exhibit99pressrelease.htm

Exhibit 99

FOR RELEASE 6:00 AM ET, October 31, 2012

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

Telephone: (304) 530-0552

Email: rtissue@summitfgi.com

SUMMIT FINANCIAL GROUP REPORTS 3rd QUARTER 2012 RESULTS

MOOREFIELD, WV – October 31, 2012 (GLOBE NEWSWIRE) – Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ: SMMF) today reported third quarter 2012 net income applicable to common shares of $803,000, or $0.10 per diluted share, compared with $1,862,000, or $0.24 per diluted share, for the third quarter of 2011. Third quarter 2012 results, as compared to the same period in 2011, were positively impacted by lower charges for other-than-temporary impairment (“OTTI”) of securities and negatively impacted by higher charges to write-down foreclosed properties to estimated fair values and lower realized gains on the sales of securities.

Excluding from third quarter 2012 nonrecurring items (on a pre-tax basis) consisting of realized securities gains of $760,000, gains on sales of assets of $16,000, OTTI of securities of $39,000 and write-downs of foreclosed properties of $2.57 million, and from third quarter 2011 realized securities gains of $1,517,000, gains on sales of assets of $130,000, OTTI of securities of $484,000, and write-downs of foreclosed properties of $1.64 million, pro forma third quarter 2012 earnings applicable to common shares were approximately $1.96 million, or $0.22 per diluted share, compared to $2.16 million, or $0.28 per diluted share, for the year-ago period.

For the nine months ended September 30, 2012, Summit recorded net income applicable to common shares of $3.03 million, or $0.38 per diluted share, compared with $2.37 million, or $0.32 per diluted share, for the comparable 2011 nine-month period.

Excluding from the nine month period ended September 30, 2012 nonrecurring items (on a pre-tax basis) comprised of realized securities gains of $2.25 million, losses on sales of assets of $583,000, OTTI of $375,000 and write-downs of foreclosed properties of $6.11 million, and from the 2011 first nine-month period realized securities gains of $3.46 million, gain on sales of assets of $277,000, OTTI charges of $2.25 million and write-downs of foreclosed properties of $5.77 million, pro forma earnings for first nine months of 2012 were approximately $6.07 million, or $0.71 per diluted share, compared to $5.06 million, or $0.67 per diluted share, for the 2011 nine month period.

Highlights for Q3 2012 include:

·	Achieved sixth consecutive quarter of positive quarterly earnings.

·	Net interest margin improved 9 basis points compared to Q3 2011, but declined 3 basis points compared to Q2 2012.

·	Recorded charges of $2.57 million and $39,000, respectively, to write-down foreclosed properties and to recognize OTTI of securities, which were partially offset by $760,000 in realized securities gains.

·	Noninterest expenses remained well-controlled, declining 1.3 percent from the year-ago quarter.

·	Summit’s leverage capital ratio is at its highest level in five years and its total risk-based capital ratio is at highest level in eleven years.

H. Charles Maddy, III, President and Chief Executive Officer of Summit, commented, “We are pleased by our continued progress having now achieved six consecutive quarters of profitability; unfortunately as anticipated, earnings are and will remain choppy in the near term as our foreclosed properties are re-appraised and written-down to estimated fair values on an ongoing basis. Year-to-date in 2012, I am particularly pleased that: despite a decline in average earning assets, our net interest income remains relatively stable; our net interest margin has improved; our core noninterest income has increased, while we have decreased noninterest expenses; and OTTI of securities charges are very modest compared to prior-year amounts, and are expected to remain at relatively low levels. Reducing our portfolio of problem assets remains our top priority, and we have reduced our nonperforming assets in each of the three most recent quarters. However, dispositions of foreclosed properties remain frustratingly slow -- particularly with respect to commercial and residential development properties.”

Results from Operations

Total revenue for the third quarter 2012, consisting of net interest income and noninterest income, was $10.7 million compared to $12.1 million for the third quarter 2011. For the year-to-date period ended September 30, 2012, total revenue was $33.3 million compared to $33.7 million for the same period in 2011.

Total revenue excluding nonrecurring items (as enumerated above) was unchanged at $12.6 million for third quarter 2012 and the same prior-year quarter. For the first nine months of 2012, total revenue excluding nonrecurring items was $38.1 million compared to $38.0 for the first nine months of 2011.

For the third quarter of 2012, net interest income remained relatively unchanged at $9.94 million, compared to $9.92 million reported in the prior-year third quarter and $9.97 million reported in the linked quarter. The net interest margin for third quarter 2012 was 3.17 percent compared to 3.08 percent for the year-ago quarter, and 3.20 percent for the linked quarter.

Noninterest income, consisting primarily of insurance commissions from Summit's insurance agency subsidiary and service fee income from community banking activities, for third quarter 2012 was $806,000 compared to $2.19 million for the comparable period of 2011. Excluding nonrecurring items (as enumerated above), noninterest income was $2.64 million for third quarter 2012 compared to $2.66 million for third quarter 2011.

The provision for loan losses remained at $2.0 million for the third quarter of 2012, unchanged from both the linked and year-ago quarters.

Noninterest expenses continue to be well-controlled, as total noninterest expense decreased 1.3% for the quarter to $7.5 million from the $7.6 million reported in third quarter 2011. Noninterest expense for the first nine months of 2012 remained nearly unchanged compared to the first nine months 2011.

Balance Sheet

At September 30, 2012, total assets were $1.40 billion, a decrease of $46.0 million, or 3.2 percent, and a decrease of $60.5 million, or 4.1 percent, since December 31, 2011 and September 30, 2011, respectively. Total loans, net of unearned fees, were $958.8 million at September 30, 2012, down $24.5 million, or 2.5 percent, from the $983.2 million reported at year end 2011.

All loan categories have declined since year end 2011, except for commercial real estate (“CRE”), the largest component of Summit’s loan portfolio, which increased $242,000. The second largest component of Summit’s loan portfolio, residential real estate, declined $2.4 million, or 0.7 percent, while construction and development (“C&D”) loans declined $11.0 million, or 11.5 percent and commercial (“C&I”) loans declined $10.0 million, or 10.1 percent.

At September 30, 2012, retail deposits were $766.6 million, a decrease of $17.5 million, or 2.2 percent, since year end 2011. During the first nine months of 2012, retail checking deposits grew $26.9 million, or 10.9 percent, to $274.0 million, while retail savings and time deposits declined during the same period by $11.2 million and $33.1 million, respectively, or 5.4 percent and 10.1 percent, respectively. This reflects management’s ongoing effort to enhance Summit’s cost of funds by improving its deposit mix by attracting lower-cost checking deposits to replace higher-cost time deposits.

Long-term borrowings and subordinated debentures declined by 21.7 percent since year end 2011, as the Company paid down $66.5 million in maturing borrowings during this period.

Asset Quality

As of September 30, 2012, nonperforming assets (“NPAs”), consisting of nonperforming loans, foreclosed properties, and repossessed assets, were $99.8 million, or 7.11 percent of assets. This compares to $106.1 million, or 7.49 percent of assets at the linked quarter, and $99.9 million, or 6.82 percent of assets at September 30, 2011.

Third quarter 2012 net loan charge-offs were $2.1 million, or 0.86 percent of average loans annualized, while adding $2.0 million to the allowance for loan losses. The allowance for loan losses stood at $17.8 million, or 1.86 percent of total loans at September 30, 2012, compared to 1.80 percent at December 31, 2011.

Capital Adequacy

Total shareholders’ equity was $107.3 million as of September 30, 2012 compared to $102.6 million December 31, 2011.

Summit's depository institution, Summit Community Bank, Inc. (the “Bank”), remains well in excess of regulatory requirements for a "well capitalized" institution at September 30, 2012. The Bank’s total risk-based capital ratio improved to 14.6 percent at September 30, 2012 compared to 13.6 percent at December 31, 2011, while its Tier 1 leverage capital ratio improved to 9.5 from the 8.9 percent reported at December 31, 2011. Total common shares outstanding as of September 30, 2012 were 7,425,472.

About the Company

Summit Financial Group, Inc. is a $1.40 billion financial holding company headquartered in Moorefield, West Virginia. Summit provides community banking services primarily in the Eastern Panhandle and South Central regions of West Virginia and the Northern and Shenandoah Valley regions of Virginia, through its bank subsidiary, Summit Community Bank, Inc., which operates fifteen banking locations. Summit also operates Summit Insurance Services, LLC in Moorefield, West Virginia and Leesburg, 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 economies. We undertake no obligation to revise these statements following the date of this press release.

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 GAAP performance measures to exclude the effects of realized and unrealized securities gains and losses, gains/losses on sales of assets, and write-downs of foreclosed properties to estimated fair value included in its Statements of Income. Management deems these items to be unusual in nature and believes presentations of financial measures excluding the impact of these items 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.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary -- Q3 2012 vs Q3 2011


	For the Quarter Ended						Percent
Dollars in thousands	9/30/2012			9/30/2011			Change
Condensed Statements of Income
Interest income
Loans, including fees	$	13,648		$	14,717		-7.3	%
Securities		1,934			2,920		-33.8	%
Other		7			15		-53.3	%
Total interest income		15,589			17,652		-11.7	%
Interest expense
Deposits		3,067			4,561		-32.8	%
Borrowings		2,587			3,170		-18.4	%
Total interest expense		5,654			7,731		-26.9	%
Net interest income		9,935			9,921		0.1	%
Provision for loan losses		2,000			2,001		0.0	%
Net interest income after provision
for loan losses		7,935			7,920		0.2	%

Noninterest income
Insurance commissions		1,052			1,073		-2.0	%
Service fees related to deposit accounts		1,074			1,078		-0.4	%
Realized securities gains		760			1,517		-49.9	%
Gain (loss) on sale of assets		16			130		-87.7	%
Other-than-temporary impairment of securities		(39	)		(484	)	-91.9	%
Write-downs of foreclosed properties		(2,571	)		(1,637	)	57.1	%
Other income		514			510		0.8	%
Total noninterest income		806			2,187		-63.1	%
Noninterest expense
Salaries and employee benefits		3,940			3,959		-0.5	%
Net occupancy expense		476			473		0.6	%
Equipment expense		576			589		-2.2	%
Professional fees		250			265		-5.7	%
FDIC premiums		510			580		-12.1	%
Foreclosed properties expense		395			389		1.5	%
Other expenses		1,325			1,318		0.5	%
Total noninterest expense		7,472			7,573		-1.3	%
Income before income taxes		1,269			2,534		-49.9	%
Income taxes		272			598		-54.5	%
Net income		997			1,936		-48.5	%
Preferred stock dividends		194			74		162.2	%

Net income applicable to common shares	$	803		$	1,862		-56.9	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary -- Q3 2012 vs Q3 2011

	For the Quarter Ended						Percent
	9/30/2012			9/30/2011			Change
Per Share Data
Earnings per common share
Basic	$	0.11		$	0.25		-56.0	%
Diluted	$	0.10		$	0.24		-58.3	%

Average shares outstanding
Basic		7,425,472			7,425,472		0.0	%
Diluted		9,601,278			8,110,070		18.4	%

Performance Ratios
Return on average equity (A)		3.71	%		8.22	%	-54.9	%
Return on average assets		0.28	%		0.53	%	-47.2	%
Net interest margin		3.17	%		3.08	%	2.9	%
Efficiency ratio (B)		53.91	%		52.36	%	3.0	%

NOTE (A) – Net income divided by total average shareholders’ equity.

NOTE (B) – Computed on a tax equivalent basis excluding nonrecurring income and expense items and amortization of intangibles.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Nine Month Performance Summary -- 2012 vs 2011


	For the Nine Months Ended						Percent
Dollars in thousands	9/30/2012			9/30/2011			Change
Condensed Statements of Income
Interest income
Loans, including fees	$	42,054		$	44,814		-6.2	%
Securities		6,579			9,088		-27.6	%
Other		31			59		-47.5	%
Total interest income		48,664			53,961		-9.8	%
Interest expense
Deposits		10,140			13,971		-27.4	%
Borrowings		8,600			9,807		-12.3	%
Total interest expense		18,740			23,778		-21.2	%
Net interest income		29,924			30,183		-0.9	%
Provision for loan losses		6,002			8,001		-25.0	%
Net interest income after provision
for loan losses		23,922			22,182		7.8	%

Noninterest income
Insurance commissions		3,352			3,458		-3.1	%
Service fees related to deposit accounts		3,163			3,024		4.6	%
Realized securities gains		2,245			3,463		-35.2	%
Gain (loss) on sale of assets		(583	)		277		-310.5	%
Other-than-temporary impairment of securities		(375	)		(2,245	)	-83.3	%
Write-downs of foreclosed properties		(6,114	)		(5,770	)	6.0	%
Other income		1,649			1,354		21.8	%
Total noninterest income		3,337			3,561		-6.3	%
Noninterest expense
Salaries and employee benefits		11,733			11,987		-2.1	%
Net occupancy expense		1,445			1,463		-1.2	%
Equipment expense		1,773			1,750		1.3	%
Professional fees		781			654		19.4	%
FDIC premiums		1,532			1,859		-17.6	%
Foreclosed properties expense		1,017			1,235		-17.7	%
Other expenses		4,025			3,503		14.9	%
Total noninterest expense		22,306			22,451		-0.6	%
Income before income taxes		4,953			3,292		50.5	%
Income taxes		1,345			698		92.7	%
Net income		3,608			2,594		39.1	%
Preferred stock dividends		583			223		161.4	%

Net income applicable to common shares	$	3,025		$	2,371		27.6	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Nine Month Performance Summary -- 2012 vs 2011

	For the Nine Months Ended						Percent
	9/30/2012			9/30/2011			Change
Per Share Data
Earnings per common share
Basic	$	0.41		$	0.32			28.1	%
Diluted	$	0.38		$	0.32			18.8	%

Average shares outstanding
Basic		7,425,472			7,425,472			0.0	%
Diluted		9,601,098			7,428,860			29.2	%

Performance Ratios
Return on average equity (A)		4.54	%		3.76	%		20.7	%
Return on average assets		0.34	%		0.23	%		47.8	%
Net interest margin		3.19	%		3.10	%		2.9	%
Efficiency ratio (B)		53.04	%		51.88	%		2.2	%

NOTE (A) – Net income divided by total average shareholders’ equity.

NOTE (B) – 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	9/30/2012			6/30/2012			3/31/2012			12/31/2011			9/30/2011
Condensed Statements of Income
Interest income
Loans, including fees	$	13,648		$	14,041		$	14,365		$	14,362		$	14,717
Securities		1,934			2,225			2,421			2,711			2,920
Other		7			12			11			13			15
Total interest income		15,589			16,278			16,797			17,086			17,652
Interest expense
Deposits		3,067			3,360			3,713			4,302			4,561
Borrowings		2,587			2,947			3,066			3,123			3,170
Total interest expense		5,654			6,307			6,779			7,425			7,731
Net interest income		9,935			9,971			10,018			9,661			9,921
Provision for loan losses		2,000			2,001			2,001			1,999			2,001
Net interest income after provision
for loan losses		7,935			7,970			8,017			7,662			7,920

Noninterest income
Insurance commissions		1,052			1,141			1,158			1,003			1,073
Service fees related to deposit accounts		1,074			1,075			1,014			1,102			1,078
Realized securities gains		760			320			1,165			542			1,517
Gain (loss) on sale of assets		16			(523	)		(77	)		18			130
Other-than-temporary impairment of securities		(39	)		(106	)		(229	)		(401	)		(484	)
Write-downs of foreclosed properties		(2,571	)		(1,631	)		(1,912	)		(882	)		(1,637	)
Other income		514			552			584			607			510
Total noninterest income		806			828			1,703			1,989			2,187
Noninterest expense
Salaries and employee benefits		3,940			3,892			3,901			3,846			3,959
Net occupancy expense		476			490			479			472			473
Equipment expense		576			603			594			593			589
Professional fees		250			227			304			501			265
FDIC premiums		510			500			522			564			580
Foreclosed properties expense		395			248			374			441			389
Other expenses		1,325			1,335			1,365			1,417			1,318
Total noninterest expense		7,472			7,295			7,539			7,834			7,573
Income before income taxes		1,269			1,503			2,181			1,817			2,534
Income taxes		272			590			483			337			598
Net income		997			913			1,698			1,480			1,936
Preferred stock dividends		194			194			194			149			74
Net income applicable to common shares	$	803		$	719		$	1,504		$	1,331		$	1,862

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

	For the Quarter Ended
	9/30/2012			6/30/2012			3/31/2012			12/31/2011			9/30/2011
Per Share Data
Earnings per common share
Basic	$	0.11		$	0.10		$	0.20		$	0.18		$	0.25
Diluted	$	0.10		$	0.09		$	0.18		$	0.16		$	0.24

Average shares outstanding
Basic		7,425,472			7,425,472			7,425,472			7,425,472			7,425,472
Diluted		9,601,278			8,927,802			9,600,017			9,044,976			8,110,070

Performance Ratios
Return on average equity (A)		3.71	%		3.44	%		6.49	%		5.87	%		8.22	%
Return on average assets		0.28	%		0.25	%		0.47	%		0.41	%		0.53	%
Net interest margin		3.17	%		3.20	%		3.20	%		3.03	%		3.08	%
Efficiency ratio - (B)		53.91	%		52.59	%		52.70	%		54.96	%		52.36	%

NOTE (A) – Net income divided by total average shareholders’ equity.

NOTE (B) – 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	9/30/2012			6/30/2012			3/31/2012			12/31/2011			9/30/2011

Assets
Cash and due from banks	$	3,752		$	4,266		$	4,059		$	4,398		$	3,596
Interest bearing deposits other banks		13,441			14,288			26,855			28,294			39,103
Securities		291,992			289,151			292,002			286,599			292,442
Loans, net		940,933			948,294			957,797			965,516			964,349
Property held for sale		56,033			60,069			61,584			63,938			63,335
Premises and equipment, net		21,265			21,470			21,756			22,084			22,334
Intangible assets		8,387			8,475			8,563			8,651			8,739
Cash surrender value of life insurance policies		30,065			29,808			29,559			29,284			29,034
Other assets		38,218			40,620			42,190			41,357			41,652
Total assets	$	1,404,086		$	1,416,441		$	1,444,365		$	1,450,121		$	1,464,584

Liabilities and Shareholders' Equity
Retail deposits	$	766,555		$	767,413		$	785,283		$	784,029		$	816,904
Wholesale deposits		260,752			234,256			225,856			232,471			230,405
Short-term borrowings		20,957			10,957			15,956			15,956			955
Long-term borrowings and
subordinated debentures		240,133			290,024			303,510			306,643			308,420
Other liabilities		8,361			8,084			9,361			8,456			8,976
Shareholders' equity		107,328			105,707			104,399			102,566			98,924
Total liabilities and shareholders' equity	$	1,404,086		$	1,416,441		$	1,444,365		$	1,450,121		$	1,464,584

Book value per common share (A)	$	11.20		$	11.01		$	10.87		$	10.68		$	10.96
Tangible book value per common share (A)	$	10.33		$	10.13		$	9.98		$	9.78		$	9.99
Tangible equity / Tangible assets		7.1	%		6.9	%		6.7	%		6.5	%		6.2	%

NOTE (A) – Assumes conversion of all outstanding shares of convertible preferred stock.

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Regulatory Capital Ratios

	9/30/2012		6/30/2012		3/31/2012		12/31/2011		9/30/2011
Summit Financial Group, Inc.
Total Risk Based Capital	13.8	%	13.6	%	13.3	%	13.0	%	12.3	%
Tier 1 Risk Based Capital	11.3	%	11.1	%	10.8	%	10.5	%	9.7	%
Tier 1 Leverage Ratio	8.0	%	7.9	%	7.8	%	7.6	%	6.9	%

Summit Community Bank, Inc.
Total Risk Based Capital	14.6	%	14.3	%	14.0	%	13.6	%	13.4	%
Tier 1 Risk Based Capital	13.3	%	13.1	%	12.7	%	12.3	%	12.1	%
Tier 1 Leverage Ratio	9.5	%	9.3	%	9.1	%	8.9	%	8.7	%

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

Dollars in thousands	9/30/2012		6/30/2012		3/31/2012		12/31/2011		9/30/2011

Commercial	$	88,997	$	92,060	$	99,386	$	99,024	$	94,801
Commercial real estate
Owner occupied		150,090		152,347		153,528		158,754		166,813
Non-owner occupied		279,132		280,891		275,727		270,226		253,538
Construction and development
Land and development		82,857		84,383		88,212		93,035		94,023
Construction		2,087		1,793		2,148		2,936		9,445
Residential real estate
Non-jumbo		215,584		217,321		219,485		221,733		224,499
Jumbo		62,748		61,962		62,836		61,535		62,255
Home equity		53,455		51,692		50,884		50,898		51,025
Consumer		21,290		21,212		21,573		22,325		22,988
Other		2,513		2,523		2,540		2,762		2,911
Total loans, net of unearned fees		958,753		966,184		976,319		983,228		982,298
Less allowance for loan losses		17,820		17,890		18,522		17,712		17,949
Loans, net	$	940,933	$	948,294	$	957,797	$	965,516	$	964,349

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

Dollars in thousands	9/30/2012		6/30/2012		3/31/2012		12/31/2011		9/30/2011
Non interest bearing checking	$	96,764	$	96,172	$	87,916	$	88,655	$	85,406
Interest bearing checking		177,236		164,867		172,506		158,483		163,840
Savings		197,610		204,509		212,402		208,809		208,030
Time deposits		294,945		301,865		312,459		328,082		359,628
Total retail deposits	$	766,555	$	767,413	$	785,283	$	784,029	$	816,904

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

	For the Quarter Ended
Dollars in thousands	9/30/2012			6/30/2012			3/31/2012			12/31/2011			9/30/2011
Gross loan charge-offs	$	2,142		$	2,790		$	1,340		$	2,368		$	2,157
Gross loan recoveries		(73	)		(156	)		(149	)		(133	)		(89	)
Net loan charge-offs	$	2,069		$	2,634		$	1,191		$	2,235		$	2,068

Net loan charge-offs to average loans (annualized)		0.86	%		1.08	%		0.49	%		0.91	%		0.84	%
Allowance for loan losses	$	17,820		$	17,890		$	18,523		$	17,712		$	17,949
Allowance for loan losses as a percentage
of period end loans		1.86	%		1.85	%		1.89	%		1.80	%		1.82	%
Nonperforming assets:
Nonperforming loans
Commercial	$	5,343		$	6,476		$	2,477		$	3,259		$	3,473
Commercial real estate		2,803			3,536			4,282			7,163			8,398
Commercial construction and development		428			662			799			1,052			-
Residential construction and development		16,333			16,735			21,375			22,634			17,506
Residential real estate		18,809			18,550			17,754			18,187			6,818
Consumer		88			78			81			145			87
Total nonperforming loans		43,804			46,037			46,768			52,440			36,282
Foreclosed properties
Commercial		-			-			-			-			-
Commercial real estate		11,802			12,029			14,703			15,721			14,256
Commercial construction and development		17,683			18,632			17,377			17,101			16,960
Residential construction and development		23,769			26,014			25,724			27,877			27,804
Residential real estate		2,779			3,393			3,780			3,239			3,718
Total foreclosed properties		56,033			60,068			61,584			63,938			62,738
Other repossessed assets		-			-			266			263			859
Total nonperforming assets	$	99,837		$	106,105		$	108,618		$	116,641		$	99,879

Nonperforming loans to period end loans		4.57	%		4.76	%		4.79	%		5.33	%		3.69	%
Nonperforming assets to period end assets		7.11	%		7.49	%		7.52	%		8.04	%		6.82	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Loans Past Due 30-89 Days
	For the Quarter Ended
In thousands	9/30/2012		6/30/2012		3/31/2012		12/31/2011		9/30/2011

Commercial	$	874	$	300	$	689	$	533	$	255
Commercial real estate		1,264		1,787		2,776		5,746		2,797
Construction and development		56		293		518		1,756		1,251
Residential real estate		4,346		5,763		5,509		6,633		4,779
Consumer		313		408		242		466		308
Total	$	6,853	$	8,551	$	9,734	$	15,134	$	9,390

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q3 2012 vs Q3 2011

	Q3 2012			Q3 2011
	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	$ 955,849	$ 13,572	5.65%	$ 976,169	$ 14,656	5.96%
Tax-exempt	6,267	115	7.30%	4,575	92	7.98%
Securities
Taxable	238,458	1,341	2.24%	246,411	2,104	3.39%
Tax-exempt	69,636	890	5.08%	79,685	1,236	6.15%
Interest bearing deposits other banks
and Federal funds sold	19,690	7	0.14%	28,911	15	0.21%
Total interest earning assets	1,289,900	15,925	4.91%	1,335,751	18,103	5.38%

Noninterest earning assets
Cash & due from banks	4,247			4,047
Premises & equipment	21,422			22,503
Other assets	117,354			126,113
Allowance for loan losses	(17,825)			(18,240)
Total assets	$ 1,415,098			$ 1,470,174

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$ 176,974	$ 83	0.19%	$ 152,516	$ 96	0.25%
Savings deposits	200,865	321	0.64%	210,715	467	0.88%
Time deposits	548,983	2,663	1.93%	602,454	3,998	2.63%
Short-term borrowings	12,479	8	0.26%	1,226	1	0.32%
Long-term borrowings and
subordinated debentures	264,315	2,579	3.88%	313,102	3,169	4.02%
Total interest bearing liabilities	1,203,616	5,654	1.87%	1,280,013	7,731	2.40%

Noninterest bearing liabilities
Demand deposits	96,048			86,966
Other liabilities	8,015			8,948
Total liabilities	1,307,679			1,375,927

Shareholders' equity - preferred	9,326			3,558
Shareholders' equity - common	98,093			90,689
Total liabilities and
shareholders' equity	$ 1,415,098			$ 1,470,174

NET INTEREST EARNINGS		$ 10,271			$ 10,372

NET INTEREST MARGIN			3.17%			3.08%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
YTD 2012 vs YTD 2011

	YTD 2012			YTD 2011
	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	$ 965,227	$ 41,811	5.79%	$ 987,928	$ 44,622	6.04%
Tax-exempt	6,776	368	7.25%	4,765	289	8.11%
Securities
Taxable	235,885	4,592	2.60%	262,275	7,290	3.72%
Tax-exempt	70,753	3,009	5.68%	56,313	2,727	6.47%
Interest bearing deposits other banks
and Federal funds sold	22,737	31	0.18%	36,307	59	0.22%
Total interest earning assets	1,301,378	49,811	5.11%	1,347,588	54,987	5.46%

Noninterest earning assets
Cash & due from banks	4,195			3,951
Premises & equipment	21,684			22,737
Other assets	120,041			118,393
Allowance for loan losses	(18,191)			(18,144)
Total assets	$ 1,429,107			$ 1,474,525

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$ 167,843	$ 247	0.20%	$ 151,137	$ 296	0.26%
Savings deposits	206,953	1,054	0.68%	206,705	1,473	0.95%
Time deposits	545,121	8,839	2.17%	611,404	12,202	2.67%
Short-term borrowings	14,250	25	0.23%	1,663	3	0.24%
Long-term borrowings and
subordinated debentures	288,305	8,575	3.97%	318,584	9,804	4.11%
	1,222,472	18,740	2.05%	1,289,493	23,778	2.47%
Noninterest bearing liabilities
Demand deposits	92,362			83,768
Other liabilities	8,273			9,234
Total liabilities	1,323,107			1,382,495

Shareholders' equity - preferred	9,326			3,532
Shareholders' equity - common	96,674			88,498
Total liabilities and
shareholders' equity	$ 1,429,107			$ 1,474,525

NET INTEREST EARNINGS		$ 31,071			$ 31,209

NET INTEREST MARGIN			3.19%			3.10%

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	9/30/2012			9/30/2011			9/30/2012			9/30/2011


Net income applicable to common shares - excluding
realized securities gains, gains/(losses) on sales of
assets, other-than-temporary impairment of securities
and write-downs of foreclosed properties	$	1,959		$	2,160		$	6,066		$	5,063

Realized securities gains		760			1,517			2,245			3,463
Applicable income tax effect		(281	)		(561	)		(831	)		(1,281	)
Gains (losses) on sales of assets		16			130			(583	)		277
Applicable income tax effect		(6	)		(48	)		216			(102	)
Other-than-temporary impairment of securities		(39	)		(484	)		(375	)		(2,245	)
Applicable income tax effect		14			179			139			831
Write-downs foreclosed properties		(2,571	)		(1,637	)		(6,114	)		(5,770	)
Applicable income tax effect		951			606			2,262			2,135
		(1,156	)		(298	)		(3,041	)		(2,692	)
GAAP net income applicable to common shares	$	803		$	1,862		$	3,025		$	2,371


Diluted earnings per common share - excluding
realized securities gains, gains/(losses) on sales of
assets, other-than-temporary impairment of securities
and write-downs of foreclosed properties	$	0.22		$	0.28		$	0.71		$	0.67

Realized securities gains		0.08			0.19			0.23			0.47
Applicable income tax effect		(0.03	)		(0.07	)		(0.09	)		(0.17	)
Gains (losses) on sales of assets		-			0.02			(0.06	)		0.04
Applicable income tax effect		-			(0.01	)		0.02			(0.01	)
Other-than-temporary impairment of securities		-			(0.06	)		(0.04	)		(0.30	)
Applicable income tax effect		-			0.02			0.01			0.11
Write-downs of foreclosed properties		(0.27	)		(0.20	)		(0.64	)		(0.78	)
Applicable income tax effect		0.10			0.07			0.24			0.29
		(0.12	)		(0.04	)		(0.33	)		(0.35	)
GAAP diluted earnings per common share	$	0.10		$	0.24		$	0.38		$	0.32

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	9/30/2012			9/30/2011			9/30/2012			9/30/2011

Total revenue - excluding realized securities gains,
other-than-temporary impairment of securities and
write-downs of foreclosed properties	$	12,575		$	12,582		$	38,088		$	38,019

Realized securities gains		760			1,517			2,245			3,463
Gains (losses) on sales of assets		16			130			(583	)		277
Other-than-temporary impairment of securities		(39	)		(484	)		(375	)		(2,245	)
Write-downs of foreclosed properties		(2,571	)		(1,637	)		(6,114	)		(5,770	)
		(1,834	)		(474	)		(4,827	)		(4,275	)
GAAP total revenue	$	10,741		$	12,108		$	33,261		$	33,744

Total noninterest income - excluding realized securities
gains, other-than-temporary impairment of securities
and write-downs of foreclosed properties	$	2,640		$	2,661		$	8,164		$	7,836

Realized securities gains		760			1,517			2,245			3,463
Gains (losses) on sales of assets		16			130			(583	)		277
Other-than-temporary impairment of securities		(39	)		(484	)		(375	)		(2,245	)
Write-downs of foreclosed properties		(2,571	)		(1,637	)		(6,114	)		(5,770	)
		(1,834	)		(474	)		(4,827	)		(4,275	)
GAAP total noninterest income	$	806		$	2,187		$	3,337		$	3,561