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 31, 2008

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 31, 2008, Summit Financial Group, Inc. (“Summit”) issued a News Release announcing its earnings for the fourthquarter and for the year 2007.  This News Release is furnishedas Exhibit 99 and is incorporated herein by reference.

Section 9 – Financial Statements and Exhibits

Item 9.01  Financial Statements and Exhibits

(c)   Exhibits

99            News Release issued on January 31, 2008

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: February 5, 2008                                                                                          By: /s/ Julie R. Cook                                           

              Julie R. Cook

              Vice President and

                   0;           Chief Accounting Officer

EX-99.1

Exhibit 99

FOR RELEASE 4:00 PM EST, THURSDAY, JANUARY 31, 2008

Contact:                       Robert S. Tissue, Sr. Vice President & CFO

Telephone:                  (304) 530-0552

Email:                            rtissue@SummitFGI.com

SUMMIT FINANCIAL GROUP REPORTS EARNINGS FOR THE YEAR AND FOURTH QUARTER 2007

MOOREFIELD, WV -- January 31, 2008--Summit Financial Group, Inc. (NASDAQ: SMMF) today reported fiscal year and fourthquarter 2007 financial results from continuing operations,which excludes from income substantially all business activities of Summit Mortgage, its residential mortgage loan origination unit, which ceased operations in January 2007.  Income from continuing operations for 2007 was $13.5 million or $1.85 per diluted share, an increase of 22.4 percent and 20.1 percent, respectively, compared with $11.1 million or $1.54 per diluted share reported for the prior-year.  Excluding mark-to-market changes in fair value of interest rate swaps, income from continuing operations was $12.6 million for 2007 compared to $11.1 million for 2006.  2007 results from continuing operations reflect strong loan growth, well-controlled operating expenses and a stable net interest margin year-over-year.

For the fourthquarter of 2007,Summit’s income from continuing operations was $3.9 million or $0.52 per diluted share compared with the $2.7 million or $0.39 per diluted share reported for the prior-year quarter, an increase of 40.7 percent and 33.3 percent, respectively.  Excluding mark-to-market changes in fair value of interest rate swaps, fourth quarter 2007 income from continuing operations was $3.4 million compared to $2.7 million for the same period in 2006.

H. Charles Maddy, III, president and chief executive officer of Summit, commented, "This has not been an easy year for the banking industry, and we include Summit in that statement.  We continue to perform well by virtue of our strong markets, our conservative loan and administration policies, and the dedication of our staff.  We are expanding successfully in a weak banking environment, keeping our expenses in check and our revenues growing proportionately to our asset size.  We are seeing some signs of weakness in our loan portfolio, but so far, these have been at a manageable level.”

Highlights of the year include:

·   Settlement of the Corinthian Mortgage litigation in Q4

·   Completion of the acquisition of the Kelly Agencies in Q3

·   Agreement to acquire Greater Atlantic Financial Corp. in Q2; plan to close in  Q1 ‘08

·   Consolidation of our two subsidiary banks under the “Summit Community Bank” name in Q2

Mr. Maddy continued, “The big news for us in 2007 is that we have completely exited from our mortgage banking business following settlement of litigation that carried a high price.  However, we are relieved to be rid of the uncertainties that have compromised our ability to focus on our core banking business.  We are ready to move ahead to close and consolidate our acquisition of Greater Atlantic in the first quarter of 2008.  We are confident of our ability to run an outstanding community bank, and Greater Atlantic represents an extension of our core expertise.”

“Our accomplishments this past year position us well for continued growth.  We consolidated our two banks into one, unifying our brand and improving our operating efficiency.  We completed the acquisition of the Kelly Agencies, two Leesburg, Virginia-based insurance agencies primarily specializing in group health, life and disability benefit plans.  This acquisition is already performing well for us, generating approximately $1 million of commission revenue per quarter.  Next on our agenda is the completion of the Greater Atlantic acquisition, consisting of five branches in some of the highest growth and wealthiest markets in the country.  We anticipate closing on the Greater Atlantic acquisition during the first quarter of 2008.”

Consolidated net income for 2007 was $6.5 million or $0.88 per diluted share, compared with $8.3 million or $1.15 per diluted share reported for 2006, a decline of 21.8 percent and 23.5 percent, respectively.  2007 consolidated results include a loss from discontinued operations related to Summit Mortgage of $7.1 million, or $0.97 per diluted share, which includes a $5.8 million after-tax charge to settle the Corinthian litigation.  2006 results include a loss from discontinued operations of $2.8 million, or $0.39 per diluted share.

On a consolidated basis, Summit reported a fourth quarter 2007 net loss of $2.8 million, or $0.37 per diluted share, compared with net income of $207,000, or $0.03 per diluted share for the prior-year fourth quarter.  Consolidated results for the fourth quarter also reflect the above-mentioned 2007 litigation settlement and a charge to terminate the mortgage company in 2006.

For 2007, the returns on average shareholders’ equity and average assets from continuing operations calculated in accordance with GAAP were 15.39 percent and 1.04 percent, respectively, compared with prior-year ratios of 13.99 percent and 0.94 percent.  Fourth quarter 2007 returns on average shareholders’ equity and average assets from continuing operations were 16.23 percent and 1.13 percent, respectively, compared with prior-year ratios of 13.37 percent and 0.89 percent.

Total revenues for 2007 were $46.4 million, consisting of $39.0 million of net interest income plus $7.4 million of noninterest income, an increase of 17.4 percent compared to total revenues of $39.5 million in 2006.  Net interest income for the year increased 8.8 percent above 2006, reflecting 10.7 percent growth in average earning assets, partially offset by a 12 basis point decline in the net interest margin, to 3.26 percent.

Total revenue for the fourth quarter of 2007 was $13.0 million, up 26.3 percent from fourth quarter 2006 revenue of $10.3 million.  Net interest income was $10.3 million, up 10.3 percent from the year-ago quarter, from the combined impact of an 11.6 percent increase in average earning assets and an eight basis point decline in the net interest margin, to 3.24 percent.  Mr. Maddy commented, “Unlike many community banks, Summit’s balance sheet is liability-sensitive, and in this sharply declining interest-rate environment, our net interest margin should strengthen.  Competitive pressures from loan and deposit pricing still remain formidable, but with respect to loan pricing, some of our competitors are just not quite as competitive as they were in the past.”

Mr. Maddy added, “Our fee-based revenue has been growing solidly.  Service fee income is growing incrementally each quarter, and the contribution of insurance commissions surged to approximately 50 percent of noninterest income this quarter (excluding the impact of interest rate swaps from noninterest income).  We completed our acquisition of the Kelly Insurance Agencies on July 2, 2007, and for each of the two most recent 2007 quarters, insurance commissions increased by $1 million per quarter.”

For 2007, noninterest income was $7.4 million, up $3.7 million or 102.5 percent from the $3.6 million reported for fiscal 2006.  Excluding changes in fair value of interest rate swaps and the net cash settlement of interest on these swaps from fiscal 2007 and 2006, and further excluding the $2.1 million of insurance revenues from the Kelly Agencies acquisition, noninterest income from organic sources was $4.5 million, up $249,000 or 5.8 percent above fiscal 2006.  Service fee income increased $246,000, or 8.9 percent, to $3.0 million, compared to $2.8 million for the prior-year.  For the fourth quarter of 2007, noninterest income was $2.7 million, up $1.8 millionfrom the $946,000 recorded for the year-ago quarter.  Service fee income increased $161,000, or 22.9 percent, to $863,000 for fourth quarter of 2007.

2007 noninterest expense was $25.1 million, a 16.1 percent, or $3.5 million increase over the $21.6 million record for the previous fiscal year.  Salaries and benefits accounted for 79.9 percent of the increase, increasing $2.8 million, or 23.6 percent, to $14.6 million for the year; 2007 results include the addition of 34 employees associated with the acquisition of the Kelly Agencies.  The efficiency ratio for continuing operations was 53.00 percent for 2007, compared with 52.15 percent for 2006.  For the fourth quarter of 2007, noninterest expense was $6.9 million, up 30.4 percent or $1.6 million from the fourth quarter of 2006, and 1.3 percent or $90,000 from the linked quarter. The efficiency ratio (for continuing operations) was 53.03 percent for the fourth quarter of 2007, compared with 49.61 percent for the prior-year fourth quarter, and 53.91 percent for the linked quarter.

Assets at December 31, 2007 were $1.44 billion, an increase of $200.0 million, or 16.2 percent, over the prior-year period.  Loans, net of unearned income, were $1.06 billion at period end, up $138.1 million, or 15.0 percent, year over year.  Loan growth was distributed across virtually every loan category (except consumer loans); however, commercial real estate (CRE) loans, the largest loan category at 36.1 percent of the portfolio, was also the driver of 2007 loan growth, up $70.3 millionyear-over-year; CRE contributed approximately 50 percent of total loan growth for the year.  Residential real estate, the second largest loan category at 30.3 percent, contributed approximately $40 million of loan growth, mostly in the second half of the year.  Growth of construction and development loans slowed substantially this year with only a $9.5 million increase, its portfolio share reduced to 21.2 percent from 23.3 percent at year-end 2006.

At December 31, 2007, nonperforming assets were $12.4 million, or 0.86 percent of total assets, compared with $7.7 million, or 0.58 percent for the linked quarter and $5.4 million, or 0.43 percent for the year-ago quarter.Residential real estate loans account for approximately $4.9 million of nonperforming assets, and construction and development loans – largely residential – accounted for an additional $2.0 million. Commercial real estate loans totaled approximately $2.5 million of nonperforming assets.  Mr. Maddy noted, “Although our level of nonperforming assets has doubled as a percent of total assets over the course of the past year, we believe our loans are solidly underwritten and supported by real property that should retain its value better than in many markets. Anticipated population growth should serve to absorb the additional housing inventory within a reasonable timeframe.  A bright spot has been the CRE portfolio, which has performed well and has yet to demonstrate substantial signs of weakness.”

For the current quarter, the Company had net charge-offs of $285,000, or an annualized 0.11 percent of average loans, compared with $566,000, or an annualized 0.23 percent for the linked quarter, and $263,000, or 0.11 percent annualized for the year earlier period.Mr. Maddy commented, “We experienced very low charge-offs on loans that are part of our continuing operations.  Approximately $464,000 of charge-offs during the year were loans made by Summit Mortgage; when we discontinued its 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 December 31, 2007, loan loss reserves were 0.86 percent of loans outstanding.

Total deposits at December 31, 2007 were $828.7 million compared with $888.7 million at the prior year-end, a decrease of $60 million or 6.8 percent.  Brokered deposits declined by $103.2 million or 36.9 percent over the past year, to $176.4 million at December 31, 2007, while Summit’s retail deposit portfolio increased by $43.2 million, or 7.1 percent, to $652.3 million at year-end 2007.  Retail deposits now account for 78.7 percent of total deposits, compared with 68.5 percent at year end 2006.

Shareholders’ equity at December 31, 2007 was $89.4 million, an increase of 13.5 percent over the last twelve months.  Common shares outstanding totaled 7,408,941 at year-end, compared with 7,089,680 for the prior-year end.  The increase includes the issuance of approximately 318,000 shares during the third quarter of 2007 for the acquisition of the Kelly Agencies.

ABOUT THE COMPANY

Summit Financial Group, Inc., a financial holding company with total assets of $1.44 billion, operates fifteen banking locations through its wholly-owned community bank, Summit Community Bank.  Summit also operates Summit Insurance Services, LLC.

NON-GAAP FINANCIAL MEASURES

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.

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 2007 vs Q4 2006
	For the Quarter Ended						Percent
Dollars in thousands	12/31/2007			12/31/2006			Change
Condensed Statements of Income
Interest income
Loans, including fees	$	20,199		$	18,746			7.8	%
Securities		3,590			3,131			14.7	%
Other		8			7			14.3	%
Total interest income		23,797			21,884			8.7	%
Interest expense
Deposits		7,759			8,990			-13.7	%
Borrowings		5,697			3,518			61.9	%
Total interest expense		13,456			12,508			7.6	%
Net interest income		10,341			9,376			10.3	%
Provision for loan losses		750			930			-19.4	%
Net interest income after provision
for loan losses		9,591			8,446			13.6	%
Noninterest income
Insurance commissions		1,157			228			407.5	%
Service fee income		863			702			22.9	%
Securities gains (losses)		-			-			n/a
Net cash settlement on interest rate swaps		(183	)		(197	)		-7.1	%
Change in fair value of interest rate swaps		783			50			1466.0	%
Other income		78			163			-52.1	%
Total noninterest income		2,698			946			185.2	%
Noninterest expense
Salaries and employee benefits		4,090			2,899			41.1	%
Net occupancy expense		466			378			23.3	%
Equipment expense		568			480			18.3	%
Professional fees		152			252			-39.7	%
Other expenses		1,634			1,291			26.6	%
Total noninterest expense		6,910			5,300			30.4	%
Income from continuing operations before income taxes		5,379			4,092			31.5	%
Income taxes		1,511			1,343			12.5	%
Income from continuing operations		3,868			2,749			40.7	%
Discontinued operations
Exit costs and impairment of long-lived assets		(435	)		(2,480	)		-82.5	%
Operating income (loss)		(9,549	)		(1,373	)		595.5	%
Income (loss) from discontinued operations
before income taxes		(9,984	)		(3,853	)		159.1	%
Income taxes		(3,347	)		(1,311	)		155.3	%
Income (loss) from discontinued operations		(6,637	)		(2,542	)		161.1	%
Net Income	$	(2,769	)	$	207			-1437.7	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary -- Q4 2007 vs Q4 2006
	For the Quarter Ended						Percent
	12/31/2007			12/31/2006			Change
Per Share Data
Earnings per share from continuing operations
Basic	$	0.52		$	0.39			33.3	%
Diluted	$	0.52		$	0.39			33.3	%
Earnings per share from discontinued operations
Basic	$	(0.89	)	$	(0.36	)		147.2	%
Diluted	$	(0.89	)	$	(0.36	)		147.2	%
Earnings per share
Basic	$	(0.37	)	$	0.03			-1333.3	%
Diluted	$	(0.37	)	$	0.03			-1333.3	%
Average shares outstanding
Basic		7,401,684			7,091,560			4.4	%
Diluted		7,450,049			7,150,407			4.2	%
Performance Ratios
Return on average equity		-11.62	%		1.01	%		-1250.5	%
Return on average equity - continuing operations		16.23	%		13.37	%		21.4	%
Return on average assets		-0.81	%		0.07	%		-1257.1	%
Return on average assets - continuing operations		1.13	%		0.89	%		27.0	%
Net interest margin		3.24	%		3.32	%		-2.4	%
Efficiency ratio - continuing operations (A)		53.03	%		49.61	%		6.9	%

NOTE:  (A) – Computed on a tax equivalent basis excluding nonrecurring income and expense items, amortization of intangibles, and changes in fair value of derivatives.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)
Annual Performance Summary -- 2007 vs 2006
	For the Years Ended						Percent
Dollars in thousands	12/31/2007			12/31/2006			Change
Condensed Statements of Income
Interest income
Loans, including fees	$	77,911		$	68,656			13.5	%
Securities		13,422			11,562			16.1	%
Other		51			60			-15.0	%
Total interest income		91,384			80,278			13.8	%
Interest expense
Deposits		34,296			28,312			21.1	%
Borrowings		18,021			16,067			12.2	%
Total interest expense		52,317			44,379			17.9	%
Net interest income		39,067			35,899			8.8	%
Provision for loan losses		2,055			1,845			11.4	%
Net interest income after provision
for loan losses		37,012			34,054			8.7	%
Noninterest income
Insurance commissions		2,876			924			211.3	%
Service fee income		3,004			2,758			8.9	%
Securities gains (losses)		-			-			-
Net cash settlement on interest rate swaps		(727	)		(533	)		36.4	%
Change in fair value of interest rate swaps		1,478			(91	)		-1724.2	%
Other income		726			575			26.3	%
Total noninterest income		7,357			3,633			102.5	%
Noninterest expense
Salaries and employee benefits		14,608			11,821			23.6	%
Net occupancy expense		1,758			1,557			12.9	%
Equipment expense		2,004			1,901			5.4	%
Professional fees		695			892			-22.1	%
Other expenses		6,033			5,438			10.9	%
Total noninterest expense		25,098			21,609			16.1	%
Income from continuing operations before income taxes		19,271			16,078			19.9	%
Income taxes		5,734			5,018			14.3	%
Income from continuing operations		13,537			11,060			22.4	%
Discontinued operations
Exit costs and impairment of long-lived assets		(312	)		(2,480	)		-87.4	%
Operating income (loss)		(10,347	)		(1,750	)		491.3	%
Income (loss) from discontinued operations
before income taxes		(10,659	)		(4,230	)		152.0	%
Income taxes		(3,578	)		(1,427	)		150.7	%
Income (loss) from discontinued operations		(7,081	)		(2,803	)		152.6	%
Net Income	$	6,456		$	8,257			-21.8	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Annual Performance Summary -- 2007 vs 2006
	For the Years Ended						Percent
	12/31/2007			12/31/2006			Change
Per Share Data
Earnings per share from continuing operations
Basic		1.87		$	1.55			20.6	%
Diluted		1.85		$	1.54			20.1	%
Earnings per share from discontinued operations
Basic		(0.98	)	$	(0.39	)		151.3	%
Diluted		(0.97	)	$	(0.39	)		148.7	%
Earnings per share
Basic	$	0.89		$	1.16			-23.3	%
Diluted	$	0.88		$	1.15			-23.5	%
Average shares outstanding
Basic		7,244,011			7,120,518			1.7	%
Diluted		7,303,391			7,183,281			1.7	%
Performance Ratios
Return on average equity		7.34	%		10.44	%		-29.7	%
Return on average equity - continuing operations		15.39	%		13.99	%		10.0	%
Return on average assets		0.50	%		0.70	%		-28.6	%
Return on average assets - continuing operations		1.04	%		0.94	%		10.6	%
Net interest margin		3.26	%		3.38	%		-3.6	%
Efficiency ratio - continuing operations (A)		53.00	%		52.15	%		1.6	%

NOTE:  (A) – Computed on a tax equivalent basis excluding nonrecurring income and expense items, amortization of intangibles, and changes in fair value of derivatives.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Five Quarter Performance Summary
	For the Quarter Ended
Dollars in thousands	12/31/2007			9/30/2007			6/30/2007			3/31/2007			12/31/2006
Condensed Statements of Income
Interest income
Loans, including fees	$	20,199		$	19,921		$	19,079		$	18,712		$	18,746
Securities		3,590			3,446			3,263			3,124			3,131
Other		8			9			27			6			7
Total interest income		23,797			23,376			22,369			21,842			21,884
Interest expense
Deposits		7,759			8,627			8,882			9,028			8,990
Borrowings		5,697			4,753			3,960			3,611			3,518
Total interest expense		13,456			13,380			12,842			12,639			12,508
Net interest income		10,341			9,996			9,527			9,203			9,376
Provision for loan losses		750			525			390			390			930
Net interest income after provision
for loan losses		9,591			9,471			9,137			8,813			8,446
Noninterest income
Insurance commissions		1,157			1,303			209			206			228
Service fee income		863			788			736			617			702
Securities gains (losses)		-			-			-			-			-
Net cash settlement on interest rate swaps		(183	)		(181	)		(179	)		(184	)		(197	)
Change in fair value of interest rate swaps		783			752			(273	)		227			50
Other income		78			244			203			191			163
Total noninterest income		2,698			2,906			696			1,057			946
Noninterest expense
Salaries and employee benefits		4,090			4,054			3,238			3,226			2,899
Net occupancy expense		466			466			408			418			378
Equipment expense		568			496			493			446			480
Professional fees		152			176			193			174			252
Other expenses		1,634			1,628			1,386			1,385			1,291
Total noninterest expense		6,910			6,820			5,718			5,649			5,300
Income before income taxes		5,379			5,557			4,115			4,221			4,092
Income taxes		1,511			1,802			1,135			1,286			1,343
Income from continuing operations		3,868			3,755			2,980			2,935			2,749
Discontinued operations
Exit costs and impairment of long-lived assets		(435	)		-			43			80			(2,480	)
Operating income (loss)		(9,549	)		(200	)		(227	)		(372	)		(1,373	)
Income (loss) from discontinued operations
before income taxes		(9,984	)		(200	)		(184	)		(292	)		(3,853	)
Income taxes		(3,347	)		(69	)		(66	)		(97	)		(1,311	)
Income (loss) from discontinued operations		(6,637	)		(131	)		(118	)		(195	)		(2,542	)
Net Income	$	(2,769	)	$	3,624		$	2,862		$	2,740		$	207

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)
Five Quarter Performance Summary
	For the Quarter Ended
	12/31/2007			9/30/2007			6/30/2007			3/31/2007			12/31/2006
Per Share Data
Earnings per share from continuing operations
Basic	$	0.52		$	0.51		$	0.42		$	0.41		$	0.39
Diluted	$	0.52		$	0.50		$	0.42		$	0.41		$	0.39
Earnings per share from discontinued operations
Basic	$	(0.89	)	$	(0.02	)	$	(0.02	)	$	(0.03	)	$	(0.36	)
Diluted	$	(0.89	)	$	(0.02	)	$	(0.02	)	$	(0.03	)	$	(0.36	)
Earnings per share
Basic	$	(0.37	)	$	0.49		$	0.40		$	0.38		$	0.03
Diluted	$	(0.37	)	$	0.48		$	0.40		$	0.38		$	0.03
Average shares outstanding
Basic		7,401,684			7,399,213			7,084,980			7,084,980			7,091,560
Diluted		7,450,049			7,458,515			7,148,241			7,147,170			7,150,407
Performance Ratios
Return on average equity		-11.62	%		16.13	%		13.59	%		13.40	%		1.01	%
Return on average equity - continuing operations		16.23	%		16.71	%		14.15	%		14.35	%		13.37	%
Return on average assets		-0.81	%		1.11	%		0.91	%		0.88	%		0.07	%
Return on average assets - continuing operations		1.13	%		1.15	%		0.94	%		0.94	%		0.89	%
Net interest margin		3.24	%		3.28	%		3.28	%		3.26	%		3.32	%
Efficiency ratio - continuing operations (A)		53.03	%		53.91	%		51.46	%		53.50	%		49.61	%

NOTE:  (A) – Computed on a tax equivalent basis excluding nonrecurring income and expense items, amortization of intangibles, and changes in fair value of derivatives.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Selected Balance Sheet Data
	For the Quarter Ended
Dollars in thousands, except per share amounts	12/31/2007			9/30/2007			6/30/2007			3/31/2007			12/31/2006
Assets	$	1,435,536		$	1,340,679		$	1,280,428		$	1,254,528		$	1,235,519
Securities		300,066			279,289			259,526			258,173			247,874
Loans, net		1,052,489			986,437			949,175			930,769			916,045
Intangible assets		10,055			10,143			3,121			3,159			3,197
Retail deposits		652,296			638,633			626,617			623,431			609,064
Brokered time deposits		176,391			189,966			223,771			253,794			279,623
Short-term borrowings		172,055			124,699			100,901			79,886			60,428
Long-term borrowings and
subordinated debentures		335,327			283,268			236,347			203,408			195,698
Shareholders' equity		89,420			93,475			81,910			81,950			78,752
Book value per share	$	12.06		$	12.63		$	11.56		$	11.57		$	11.12
Tangible book value per share	$	10.70		$	11.26		$	11.12		$	11.12		$	10.66
Tangible equity / Tangible assets		5.6	%		6.3	%		6.2	%		6.3	%		6.1	%
Tier 1 leverage ratio		7.3	%		8.1	%		7.9	%		7.9	%		7.8	%

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Loan Composition
Dollars in thousands	12/31/2007		9/30/2007		6/30/2007		3/31/2007		12/31/2006
Commercial	$	92,599	$	87,018	$	81,292	$	69,700	$	69,470
Commercial real estate		384,478		352,396		354,833		329,561		314,199
Construction and development		225,270		212,570		198,721		220,430		215,820
Residential real estate		322,640		305,016		283,821		279,564		282,512
Consumer		31,956		33,255		33,937		33,845		36,455
Other		6,641		6,793		7,111		7,209		6,968
Total loans		1,063,584		997,048		959,715		940,309		925,424
Less unearned fees and interest		1,903		1,884		1,772		1,757		1,868
Total loans net of unearned fees and interest		1,061,681		995,164		957,943		938,552		923,556
Less allowance for loan losses		9,192		8,727		8,768		7,783		7,511
Loans, net	$	1,052,489	$	986,437	$	949,175	$	930,769	$	916,045

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Retail Deposit Composition
Dollars in thousands	12/31/2007		9/30/2007		6/30/2007		3/31/2007		12/31/2006
Non interest bearing checking	$	65,727	$	65,230	$	64,373	$	60,645	$	62,591
Interest bearing checking		222,825		230,491		230,509		230,634		220,167
Savings		40,845		39,596		41,910		44,713		47,984
Time deposits		322,899		303,316		289,825		287,439		278,322
Total retail deposits	$	652,296	$	638,633	$	626,617	$	623,431	$	609,064

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Asset Quality Information
	For the Quarter Ended
Dollars in thousands	12/31/2007			9/30/2007			6/30/2007			3/31/2007			12/31/2006
Gross loan charge-offs	$	332		$	599		$	141		$	206		$	313
Gross loan recoveries		(47	)		(33	)		(45	)		(87	)		(50	)
Net loan charge-offs	$	285		$	566		$	96		$	119		$	263
Net loan charge-offs to average loans (annualized)		0.11	%		0.23	%		0.04	%		0.05	%		0.11	%
Allowance for loan losses	$	9,192		$	8,727		$	8,768		$	7,783		$	7,511
Allowance for loan losses as a percentage
of period end loans		0.86	%		0.88	%		0.91	%		0.83	%		0.81	%
Nonperforming assets:
Nonperforming loans	$	10,333		$	6,916		$	7,307		$	4,474		$	5,276
Foreclosed properties and
other repossessed assets		2,058			815			851			43			77
Total	$	12,391		$	7,731		$	8,158		$	4,517		$	5,353
Nonperforming loans to period end loans		0.97	%		0.69	%		0.76	%		0.48	%		0.57	%
Nonperforming assets to period end assets		0.86	%		0.58	%		0.64	%		0.36	%		0.43	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q4 2007 vs Q4 2006
	Q4 2007			Q4 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	$    1,015,397	$     20,075	7.84%	$       914,050	$     18,735	8.13%
Tax-exempt	9,259	188	8.06%	8,591	166	7.67%
Securities
Taxable	234,444	3,008	5.09%	202,758	2,566	5.02%
Tax-exempt	49,760	870	6.94%	47,666	842	7.01%
Interest bearing deposits other banks
and Federal funds sold	479	9	7.45%	517	11	8.44%
Total interest earning assets	1,309,339	24,150	7.32%	1,173,582	22,320	7.55%
Noninterest earning assets
Cash & due from banks	14,391			12,393
Premises & equipment	22,092			23,309
Other assets	35,362			26,786
Allowance for loan losses	(9,033)			(7,339)
Total assets	$    1,372,151			$    1,228,731
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$       225,686	$       1,575	2.77%	$       221,943	$       2,066	3.69%
Savings deposits	38,706	145	1.49%	46,804	243	2.06%
Time deposits	487,609	6,039	4.91%	549,785	6,679	4.82%
Short-term borrowings	147,144	1,724	4.65%	77,044	1,040	5.36%
Long-term borrowings and
subordinated debentures	299,420	3,973	5.26%	176,932	2,478	5.56%
	1,198,565	13,456	4.45%	1,072,508	12,506	4.63%
Noninterest bearing liabilities
Demand deposits	68,123			63,671
Other liabilities	10,131			10,307
Total liabilities	1,276,819			1,146,486
Shareholders' equity	95,332			82,245
Total liabilities and
shareholders' equity	$    1,372,151			$    1,228,731
NET INTEREST EARNINGS		$     10,694			$       9,814
NET INTEREST YIELD ON EARNING ASSETS			3.24%			3.32%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
YTD 2007 vs YTD 2006
	For the Years Ended December 31,
	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	$	963,116		$	77,510		8.05	%	$	872,017		$	68,915		7.90	%
Tax-exempt		9,270			738		7.96	%		8,428			642		7.62	%
Securities
Taxable		219,605			11,224		5.11	%		193,046			9,403		4.87	%
Tax-exempt		47,645			3,289		6.90	%		46,382			3,227		6.96	%
Interest bearing deposits other banks
and Federal funds sold		1,011			51		5.04	%		1,216			62		5.10	%
Total interest earning assets		1,240,647			92,812		7.48	%		1,121,089			82,249		7.34	%
Noninterest earning assets
Cash & due from banks		14,104								13,417
Premises & equipment		22,179								23,496
Other assets		30,795								26,422
Allowance for loan losses		(8,683	)							(6,849	)
Total assets	$	1,299,042							$	1,177,575
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	227,014		$	7,695		3.39	%	$	215,642		$	7,476		3.47	%
Savings deposits		42,254			706		1.67	%		42,332			554		1.31	%
Time deposits		524,389			25,895		4.94	%		458,864			20,282		4.42	%
Short-term borrowings		95,437			4,822		5.05	%		130,771			6,612		5.06	%
Long-term borrowings and
subordinated debentures		245,937			13,199		5.37	%		176,422			9,455		5.36	%
		1,135,031			52,317		4.61	%		1,024,031			44,379		4.33	%
Noninterest bearing liabilities
Demand deposits		65,060								64,380
Other liabilities		11,000								10,106
Total liabilities		1,211,091								1,098,517
Shareholders' equity		87,951								79,058
Total liabilities and
shareholders' equity	$	1,299,042							$	1,177,575
NET INTEREST EARNINGS				$	40,495							$	37,870
NET INTEREST YIELD ON EARNING ASSETS							3.26	%							3.38	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures
	For the Quarter Ended						For the Year Ended
Dollars in thousands	12/31/2007			12/31/2006			12/31/2007			12/31/2006
Income from continuing operations -
excluding changes in fair
value of interest rate swaps	$	3,375		$	2,718		$	12,606		$	11,117
Changes in fair value of
interest rate swaps		783			49			1,478			(91	)
Applicable income tax effect		(290	)		(18	)		(547	)		34
		493			31			931			(57	)
GAAP income from continuing
operations	$	3,868		$	2,749		$	13,537		$	11,060