINGS				$	8,936							$	7,476
NET INTEREST MARGIN							3.39	%							3.59	%