pressrel.htm

Income from continuing operations for third quarter 2007 was $3.8 million, or $0.50 per diluted share, up 5.7 percent and 2.0 percent, respectively, compared with $3.6 million, or $0.49 per diluted share, reported for the prior-year period. Consolidated net income was $3.6 million, or $0.48 per diluted share, compared with $2.9 million, or $0.39 per diluted share reported for the third quarter of 2006, up 26.3 percent and 23.1 percent, respectively. Third quarter 2007 results reflect solid asset growth, well-controlled operating expenses, and a remarkably stable net interest margin. For the third quarter of 2007, in accordance with GAAP accounting, the returns on average shareholders' equity and average assets from continuing operations were 16.71 percent and 1.15 percent, respectively, compared with prior-year ratios of 17.85 percent and 1.19 percent.

For the nine months ended September 30, 2007, income from continuing operations was $9.7 million, or $1.33 per diluted share, up 16.3 percent and 14.7 percent, respectively, compared with $8.3 million, or $1.16 per diluted share, reported for the prior-year period. Consolidated net income for the first nine months of 2007 was $9.2 million, or $1.27 per diluted share, compared with $8.1 million, or $1.12 per diluted share reported for the 2006 nine-month period, up 14.6 percent and 13.4 percent respectively. For the first nine months of 2007, the returns on average shareholders' equity and average assets from continuing operations calculated on a GAAP basis were 15.11 percent and 1.01 percent, respectively, compared with prior-year ratios of 14.24 percent and 0.96 percent.

On August 22, 2007, Summit Financial Group, Inc. filed a Form 8-K stating that as a result of a review by the Securities and Exchange Commission (“SEC”) of Summit’s Form 10-K for the year ended December 31, 2006, the Company’s interpretation of the short-cut method of hedge accounting under Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended (“SFAS 133”) as it was applied to certain of its interest rate swaps should be restated. Accordingly, in September 2007, the Company restated its financial statements for December 31, 2006, and the first two quarters of 2007 to eliminate the application of hedge accounting with respect to four interest rate swaps which previously had been designated as fair value hedges of certain convertible rate advances from the Federal Home Loan Bank (“FHLB”). The impact of the restatement is that fair value changes for these interest rate swaps are now recognized as noninterest income rather than as an adjustment to the carrying value of advances. Further, net cash settlement payments received/paid during each period are reclassified from interest expense on long-term borrowings to noninterest income. The four interest rate swaps, which were entered into in August 2003 to convert the fixed rate FHLB advances to a variable rate, had a notional value totaling $36 million. Restatements for prior years were incorporated into the December 31, 2006 restatement.

“This issue has affected many financial institutions who, like us, believed their initial accounting treatment for the transactions was appropriate,” explained Robert S. Tissue, Summit’s Chief Financial Officer. “The interpretation of SFAS 133 is complex and continues to evolve. Our swap transactions created effective economic hedges and performed as anticipated. In light of the recent review by the SEC, we have restated our historical financial statements for the periods since 2003 when we entered into the swaps. Should we elect to hold these swaps through their termination date of October 18, 2010, these market value adjustments will reverse themselves over the life of the swap and will result in no economic impact to the Company.”

For the third quarter, the change in the fair value of interest rate swaps was a gain of $752,000 in 2007 and a gain of $579,000 in 2006. These gains from the non-cash change in fair value have been reported as a component of noninterest income in accordance with GAAP. Excluding the gains in fair value, third quarter pre-tax earnings from continuing operations were $4.8 million in 2007 compared with $4.6 million in 2006, a year-over-year increase of 3.7 percent. For the first nine months, the change in the fair value of interest rate swaps was a gain of $705,000 in 2007 and a loss of $140,000 in 2006. Excluding the gains/losses in fair value, pre-tax earnings from continuing operations were $13.2 million for the first nine months in 2007 compared with $12.1 million during the first nine months in 2006, a year-over-year increase of 8.8 percent.

H. Charles Maddy, III, President and Chief Executive Officer, commented, " This has been an excellent quarter for us in several respects: We continue to see strong loan growth in our markets, with loan quality and pricing holding up well. The blip in our charge-offs this quarter reflects the fast-approaching end of our obligation to repurchase any substandard loans originated by Summit Mortgage; the reserves we previously recorded have been adequate to address the losses experienced since we discontinued this business segment.

“Second, we consolidated our two previously chartered West Virginia and Virginia community banks this past quarter – into one bank, Summit Community Bank. This consolidation will provide greater brand recognition throughout our two-state footprint, as well as operational expense savings. Summit Financial Group, our holding company, will continue to be headquartered in Moorefield, West Virginia. The Summit franchise will expand even further, into northern Virginia and Montgomery County, Maryland, when we expect to close on our acquisition of Greater Atlantic Financial late in the fourth quarter of this year.

Total revenue for the third quarter of 2007, consisting of net interest income plus noninterest income, was $12.9 million, an increase of 20.0 percent compared to the $10.8 million reported for the third quarter of 2006. Net interest income for the quarter increased 7.9 percent above the prior-year third quarter, to $10.0 million, reflecting 9.8 percent growth in average earning assets, partially offset by a 12 basis point decline in the net interest margin, to 3.28 percent. Mr. Maddy added, “Our margin continues to vary within a tight band over the past year and did not change in the past quarter. Going forward, we anticipate the 50-basis point cut in the target federal funds rate will have a positive impact on our liability-sensitive balance sheet, and the possibility of additional cuts down the road should further enhance this impact.”

Noninterest income for the 2007 third quarter was $2.9 million, nearly doubling from the $1.5 million recorded for the prior-year period. Excluding from the current and year-ago third quarters, the gain on the fair value of the interest rate swaps and the net cash settlement of interest, which was previously reflected in net interest income, and further excluding the $1.1 million of insurance revenues from the acquisition of the Kelly Agencies in the third quarter of 2007, noninterest income from organic sources was $1.25 million, up $193,000, or 18.2 percent above the year-earlier quarter, and up $106,000, or 9.2 percent, compared with the linked quarter. Service fee income, the second major component of noninterest income, increased $88,000, or 12.6 percent, to $788,000.

Third quarter 2007 noninterest expense was $6.8 million, a 29.2 percent increase over the $5.3 million recorded for the prior-year third quarter; compared with the second quarter of 2007, noninterest expense increased $1.1 million, or 19.3 percent. The increase in operating expenses was largely attributable to the addition of the Kelly Agencies; excluding the $982,600 of Kelly-related expenses, noninterest expense was $5.8 million, reflecting more modest year-over-year growth of $560,000, or 10.6 percent; compared with the second quarter of 2007, growth was $119,000, or 2.1 percent. The majority of the impact was attributable to salaries and employee benefits, which rose $1.2 million over the year-ago quarter; $800,000 of the increase was derived from the addition of 34 FTE employees from the Kelly Agencies during the third quarter. The efficiency ratio (for continuing operations) was 53.91 percent for the third quarter of 2007, compared with 49.88 percent for the prior-year third quarter, and 51.46 percent for the linked quarter.

At September 30, 2007, nonperforming assets were $7.7 million, or 0.58 percent of total assets, compared with $8.2 million, or 0.64 percent for the linked quarter and $1.5 million, or 0.12 percent for the year-ago quarter. Mr. Maddy commented, “The decline in the real estate market has had a significant impact on our asset quality; residential real estate loans account for approximately $2.8 million of nonperforming assets, and construction loans – largely residential – accounted for an additional $2.6 million. Commercial real estate loans totaled approximately $600,000 of nonperforming assets. In general, the CRE portfolio has performed well and has not demonstrated any substantial signs of weakness.”

For the current quarter, the Company had net charge-offs of $566,000, or an annualized 0.23 percent of average loans, compared with $96,000, or an annualized 0.04 percent for the linked quarter, and $45,000, or 0.02 percent annualized for the year earlier period. Mr. Maddy commented, “Approximately $464,000 of charge-offs during the quarter were loans made by Summit Mortgage; when we discontinued operations earlier this year, we were obligated to provide recourse for up to one year with respect to nonperforming previously sold loans. We reserved accordingly, and the obligation period will end in first quarter 2008.” At September 30, 2007, loan loss reserves were 0.88 percent of loans outstanding.

Assets at September 30, 2007 were $1.34 billion, an increase of $129.5 million, or 10.7 percent, over the prior-year period. Loans, net of unearned income, were $988.0 million at period end, up $93.2 million, or 10.4 percent, year over year. Commercial real estate contributed $51.7 million to loan growth, a 17.2 percent increase over the past twelve months. Residential mortgages were the second largest contributors to the year-over-year increase in loans, with all of the growth occurring during the third quarter; they grew by $21.2 million, up 7.5 percent from the linked quarter. Commercial real estate remains the largest component of Summit's loan portfolio at 35.3 percent of total loans; residential mortgages account for an additional 30.6 percent. Construction and development loans follow with a 21.3 percent share.

Deposits at September 30, 2007 were $828.6 million, a decrease of $36.5 million, or 4.2 percent from prior-year third quarter levels. Retail deposits increased by $40.3 million, or 6.7 percent, to $638.6 million; retail deposits now account for 77.1 percent of total deposits, compared with 69.2 percent for the third quarter of 2006. Contributing to the shift in the deposit mix was a year-over-year decrease of $76.8 million, or 28.8 percent, in brokered time deposits, which totaled $190.0 million at period end.

This press release contains financial information determined by methods other than in accordance with generally accepted accounting principles in the United States of America ("GAAP"). Specifically, Summit adjusted several GAAP performance measures to exclude the effects of the non-cash changes in fair value of interest rate swaps included in its Statements of Income . Management believes presentations of financial measures excluding the impact of this item provide useful supplemental information that is important for a proper understanding of the operating results of Summit's core business. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

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 -- Q3 2007 vs Q3 2006


	For the Quarter Ended						Percent
Dollars in thousands	9/30/07			9/30/06			Change
Condensed Statements of Income
Interest income
Loans, including fees	$	19,921		$	18,060			10.3	%
Securities		3,446			2,998			14.9	%
Other		9			16			-43.8	%
Total interest income		23,376			21,074			10.9	%
Interest expense
Deposits		8,627			7,761			11.2	%
Borrowings		4,753			4,049			17.4	%
Total interest expense		13,380			11,810			13.3	%
Net interest income		9,996			9,264			7.9	%
Provision for loan losses		525			260			101.9	%
Net interest income after provision
for loan losses		9,471			9,004			5.2	%
Noninterest income
Insurance commissions		1,303			219			495.0	%
Service fee income		788			700			12.6	%
Securities gains (losses)		-			-			-
Net cash settlement on interest rate swaps		(181	)		(154	)		17.5	%
Change in fair value of interest rate swaps		752			579			29.9	%
Other income		244			142			71.8	%
Total noninterest income		2,906			1,486			95.6	%
Noninterest expense
Salaries and employee benefits		4,054			2,817			43.9	%
Net occupancy expense		466			387			20.4	%
Equipment expense		496			476			4.2	%
Professional fees		176			188			-6.4	%
Other expenses		1,628			1,409			15.5	%
Total noninterest expense		6,820			5,277			29.2	%
Income from continuing operations before income taxes		5,557			5,213			6.6	%
Income taxes		1,802			1,659			8.6	%
Income from continuing operations		3,755			3,554			5.7	%
Discontinued operations
Exit costs and impairment of long-lived assets		-			-			n/a
Operating income (loss)		(200	)		(1,059	)		-81.1	%
Income (loss) from discontinued operations
before income taxes		(200	)		(1,059	)		-81.1	%
Income taxes		(69	)		(374	)		-81.6	%
Income (loss) from discontinued operations		(131	)		(685	)		-80.9	%

Net Income	$	3,624		$	2,869			26.3	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary -- Q3 2007 vs Q3 2006

	For the Quarter Ended						Percent
	9/30/2007			9/30/2006			Change
Per Share Data
Earnings per share from continuing operations
Basic	$	0.51		$	0.50			2.0	%
Diluted	$	0.50		$	0.49			2.0	%
Earnings per share from discontinued operations
Basic	$	(0.02	)	$	(0.10	)		-80.0	%
Diluted	$	(0.02	)	$	(0.10	)		-80.0	%
Earnings per share
Basic	$	0.49		$	0.40			22.5	%
Diluted	$	0.48		$	0.39			23.1	%

Average shares outstanding
Basic		7,399,213			7,127,650			3.8	%
Diluted		7,458,515			7,187,274			3.8	%

Performance Ratios
Return on average equity		16.13	%		14.41	%		11.9	%
Return on average equity - continuing operations		16.71	%		17.85	%		-6.4	%
Return on average assets		1.11	%		0.96	%		15.6	%
Return on average assets - continuing operations		1.15	%		1.19	%		-3.4	%
Net interest margin		3.28	%		3.40	%		-3.5	%
Efficiency ratio (A)		55.49	%		70.86	%		-21.7	%
Efficiency ratio - continuing operations (A)		53.91	%		49.88	%		8.1	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Nine Month Performance Summary -- 2007 vs 2006


	For the Nine Months Ended						Percent
Dollars in thousands	9/30/2007			9/30/2006			Change
Condensed Statements of Income
Interest income
Loans, including fees	$	57,712		$	49,910			15.6	%
Securities		9,832			8,431			16.6	%
Other		43			53			-18.9	%
Total interest income		67,587			58,394			15.7	%
Interest expense
Deposits		26,537			19,322			37.3	%
Borrowings		12,324			12,549			-1.8	%
Total interest expense		38,861			31,871			21.9	%
Net interest income		28,726			26,523			8.3	%
Provision for loan losses		1,305			915			42.6	%
Net interest income after provision
for loan losses		27,421			25,608			7.1	%
Noninterest income
Insurance commissions		1,719			696			147.0	%
Service fee income		2,141			2,056			4.1	%
Securities gains (losses)		-			-			-
Net cash settlement on interest rate swaps		(544	)		(337	)		61.4	%
Change in fair value of interest rate swaps		705			(140	)		-603.6	%
Other income		638			412			54.9	%
Total noninterest income		4,659			2,687			73.4	%
Noninterest expense
Salaries and employee benefits		10,518			8,921			17.9	%
Net occupancy expense		1,292			1,179			9.6	%
Equipment expense		1,436			1,421			1.1	%
Professional fees		543			640			-15.2	%
Other expenses		4,399			4,149			6.0	%
Total noninterest expense		18,188			16,310			11.5	%
Income from continuing operations before income taxes		13,892			11,985			15.9	%
Income taxes		4,223			3,674			14.9	%
Income from continuing operations		9,669			8,311			16.3	%
Discontinued operations
Exit costs and impairment of long-lived assets		123			-			n/a
Operating income (loss)		(798	)		(377	)		111.7	%
Income (loss) from discontinued operations
before income taxes		(675	)		(377	)		79.0	%
Income taxes		(231	)		(116	)		99.1	%
Income (loss) from discontinued operations		(444	)		(261	)		70.1	%

Net Income	$	9,225		$	8,050			14.6	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Nine Month Performance Summary -- 2007 vs 2006

	For the Nine Months Ended						Percent
	9/30/2007			9/30/2006			Change
Per Share Data
Earnings per share from continuing operations
Basic		1.34		$	1.17			14.5	%
Diluted		1.33		$	1.16			14.7	%
Earnings per share from discontinued operations
Basic		(0.06	)	$	(0.04	)		50.0	%
Diluted		(0.06	)	$	(0.04	)		50.0	%
Earnings per share
Basic	$	1.28		$	1.13			13.3	%
Diluted	$	1.27		$	1.12			13.4	%

Average shares outstanding
Basic		7,190,875			7,130,276			0.8	%
Diluted		7,252,778			7,194,351			0.8	%

Performance Ratios
Return on average equity		14.41	%		13.79	%		4.5	%
Return on average equity - continuing operations		15.11	%		14.24	%		6.1	%
Return on average assets		0.97	%		0.93	%		4.3	%
Return on average assets - continuing operations		1.01	%		0.96	%		5.2	%
Net interest margin		3.27	%		3.40	%		-3.8	%
Efficiency ratio (A)		55.65	%		70.47	%		-21.0	%
Efficiency ratio - continuing operations (A)		52.99	%		53.04	%		-0.1	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Five Quarter Performance Summary

	For the Quarter Ended
Dollars in thousands	9/30/2007			6/30/2007			3/31/2007			12/31/2006			9/30/2006
Condensed Statements of Income
Interest income
Loans, including fees	$	19,921		$	19,079		$	18,712		$	18,746		$	18,060
Securities		3,446			3,263			3,124			3,131			2,998
Other		9			27			6			7			16
Total interest income		23,376			22,369			21,842			21,884			21,074
Interest expense
Deposits		8,627			8,882			9,028			8,990			7,761
Borrowings		4,753			3,960			3,611			3,518			4,049
Total interest expense		13,380			12,842			12,639			12,508			11,810
Net interest income		9,996			9,527			9,203			9,376			9,264
Provision for loan losses		525			390			390			930			260
Net interest income after provision
for loan losses		9,471			9,137			8,813			8,446			9,004
Noninterest income
Insurance commissions		1,303			209			206			228			219
Service fee income		788			736			617			702			700
Securities gains (losses)		-			-			-			-			-
Net cash settlement on interest rate swaps		(181	)		(179	)		(184	)		(197	)		(154	)
Change in fair value of interest rate swaps		752			(273	)		227			50			579
Other income		244			203			191			163			142
Total noninterest income		2,906			696			1,057			946			1,486
Noninterest expense
Salaries and employee benefits		4,054			3,238			3,226			2,899			2,817
Net occupancy expense		466			408			418			378			387
Equipment expense		496			493			446			480			476
Professional fees		176			193			174			252			188
Other expenses		1,628			1,386			1,385			1,291			1,409
Total noninterest expense		6,820			5,718			5,649			5,300			5,277
Income before income taxes		5,557			4,115			4,221			4,092			5,213
Income taxes		1,802			1,135			1,286			1,343			1,659
Income from continuing operations		3,755			2,980			2,935			2,749			3,554
Discontinued operations
Exit costs and impairment of long-lived assets		-			43			80			(2,480	)		-
Operating income (loss)		(200	)		(227	)		(372	)		(1,373	)		(1,059	)
Income (loss) from discontinued operations
before income taxes		(200	)		(184	)		(292	)		(3,853	)		(1,059	)
Income taxes		(69	)		(66	)		(97	)		(1,311	)		(374	)
Income (loss) from discontinued operations		(131	)		(118	)		(195	)		(2,542	)		(685	)

Net Income	$	3,624		$	2,862		$	2,740		$	207		$	2,869

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Five Quarter Performance Summary

	For the Quarter Ended
	9/30/2007			6/30/2007			3/31/2007			12/31/2006			9/30/2006
Per Share Data
Earnings per share from continuing operations
Basic	$	0.51		$	0.42		$	0.41		$	0.39		$	0.50
Diluted	$	0.50		$	0.42		$	0.41		$	0.38		$	0.49
Earnings per share from discontinued operations
Basic	$	(0.02	)	$	(0.02	)	$	(0.03	)	$	(0.36	)	$	(0.10	)
Diluted	$	(0.02	)	$	(0.02	)	$	(0.03	)	$	(0.36	)	$	(0.10	)
Earnings per share
Basic	$	0.49		$	0.40		$	0.38		$	0.03		$	0.40
Diluted	$	0.48		$	0.40		$	0.38		$	0.02		$	0.39

Average shares outstanding
Basic		7,399,213			7,084,980			7,084,980			7,091,560			7,127,650
Diluted		7,458,515			7,148,241			7,147,170			7,150,407			7,187,274

Performance Ratios
Return on average equity		16.13	%		13.59	%		13.40	%		1.01	%		14.41	%
Return on average equity - continuing operations		16.71	%		14.15	%		14.35	%		13.37	%		17.85	%
Return on average assets		1.11	%		0.91	%		0.88	%		0.07	%		0.96	%
Return on average assets - continuing operations		1.15	%		0.94	%		0.94	%		0.89	%		1.19	%
Net interest margin		3.28	%		3.28	%		3.26	%		3.32	%		3.40	%
Efficiency ratio (A)		55.49	%		53.69	%		57.71	%		69.79	%		70.86	%
Efficiency ratio - continuing operations (A)		53.91	%		51.46	%		53.50	%		49.61	%		49.88	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Selected Balance Sheet Data

	For the Quarter Ended
Dollars in thousands, except per share amounts	9/30/2007			6/30/2007			3/31/2007			12/31/2006			9/30/2006

Assets	$	1,340,679		$	1,280,428		$	1,254,528		$	1,235,519		$	1,211,195
Securities		279,289			259,526			258,173			247,874			246,332
Loans, net		988,033			949,175			930,769			916,045			894,836
Intangible assets		10,143			3,121			3,159			3,197			3,234
Retail deposits		638,633			626,617			623,431			609,064			598,293
Brokered time deposits		189,966			223,771			253,794			279,623			266,769
Short-term borrowings		124,699			100,901			79,886			60,428			90,422
Long-term borrowings and
subordinated debentures		283,268			236,347			203,408			195,698			165,716
Shareholders' equity		93,475			81,910			81,950			78,752			79,481

Book value per share	$	12.63		$	11.56		$	11.57		$	11.12		$	11.19
Tangible book value per share	$	11.26		$	11.12		$	11.12		$	10.66		$	10.73
Tangible equity / Tangible assets		6.3	%		6.2	%		6.3	%		6.1	%		6.3	%
Tier 1 leverage ratio		8.1	%		7.9	%		7.9	%		7.8	%		8.1	%

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Loan Composition

Dollars in thousands	9/30/2007		6/30/2007		3/31/2007		12/31/2006		9/30/2006

Commercial	$	87,018	$	81,292	$	69,700	$	69,470	$	67,352
Commercial real estate		352,396		354,833		329,561		314,199		300,676
Construction and development		212,570		198,721		220,430		215,820		207,545
Residential real estate		305,016		283,821		279,564		282,512		283,943
Consumer		33,255		33,937		33,845		36,455		36,885
Other		6,793		7,111		7,209		6,968		7,086
Total loans		997,048		959,715		940,309		925,424		903,487
Less unearned fees and interest		1,884		1,772		1,757		1,868		1,806
Total loans net of unearned fees and interest		995,164		957,943		938,552		923,556		901,681
Less allowance for loan losses		8,727		8,768		7,783		7,511		6,845
Loans, net	$	986,437	$	949,175	$	930,769	$	916,045	$	894,836

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Retail Deposit Composition

Dollars in thousands	9/30/2007		6/30/2007		3/31/2007		12/31/2006		9/30/2006

Non interest bearing checking	$	65,230	$	64,373	$	60,645	$	62,591	$	64,751
Interest bearing checking		230,491		230,509		230,634		220,167		223,992
Savings		39,596		41,910		44,713		47,984		44,980
Time deposits		303,316		289,825		287,439		278,322		264,570
Total retail deposits	$	638,633	$	626,617	$	623,431	$	609,064	$	598,293

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Asset Quality Information

	For the Quarter Ended
Dollars in thousands	9/30/2007			6/30/2007			3/31/2007			12/31/2006			9/30/2006

Gross loan charge-offs	$	599		$	141		$	206		$	313		$	95
Gross loan recoveries		(33	)		(45	)		(87	)		(50	)		(50	)
Net loan charge-offs	$	566		$	96		$	119		$	263		$	45

Net loan charge-offs to average loans (annualized)		0.23	%		0.04	%		0.05	%		0.11	%		0.02	%
Allowance for loan losses	$	8,727		$	8,768		$	7,783		$	7,511		$	6,845
Allowance for loan losses as a percentage
of period end loans		0.88	%		0.91	%		0.83	%		0.81	%		0.76	%
Nonperforming assets:
Nonperforming loans	$	6,916		$	7,307		$	4,474		$	5,276		$	1,273
Foreclosed properties and
other repossessed assets		815			851			43			77			180
Total	$	7,731		$	8,158		$	4,517		$	5,353		$	1,453

Nonperforming loans to period end loans		0.69	%		0.76	%		0.48	%		0.57	%		0.14	%
Nonperforming assets to period end assets		0.58	%		0.64	%		0.36	%		0.43	%		0.12	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q3 2007 vs Q3 2006
	Q3 2007								Q3 2006
	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	$	967,106		$	19,790		8.12	%	$	884,917		$	18,103		8.12	%
Tax-exempt		9,523			192		8.00	%		8,631			171		7.86	%
Securities
Taxable		223,731			2,900		5.14	%		192,475			2,452		5.05	%
Tax-exempt		47,910			822		6.81	%		47,842			817		6.78	%
Interest bearing deposits other banks
and Federal funds sold		662			11		6.59	%		3,559			16		1.78	%
Total interest earning assets		1,248,932			23,715		7.53	%		1,137,424			21,559		7.52	%

Noninterest earning assets
Cash & due from banks		14,356								12,791
Premises & equipment		22,103								23,703
Other assets		32,935								27,224
Allowance for loan losses		(8,939	)							(6,994	)
Total assets	$	1,309,387							$	1,194,148

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	230,918		$	1,969		3.38	%	$	221,297		$	2,044		3.66	%
Savings deposits		40,752			163		1.59	%		42,038			164		1.55	%
Time deposits		517,405			6,495		4.98	%		478,992			5,553		4.60	%
Short-term borrowings		89,941			1,180		5.21	%		132,680			1,777		5.31	%
Long-term borrowings and
subordinated debentures		263,968			3,573		5.37	%		164,996			2,272		5.46	%
		1,142,984			13,380		4.64	%		1,040,003			11,810		4.51	%
Noninterest bearing liabilities
Demand deposits		66,079								64,043
Other liabilities		10,435								10,470
Total liabilities		1,219,498								1,114,516

Shareholders' equity		89,889								79,632
Total liabilities and
shareholders' equity	$	1,309,387							$	1,194,148

NET INTEREST EARNINGS				$	10,335							$	9,749

NET INTEREST YIELD ON EARNING ASSETS							3.28	%							3.40	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
YTD 2007 vs YTD 2006
	For the Nine Months Ended September 30,								For the Nine Months Ended September 30,
	2007								2006
	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	$	945,496		$	57,435		8.12	%	$	857,851		$	50,180		7.82	%
Tax-exempt		9,274			550		7.93	%		8,373			476		7.60	%
Securities
Taxable		214,602			8,216		5.12	%		189,768			6,837		4.82	%
Tax-exempt		46,931			2,419		6.89	%		45,950			2,385		6.94	%
Interest bearing deposits other banks
and Federal funds sold		1,190			43		4.83	%		1,453			52		4.78	%
Total interest earning assets		1,217,493			68,663		7.54	%		1,103,395			59,930		7.26	%

Noninterest earning assets
Cash & due from banks		14,003								13,760
Premises & equipment		22,207								23,552
Other assets		29,132								26,160
Allowance for loan losses		(8,564	)							(6,683	)
Total assets	$	1,274,271							$	1,160,184

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	227,461		$	6,120		3.60	%	$	213,518		$	5,410		3.39	%
Savings deposits		43,449			561		1.73	%		40,826			311		1.02	%
Time deposits		536,784			19,856		4.95	%		428,224			13,601		4.25	%
Short-term borrowings		78,002			3,098		5.31	%		148,876			5,572		5.00	%
Long-term borrowings and
subordinated debentures		227,914			9,226		5.41	%		176,250			6,977		5.29	%
		1,113,610			38,861		4.67	%		1,007,694			31,871		4.23	%
Noninterest bearing liabilities
Demand deposits		64,028								64,618
Other liabilities		11,297								10,059
Total liabilities		1,188,935								1,082,371

Shareholders' equity		85,336								77,813
Total liabilities and
shareholders' equity	$	1,274,271							$	1,160,184

NET INTEREST EARNINGS				$	29,802							$	28,059

NET INTEREST YIELD ON EARNING ASSETS							3.27	%							3.40	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures


	For the Quarter Ended						For the Nine Months Ended
Dollars in thousands	9/30/2007			9/30/2006			9/30/2007			9/30/2006

Income from continuing operations
before income taxes, excluding changes
in fair value of interest rate swaps	$	4,805		$	4,634		$	13,187		$	12,125

Changes in fair value of
interest rate swaps		752			579			705			(140	)
GAAP income from continuing
operations, before income taxes	$	5,557		$	5,213		$	13,892		$	11,985


Income from continuing operations -
excluding changes in fair
value of interest rate swaps	$	3,281		$	3,189		$	9,225		$	8,399

Changes in fair value of
interest rate swaps		752			579			705			(140	)
Applicable income tax effect		(278	)		(214	)		(261	)		52
		474			365			444			(88	)
GAAP income from continuing
operations	$	3,755		$	3,554		$	9,669		$	8,311

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