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):January 25, 2007

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 January 25, 2007, Summit Financial Group, Inc. (“Summit”) issued a News Release announcing its earnings for the fourth quarter and for the year 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 January 25, 2007

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: January 25, 2007 By: /s/ Julie R. Cook

           Julie R. Cook

     Vice President and

                                                                  Chief Accounting Officer

EX-99

                     Exhibit 99   

FOR RELEASE 6:00 AM EST, THURSDAY, JANUARY 25, 2007

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

SUMMIT FINANCIAL GROUP REPORTS EARNINGS FOR YEAR AND FOURTH QUARTER 2006

MOOREFIELD, W.Va.--(PRIMENEWSWIRE)--January 25, 2007--Summit Financial Group, Inc. (NASDAQ: SMMF) today reported the results of its consolidated operations and its continuing operations which excludes from income substantially all business activities of Summit Mortgage, its residential mortgage loan origination unit, following the Company’s announcement on November 17, 2006 of its intent either to sell or terminate that business:

·   Consolidated net income for 2006 was $8.3 million, or $1.15 per diluted share, compared with $11.2 million, or $1.56 per diluted share, reported for 2005.

·   Income from continuing operations was $11.1 million, or $1.54 per diluted share, an increase of 27.0 percent and 27.3 percent, respectively, compared with $8.7 million, or $1.21 per diluted share, reported for 2005.

·   A one-time after-tax charge of $1.6 million ($0.23 per diluted share) related to the termination of Summit Mortgage’s business was recognized in fourth quarter 2006 and is included as a component of discontinued operations to record the write down of furniture, equipment and leasehold improvements to fair value and to record certain exit costs primarily related to severance benefits and the termination of operating lease obligations.

Fiscal year 2005 results include a $1.5 million pre-tax other-than-temporary non-cash impairment charge, equivalent to $940,000 on an after-tax basis, or $0.13 per diluted share. This impairment charge related to $5.7 million of certain preferred stock issuances of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation which Summit continues to own.

The returns on average shareholders' equity and average assets from continuing operations were 14.00 percent and 0.94 percent, respectively, compared with prior year ratios of 12.31 percent and 0.90 percent. Results reflect strong loan growth from community banking year over year, but has recently begun to moderate, offset by net interest margin pressures and a higher loan loss provision.

·   For the fourth quarter of 2006, Summit reported net income of $181,000, or $0.03 per diluted share, compared with $2.4 million, or $.34 per diluted share for the fourth quarter of 2005.

·   Income from continuing operations was $2.7 million, or $0.39 per diluted share, up 42.3 percent and 44.4 percent, respectively, compared with $1.9 million, or $0.27 per diluted share for the prior-year quarter.

Fourth quarter 2005 results include the above-mentioned non-cash impairment charge of $940,000, or $0.13 per diluted share. Returns on average shareholders' equity and average assets from continuing operations for the fourth quarter of 2006 were 13.24 percent and 0.89 percent, respectively, compared with 2005 fourth quarter ratios of 10.30 percent and 0.72 percent.

H. Charles Maddy, III, President and Chief Executive Officer, commented, “2006 was a difficult year for Summit as we came to terms with a difficult business model in an unforgiving economy. Although we had recognized that Summit Mortgage was not performing up to expectations, we were hopeful that conditions would permit more time to realign these activities. Ultimately, however the continuing uncertainty for performance improvement dictated that it was in the best interest of our shareholders to exit the mortgage business, which we have done.

“Our community banking markets, by comparison, have demonstrated exceptional resilience to economic conditions. Loan growth over the past twelve months has been a very satisfactory 15.5 percent - more moderate than in the past, but sufficiently strong to support top-line growth -- as we have done successfully every quarter this past year, despite margin compression. We continue to see excellent opportunities within our markets. Our recent decision to exit mortgage banking will allow us to focus our resources and capital on these community banking opportunities.”

SUMMARY OF RESULTS FROM CONTINUING OPERATONS

Total revenue for 2006, consisting of net interest income plus non-interest income, was $39.5 million, an increase of 21.1 percent compared to the $32.7 million reported for 2005. Excluding the $1.5 million impairment charge included in 2005 results, total revenue increased 15.8 percent. Net interest income grew 17.1 percent above the prior year, to $35.3 million, reflecting 22.6 percent growth in average earning assets, partially offset by a 19 basis point decline in the net interest margin to 3.32 percent. Non-interest income for 2006, was $4.3 million compared with $2.5 million for the prior year; excluding the non-cash impairment charge incurred in 2005, non-interest income increased 6.2 percent, from $4.0 million in the prior year to $4.3 million. The increase reflected solid growth in insurance commissions and service fees.

For the fourth quarter of 2006, total revenue was $10.3 million compared with $7.5 million for the year-earlier quarter; excluding the $1.5 million impairment charge included in fourth quarter 2005 results, total revenue increased 14.3 percent. Net interest income was $9.2 million compared with $8.1 million in the prior-year quarter, an increase of 13.9 percent. The increase reflected 17.3 percent growth in average earning assets, partially offset by a 14 basis point decline in the net interest margin to 3.25 percent. Non-interest income, excluding the fourth quarter 2005 impairment charge, increased 17.7 percent, from $928,000 in the prior-year quarter to $1.1 million for the current period.

Non-interest expense for 2006 was $21.6 million compared with $19.3 million for the prior year, an increase of 12.2 percent. The efficiency ratio (of continuing operations) was 51.51 percent compared with 52.85 percent for 2005.Non-interest expense has remained relatively flat over the past four quarters. For the fourth quarter of 2006, non-interest expense was $5.3 compared with $4.9 million for the fourth quarter of 2005, an increase of 7.9 percent. The efficiency ratio was 48.85 percent for the fourth quarter of 2006 compared with 50.73 percent for the prior-year quarter, and 49.38 percent for the linked quarter.

Asset quality remains sound overall; however, nonperforming loans showed a $3.9 million increase this quarter, which resulted primarily from the loans of a single customer relationship. Summit is well-collateralized with regard to this credit, and adequate reserves have already been taken. At present, we do not anticipate any significant further deterioration in asset quality in the near term. Nonperforming assets were $5.4 million or 0.43 percent of assets at December 31, 2006, compared with $1.7 million, or 0.15 percent, 12 months ago. Net charge-offs for 2006 were $445,000, equivalent to 0.05 percent of average loans, compared with $257,000 and 0.04 percent of loans for the preceding year. At period-end, loan loss reserves were 0.81 percent of loans.

Assets at December 31, 2006 were $1.23 billion, an increase of $125.3 million, or 11.3 percent over the last twelve months. Loans, net of unearned income, were $923.6 million at December 31, 2006, up $124.0 million or 15.5 percent year-over-year. Commercial real estate and construction/development were the largest contributors to growth, up $48.0 million (18.0 percent) and $74.6 million (52.8 percent), respectively, since December 31, 2005. Together, these two categories comprised 57.3 percent of the loan portfolio, with residential mortgages accounting for an additional 30.5 percent.

Deposits at December 31, 2006 were $888.7 million, an increase of $214.8 million, or 31.9 percent above prior year-end levels. Nearly $609 million of these deposits are derived from retail accounts, particularly interest bearing checking accounts, which grew $19.5 million or 9.7 percent from year-ago levels. Brokered deposits increased $150.8 million, or 117.1 percent, compared to the prior year.

Shareholders' equity at December 31, 2006 was $79.9 million, an increase of 8.2 percent over the last twelve months. Common shares outstanding totaled 7,089,680 at year-end. In August 2006, we announced a plan to repurchase up to 225,000 share of our common stock, and accordingly, during the fourth quarter we repurchased 21,500 shares under this plan.

ABOUT THE COMPANY

Summit Financial Group, Inc., a financial holding company with total assets of $1.2 billion, operates fifteen 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 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 -- Q4 2006 vs Q4 2005
	For the Quarter Ended						Percent
Dollars in thousands	12/31/2006			12/31/2005			Change
Condensed Statements of Income
Interest income
Loans, including fees	$	19,434		$	14,088			37.9	%
Securities		3,131			2,368			32.2	%
Other		7			30			-76.7	%
Total interest income		22,572			16,486			36.9	%
Interest expense
Deposits		8,990			4,450			102.0	%
Borrowings		4,393			3,971			10.6	%
Total interest expense		13,383			8,421			58.9	%
Net interest income		9,189			8,065			13.9	%
Provision for loan losses		930			260			257.7	%
Net interest income after provision
for loan losses		8,259			7,805			5.8	%
Noninterest income
Insurance commissions		228			247			-7.7	%
Service fee income		702			680			3.2	%
Securities gains (losses)		-			(1,434	)		-100.0	%
Other income		162			(65	)		-349.2	%
Total noninterest income		1,092			(572	)		-290.9	%
Noninterest expense
Salaries and employee benefits		2,899			2,770			4.7	%
Net occupancy expense		378			357			5.9	%
Equipment expense		480			408			17.6	%
Professional fees		252			207			21.7	%
Other expenses		1,291			1,170			10.3	%
Total noninterest expense		5,300			4,912			7.9	%
Income from continuing operations before income taxes		4,051			2,321			74.5	%
Income taxes		1,328			408			225.5	%
Income from continuing operations		2,723			1,913			42.3	%
Discontinued operations
Exit costs and impairment of long-lived assets		(2,480	)		-			n/a
Operating income (loss)		(1,373	)		703			-295.3	%
Income from discontinued operations
before income taxes		(3,853	)		703			-648.1	%
Income taxes		(1,311	)		174			-853.4	%
Income (loss) from discontinued operations		(2,542	)		529			-580.5	%
Net Income	$	181		$	2,442			-92.6	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary -- Q4 2006 vs Q4 2005
	For the Quarter Ended						Percent
	12/31/2006			12/31/2005			Change
Per Share Data
Earnings per share from continuing operations
Basic	$	0.39		$	0.27			44.4	%
Diluted	$	0.39		$	0.27			44.4	%
Earnings per share from discontinued operations
Basic	$	(0.36	)	$	0.07			-614.3	%
Diluted	$	(0.36	)	$	0.07			-614.3	%
Earnings per share
Basic	$	0.03		$	0.34			-91.2	%
Diluted	$	0.03		$	0.34			-91.2	%
Average shares outstanding
Basic		7,092,531			7,125,994			-0.5	%
Diluted		7,151,378			7,198,068			-0.6	%
Performance Ratios
Return on average equity		0.88	%		13.15	%		-93.3	%
Return on average equity - continuing operations		13.24	%		10.30	%		28.5	%
Return on average assets		0.06	%		0.92	%		-93.5	%
Return on average assets - continuing operations		0.89	%		0.72	%		23.6	%
Net interest margin		3.25	%		3.39	%		-4.1	%
Efficiency ratio (A)		69.20	%		65.50	%		5.6	%
Efficiency ratio - continuing operations (A)		48.85	%		50.73	%		-3.7	%

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

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Annual Performance Summary -- 2006 vs 2005
	For the Year Ended						Percent
Dollars in thousands	12/31/2006			12/31/2005			Change
Condensed Statements of Income
Interest income
Loans, including fees	$	68,656		$	47,344			45.0	%
Securities		11,562			9,201			25.7	%
Other		60			108			-44.4	%
Total interest income		80,278			56,653			41.7	%
Interest expense
Deposits		28,312			13,402			111.3	%
Borrowings		16,670			13,104			27.2	%
Total interest expense		44,982			26,506			69.7	%
Net interest income		35,296			30,147			17.1	%
Provision for loan losses		1,845			1,295			42.5	%
Net interest income after provision
for loan losses		33,451			28,852			15.9	%
Noninterest income
Insurance commissions		924			853			8.3	%
Service fee income		2,758			2,589			6.5	%
Securities gains (losses)		-			(1,390	)		-100.0	%
Other income		571			451			26.6	%
Total noninterest income		4,253			2,503			69.9	%
Noninterest expense
Salaries and employee benefits		11,821			10,810			9.4	%
Net occupancy expense		1,557			1,371			13.6	%
Equipment expense		1,901			1,713			11.0	%
Professional fees		893			748			19.4	%
Other expenses		5,438			4,621			17.7	%
Total noninterest expense		21,610			19,263			12.2	%
Income from continuing operations before income taxes		16,094			12,092			33.1	%
Income taxes		5,024			3,373			48.9	%
Income from continuing operations		11,070			8,719			27.0	%
Discontinued operations
Exit costs and impairment of long-lived assets		(2,480	)		-			n/a
Operating income (loss)		(1,750	)		3,862			-145.3	%
Income (loss) from discontinued operations
before income taxes		(4,230	)		3,862			-209.5	%
Income taxes		(1,427	)		1,339			-206.6	%
Income (loss) from discontinued operations		(2,803	)		2,523			-211.1	%
Net Income	$	8,267		$	11,242			-26.5	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Annual Performance Summary -- 2006 vs 2005
	For the Year Ended						Percent
	12/31/2006			12/31/2005			Change
Per Share Data
Earnings per share from continuing operations
Basic	$	1.55		$	1.23			26.1	%
Diluted	$	1.54		$	1.21			27.3	%
Earnings per share from discontinued operations
Basic	$	(0.39	)	$	0.35			-211.4	%
Diluted	$	(0.39	)	$	0.35			-211.4	%
Earnings per share
Basic	$	1.16		$	1.58			-26.5	%
Diluted	$	1.15		$	1.56			-26.3	%
Average shares outstanding
Basic		7,120,762			7,093,402			0.4	%
Diluted		7,183,526			7,206,838			-0.3	%
Performance Ratios
Return on average equity		10.46	%		15.87	%		-34.1	%
Return on average equity - continuing operations		14.00	%		12.31	%		13.7	%
Return on average assets		0.70	%		1.16	%		-39.7	%
Return on average assets - continuing operations		0.94	%		0.90	%		4.4	%
Net interest margin		3.32	%		3.51	%		-5.4	%
Efficiency ratio (A)		69.91	%		66.93	%		4.5	%
Efficiency ratio - continuing operations (A)		51.51	%		52.85	%		-2.5	%

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	12/31/2006			9/30/2006			6/30/2006		3/31/2006		12/31/2005
Condensed Statements of Income
Interest income
Loans, including fees	$	19,434		$	18,060		$	16,609	$	15,240	$	14,088
Securities		3,131			2,998			2,787		2,647		2,368
Other		7			16			13		24		30
Total interest income		22,572			21,074			19,409		17,911		16,486
Interest expense
Deposits		8,990			7,761			6,408		5,153		4,450
Borrowings		4,393			4,239			4,348		4,379		3,971
Total interest expense		13,383			12,000			10,756		9,532		8,421
Net interest income		9,189			9,074			8,653		8,379		8,065
Provision for loan losses		930			260			330		325		260
Net interest income after provision
for loan losses		8,259			8,814			8,323		8,054		7,805
Noninterest income
Insurance commissions		228			219			247		230		247
Service fee income		702			700			726		631		680
Securities gains (losses)		-			-			-		-		(1,434	)
Other income		162			131			136		142		(65	)
Total noninterest income		1,092			1,050			1,109		1,003		(572	)
Noninterest expense
Salaries and employee benefits		2,899			2,817			3,049		3,055		2,770
Net occupancy expense		378			387			390		401		357
Equipment expense		480			476			496		450		408
Professional fees		252			188			245		207		207
Other expenses		1,291			1,409			1,492		1,248		1,170
Total noninterest expense		5,300			5,277			5,672		5,361		4,912
Income before income taxes		4,051			4,587			3,760		3,696		2,321
Income taxes		1,328			1,421			1,167		1,108		408
Income from continuing operations		2,723			3,166			2,593		2,588		1,913
Discontinued operations
Exit costs and impairment of long-lived assets		(2,480	)		-			-		-		-
Operating income (loss)		(1,373	)		(1,059	)		74		609		703
Income from discontinued operations
before income taxes		(3,853	)		(1,059	)		74		609		703
Income taxes		(1,311	)		(374	)		33		226		174
Income (loss) from discontinued operations		(2,542	)		(685	)		41		383		529
Net Income	$	181		$	2,481		$	2,634	$	2,971	$	2,442

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Five Quarter Performance Summary
	For the Quarter Ended
	12/31/2006			9/30/2006			6/30/2006			3/31/2006			12/31/2005
Per Share Data
Earnings per share from continuing operations
Basic	$	0.39		$	0.45		$	0.36		$	0.36		$	0.27
Diluted	$	0.39		$	0.45		$	0.36		$	0.36		$	0.27
Earnings per share from discontinued operations
Basic	$	(0.36	)	$	(0.10	)	$	0.01		$	0.06		$	0.07
Diluted	$	(0.36	)	$	(0.10	)	$	0.01		$	0.05		$	0.07
Earnings per share
Basic	$	0.03		$	0.35		$	0.37		$	0.42		$	0.34
Diluted	$	0.03		$	0.35		$	0.37		$	0.41		$	0.34
Average shares outstanding
Basic		7,092,531			7,127,650			7,135,107			7,128,076			7,125,994
Diluted		7,151,378			7,187,274			7,193,407			7,192,924			7,198,068
Performance Ratios
Return on average equity		0.88	%		12.46	%		13.53	%		15.60	%		13.15	%
Return on average equity - continuing operations		13.24	%		15.90	%		13.32	%		13.59	%		10.30	%
Return on average assets		0.06	%		0.83	%		0.91	%		1.05	%		0.92	%
Return on average assets - continuing operations		0.89	%		1.06	%		0.89	%		0.92	%		0.72	%
Net interest margin		3.25	%		3.33	%		3.32	%		3.39	%		3.39	%
Efficiency ratio (A)		69.20	%		70.57	%		70.69	%		69.16	%		65.50	%
Efficiency ratio - continuing operations (A)		48.85	%		49.38	%		54.33	%		53.76	%		50.73	%

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

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Selected Balance Sheet Data
	For the Quarter Ended
Dollars in thousands, except per share amounts	12/31/2006		9/30/2006		6/30/2006		3/31/2006		12/31/2005
Assets	$	1,234,831	$	1,210,491	$	1,179,648	$	1,137,692	$	1,109,532
Securities		247,874		246,332		238,382		233,805		223,772
Loans, net		916,045		894,836		866,170		824,359		793,452
Intangible assets		3,197		3,234		3,272		3,310		3,348
Assets related to discontinued operations		9,715		8,369		11,633		14,577		18,411
Retail deposits		609,064		598,293		570,731		560,551		545,104
Brokered time deposits		279,623		266,769		190,832		170,185		128,797
Short-term borrowings		60,428		90,422		164,185		136,483		182,028
Long-term borrowings and
subordinated debentures		193,881		163,864		167,168		183,136		170,501
Shareholders' equity		79,875		80,630		76,559		75,816		73,803
Book value per share	$	11.27	$	11.35	$	10.73	$	10.63	$	10.36

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Loan Composition
Dollars in thousands	12/31/2006		9/30/2006		6/30/2006		3/31/2006		12/31/2005
Commercial	$	69,470	$	67,352	$	64,342	$	66,564	$	63,206
Commercial real estate		314,199		300,676		296,680		275,896		266,228
Construction and development		215,820		207,545		182,000		165,026		141,207
Residential real estate		282,512		283,943		288,316		281,301		285,242
Consumer		36,455		36,885		37,040		37,356		36,863
Other		6,968		7,086		6,188		6,382		8,598
Total loans		925,424		903,487		874,566		832,525		801,344
Less unearned fees and interest		1,868		1,806		1,767		1,731		1,780
Total loans net of unearned fees and interest		923,556		901,681		872,799		830,794		799,564
Less allowance for loan losses		7,511		6,845		6,629		6,435		6,112
Loans, net	$	916,045	$	894,836	$	866,170	$	824,359	$	793,452

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Retail Deposit Composition
Dollars in thousands	12/31/2006		9/30/2006		6/30/2006		3/31/2006		12/31/2005
Non interest bearing checking	$	62,591	$	64,751	$	66,071	$	62,860	$	62,631
Interest bearing checking		220,167		223,992		214,279		214,572		200,638
Savings		47,984		44,980		38,737		39,474		44,681
Time deposits		278,322		264,570		251,644		243,645		237,154
Total retail deposits	$	609,064	$	598,293	$	570,731	$	560,551	$	545,104

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Asset Quality Information - Continuing Operations
	For the Quarter Ended
Dollars in thousands	12/31/2006			9/30/2006			6/30/2006			3/31/2006			12/31/2005
Net loan charge-off's	$	263		$	45		$	135		$	2		$	70
Net loan charge-off's to average loans (annualized)		0.11	%		0.02	%		0.06	%		0.00	%		0.04	%
Allowance for loan losses	$	7,511		$	6,845		$	6,629		$	6,435		$	6,112
Allowance for loan losses as a percentage
of period end loans		0.81	%		0.76	%		0.76	%		0.77	%		0.76	%
Nonperforming assets:
Nonperforming loans	$	5,276		$	1,273		$	987		$	1,447		$	1,382
Foreclosed properties and
other repossessed assets		77			180			298			271			285
Total	$	5,353		$	1,453		$	1,285		$	1,718		$	1,667
Nonperforming loans to period end loans		0.57	%		0.14	%		0.11	%		0.17	%		0.17	%
Nonperforming assets to period end assets		0.43	%		0.12	%		0.11	%		0.15	%		0.15	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q4 2006 vs Q4 2005
	Q4 2006								Q4 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	$	914,050		$	18,735		8.13	%	$	773,394		$	14,160		7.26	%
Tax-exempt		8,591			166		7.67	%		8,106			150		7.34	%
Securities
Taxable		202,758			2,566		5.02	%		169,871			1,847		4.31	%
Tax-exempt		47,666			842		7.01	%		46,315			778		6.66	%
Interest bearing deposits other banks
and Federal funds sold		517			11		8.44	%		2,899			32		4.38	%
Total interest earning assets		1,173,582			22,320		7.55	%		1,000,585			16,967		6.73	%
Noninterest earning assets
Cash & due from banks		12,393								20,525
Premises & equipment		23,309								22,732
Other assets		26,786								24,389
Allowance for loan losses		(7,339	)							(6,075	)
Total assets	$	1,228,731							$	1,062,156
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	221,943		$	2,066		3.69	%	$	181,251		$	1,252		2.74	%
Savings deposits		46,804			243		2.06	%		44,917			77		0.68	%
Time deposits		549,785			6,679		4.82	%		352,146			3,122		3.52	%
Short-term borrowings		35,033			1,040		11.78	%		160,159			1,700		4.21	%
Long-term borrowings and
subordinated debentures		218,943			2,666		4.83	%		175,116			2,270		5.14	%
		1,072,508			12,694		4.70	%		913,589			8,421		3.66	%
Noninterest bearing liabilities
Demand deposits		63,671								65,378
Other liabilities		10,307								8,882
Total liabilities		1,146,486								987,849
Shareholders' equity		82,245								74,307
Total liabilities and
shareholders' equity	$	1,228,731							$	1,062,156
NET INTEREST EARNINGS				$	9,626							$	8,546
NET INTEREST MARGIN							3.25	%							3.39	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
YTD 2006 vs YTD 2005
	For the Year Ended December 31,
	2006								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	$	872,017		$	68,915		7.90	%	$	691,041		$	47,582		6.89	%
Tax-exempt		8,428			642		7.62	%		8,688			635		7.31	%
Securities
Taxable		193,046			9,403		4.87	%		164,611			7,076		4.30	%
Tax-exempt		46,382			3,227		6.96	%		47,563			3,180		6.69	%
Interest bearing deposits other banks
and Federal funds sold		1,216			62		5.10	%		2,779			109		3.92	%
Total interest earning assets		1,121,089			82,249		7.34	%		914,682			58,582		6.40	%
Noninterest earning assets
Cash & due from banks		13,417								17,583
Premises & equipment		23,496								21,234
Other assets		26,422								21,121
Allowance for loan losses		(6,849	)							(5,652	)
Total assets	$	1,177,575							$	968,968
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	215,642		$	7,476		3.47	%	$	151,271		$	3,120		2.06	%
Savings deposits		42,332			554		1.31	%		47,745			312		0.65	%
Time deposits		458,864			20,282		4.42	%		319,377			9,970		3.12	%
Short-term borrowings		130,771			6,612		5.06	%		138,694			4,824		3.48	%
Long-term borrowings and
subordinated debentures		176,422			10,058		5.70	%		172,260			8,280		4.81	%
		1,024,031			44,982		4.39	%		829,347			26,506		3.20	%
Noninterest bearing liabilities
Demand deposits		64,380								61,543
Other liabilities		10,106								7,258
Total liabilities		1,098,517								898,148
Shareholders' equity		79,058								70,820
Total liabilities and
shareholders' equity	$	1,177,575							$	968,968
NET INTEREST EARNINGS				$	37,267							$	32,076
NET INTEREST MARGIN							3.32	%							3.51	%