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): October 26, 2017

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)	(IRS Employer
of incorporation)		Identification No.)

300 North Main Street, Moorefield, West Virginia 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 October 26, 2017, Summit Financial Group, Inc. (“Summit”) issued a News Release announcing its earnings for the three months and nine months ended September 30, 2017. This News Release is furnished as Exhibit 99 and is incorporated herein by reference.

Section 9 - Financial Statements and Exhibits

ITEM 9.01.    Financial Statements and Exhibits

(d)	Exhibits
	99	News Release issued on October 26, 2017

SIGNATURES

Pursuant to the requirements of the Securities and 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:   October 26, 2017	By:  /s/  Julie R. Markwood
	Julie R. Markwood
	Vice President &
	Chief Accounting Officer

2

EX-99

EXHIBIT 99

FOR RELEASE 6:00 AM ET, October 26, 2017

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

Telephone:(304) 530-0552

Email:rtissue@summitfgi.com

SUMMIT FINANCIAL GROUP REPORTS THIRD QUARTER 2017 RESULTS

Q3 2017 Diluted EPS of $0.48 compared to $0.40 for Q3 2016 and $0.43 for Q2 2017

MOOREFIELD, WV - October 26, 2017 (GLOBE NEWSWIRE) - Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ: SMMF) today reported third quarter 2017 net income of $5.93 million, or $0.48 per diluted share, compared to $4.28 million, or $0.40 per diluted share, for the third quarter of 2016, representing an increase of 38.5 percent, or 20.0 percent per diluted share.

For the nine months ended September 30, 2017, Summit recorded net income of $9.59 million, or $0.81 per diluted share, compared with $12.59 million, or $1.18 per diluted share, for the comparable 2016 nine-month period, representing a decrease of 23.8 percent or 31.4 percent per diluted share. The 2017 decrease in nine-month period earnings is principally attributable to a legal settlement during first quarter which reduced earnings by $0.54 per diluted share.

Highlights for Q3 2017 include:

• Loans, excluding mortgage warehouse lines of credit, grew $22.9 million during the quarter, or 6.1 percent (on an annualized basis); loans, excluding mortgage warehouse lines of credit and First Century Bankshares, Inc.’s (“FCB”) purchased loan portfolio, have grown $75.7 million, or 8.2 percent (annualized), since year-end 2016;

• Total revenues increased 43.6 percent compared to the year ago quarter, principally as result of the acquisitions of FCB and Highland County Bankshares, Inc. (“HCB”), but decreased 2.4 percent compared to the linked-quarter primarily as result of lower net interest income;

• Net interest margin increased 33 basis points compared to Q3 2016, reflecting FCB’s higher yielding loan portfolio and lower cost of funds, but declined 16 basis points compared to Q2 2017, as the result of lower yields on loans coupled with rising funding costs.

H. Charles Maddy, III, President and Chief Executive Officer of Summit, commented, “I am very pleased to report Summit’s record quarterly earnings in Q3 2017, but more importantly, the 20 percent growth in diluted earnings per share over that earned in Q3 a year-ago. These results are primarily attributable to our two acquisitions which closed during this timeframe, and they validate our ability to successfully execute on a disciplined M&A growth strategy, which we believe will continue to present us with significant opportunities going forward as we seek to be a consistent, high-performing community banking institution.”

Acquisitions

On April 1, 2017, Summit completed its acquisition of FCB and its subsidiary, First Century Bank, headquartered in Bluefield, West Virginia. Accordingly, FCB’s results of operations are included in Summit’s consolidated results of operation from the date of acquisition, and therefore Summit’s results for the three and nine months ended September 30, 2017 reflect increased levels of average balances, income and expense compared to its same periods of 2016 results. At consummation, FCB had total assets of $404.8 million, loans of $229.0 million, and deposits of $350.0 million. In addition, our merger-related expenses totaled $1.58 million during first nine months of 2017, with $1.46 million of those expenses incurred during second quarter 2017.

On October 1, 2016, Summit completed its acquisition of HCB and its subsidiary, First & Citizens Bank, headquartered in Monterey, Virginia. Accordingly, HCB’s results of operations are included in Summit’s consolidated results of operation from the date of acquisition, and therefore Summit’s results for the three and nine months ended September 30, 2017 reflect increased levels of average balances, income and expense as compared to the same periods of 2016 results. At consummation, HCB had total assets of $122.8 million, loans of $60.8 million, and deposits of $106.9 million.

In conjunction with these acquisitions, Summit recognized net accretion income related to loan and time deposit fair value acquisition accounting adjustments totaling $226,000 and $76,000 in Q3 2017 and $784,000 and $167,000 for the nine months ended September 30, 2017, respectively.

Results of Operations

Total revenue for third quarter 2017, consisting of net interest income and noninterest income, grew 43.6 percent to $21.2 million, principally as result of the FCB and HCB acquisitions, compared to $14.8 million for the third quarter 2016. For the year-to-date period ended September 30, 2017, total revenue was $59.2 million compared to $44.2 million for the same period of 2016, representing a 34.1 percent increase.

For the third quarter of 2017, net interest income was $17.2 million, an increase of 43.2 percent from the $12.0 million reported in the prior-year third quarter and decreased $616,000 compared to the linked-quarter. The net interest margin for third quarter 2017 was 3.65 percent compared to 3.32 percent for the year-ago quarter, and 3.81 percent for Q2 2017. Excluding the impact of accretion and amortization of fair value acquisition accounting adjustments related to the interest earning assets and interest bearing liabilities acquired from FCB and HCB, Summit’s net interest margin was 3.59 percent for Q3 2017 and 3.61 percent for first nine months of 2017.

Noninterest income, consisting primarily of insurance commissions from Summit's insurance agency subsidiary, trust and wealth management fees and service fee income from community banking activities, for third quarter 2017 was $4.0 million compared to $2.75 million for the comparable period of 2016. Excluding realized securities gains, noninterest income was $3.97 million for third quarter 2017, compared to $2.69 million reported for third quarter 2016 and $3.83 million for the linked-quarter.

We recorded a $375,000 provision for loan losses during third quarter 2017 and none during third quarter 2016.

Q3 2017 total noninterest expense increased 47.8% to $12.45 million compared to $8.42 million for the prior-year third quarter principally due to the acquisitions of FCB and HCB. Noninterest expense for the first nine months of 2017 increased 78.7% compared to the first nine months of 2016. Summit recorded a $9.9 million charge to resolve fully all litigation with Residential Funding Company, LLC and ResCap Liquidating Trust (collectively “ResCap”) during Q1 2017. Excluding the impact of the ResCap litigation settlement charge, noninterest expense for first nine months of 2017 increased 39.7 percent to $35.5 million compared to $25.4 million for the first nine months of 2016, principally as result of the acquisitions of HCB and FCB.

Balance Sheet

At September 30, 2017, total assets were $2.10 billion, an increase of $342.5 million, or 19.5 percent since December 31, 2016. Total loans, net of unearned fees and allowance for loan losses, were $1.56 billion at September 30, 2017, up $251.5 million, or 19.2 percent, from the $1.31 billion reported at year-end 2016. Loans, excluding mortgage warehouse lines of credit, grew $22.9 million during the quarter, or 6.1 percent (on an annualized basis), and loans, excluding mortgage warehouse lines of credit and FCB’s purchased loan portfolio, have grown $75.7 million, or 8.2 percent (annualized), year-to-date.

At September 30, 2017, deposits were $1.62 billion, an increase of $321.2 million, or 24.8 percent, since year end 2016. During first nine months of 2017, checking deposits increased $201.4 million or 48.9 percent, time deposits grew by $94.5 million or 17.3 percent and savings deposits increased $25.3 million or 7.5 percent.

Shareholders’ equity was $198.8 million as of September 30, 2017 compared to $155.4 million at December 31, 2016 and $153.8 million at September 30, 2016. In conjunction with the acquisition of FCB on April 1, 2017, Summit issued 1,537,912 shares of common stock valued at $33.1 million to the former FCB shareholders.

Tangible book value per common share increased to $13.88 at September 30, 2017 compared to $13.20 at December 31, 2016 and $13.69 at September 30, 2016. Summit had 12,311,723 outstanding common shares at Q3 2017 quarter end compared to 10,736,970 at year end 2016.

Asset Quality

As of September 30, 2017, nonperforming assets (“NPAs”), consisting of nonperforming loans, foreclosed properties, and repossessed assets, were $38.7 million, or 1.84 percent of assets. This compares to $37.4 million, or 1.78 percent of assets at the linked quarter-end, and $39.2 million, or 2.36 percent of assets, at third quarter-end 2016.

Third quarter 2017 net loan charge-offs were $242,000, or 0.06 percent of average loans annualized; while we added $375,000 to the allowance for loan losses through the provision for loan losses, representing a 50 percent increase over the $250,000 provision recorded in Q2 2017 primarily as result of our loan growth. The allowance for loan losses stood at 0.79 percent of total loans at September 30, 2017, compared to 0.88 percent at year-end 2016. If the acquired FCB and HCB loans which were recorded at fair value on the acquisition dates are excluded, the allowance for loan losses to total loans ratio at September 30, 2017 and December 31, 2016 would have been 0.93 percent and 0.92 percent, respectively.

About the Company

Summit Financial Group, Inc. is a $2.10 billion financial holding company headquartered in Moorefield, West Virginia. Summit provides community banking services primarily in the Eastern Panhandle and Southern regions of West Virginia and the Northern, Shenandoah Valley and Southwestern regions of Virginia, through its bank subsidiary, Summit Community Bank, Inc., which operates thirty 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.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary -- Q3 2017 vs Q3 2016
	For the Quarter Ended						Percent
Dollars in thousands	9/30/2017			9/30/2016			Change
Condensed Statements of Income
Interest income
Loans, including fees	$	19,490		$	14,142		37.8	%
Securities	2,397			1,759			36.3	%
Other	149			5			n/m
Total interest income	22,036			15,906			38.5	%
Interest expense
Deposits	2,963			2,209			34.1	%
Borrowings	1,841			1,660			10.9	%
Total interest expense	4,804			3,869			24.2	%
Net interest income	17,232			12,037			43.2	%
Provision for loan losses	375			—			n/a
Net interest income after provision for loan losses	16,857			12,037			40.0	%
Noninterest income
Insurance commissions	1,043			1,016			2.7	%
Trust and wealth management fees	589			126			367.5	%
Service fees related to deposit accounts	1,863			1,138			63.7	%
Realized securities gains	26			61			-57.4	%
Other income	479			408			17.4	%
Total noninterest income	4,000			2,749			45.5	%
Noninterest expense
Salaries and employee benefits	6,610			4,819			37.2	%
Net occupancy expense	847			525			61.3	%
Equipment expense	1,093			716			52.7	%
Professional fees	373			270			38.1	%
Amortization of intangibles	448			50			796.0	%
FDIC premiums	310			200			55.0	%
Merger-related expense	11			80			-86.3	%
Foreclosed properties expense	171			100			71.0	%
Gain on sales of foreclosed properties	(29		)	(169		)	-82.8	%
Write-downs of foreclosed properties	91			134			-32.1	%
Other expenses	2,522			1,694			48.9	%
Total noninterest expense	12,447			8,419			47.8	%
Income before income taxes	8,410			6,367			32.1	%
Income tax expense	2,480			2,086			18.9	%
Net income	$	5,930		$	4,281		38.5	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary -- Q3 2017 vs Q3 2016
	For the Quarter Ended						Percent
	9/30/2017			9/30/2016			Change
Per Share Data
Earnings per common share
Basic	$	0.48		$	0.40		20.0	%
Diluted	$	0.48		$	0.40		20.0	%
Cash dividends	$	0.11		$	0.10		10.0	%
Average common shares outstanding
Basic	12,299,987			10,692,423			15.0	%
Diluted	12,318,959			10,727,140			14.8	%
Common shares outstanding at period end	12,311,723			10,701,841			15.0	%
Performance Ratios
Return on average equity	12.10		%	11.29		%	7.2	%
Return on average tangible equity	14.12		%	11.86		%	19.1	%
Return on average assets	1.14		%	1.08		%	5.6	%
Net interest margin	3.65		%	3.32		%	9.9	%
Efficiency ratio (A)	53.73		%	53.30		%	0.8	%
NOTE (A) - 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 -- 2017 vs 2016
	For the Nine Months Ended						Percent
Dollars in thousands	9/30/2017			9/30/2016			Change
Condensed Statements of Income
Interest income
Loans, including fees	$	54,878		$	41,200		33.2	%
Securities	6,597			5,141			28.3	%
Other	466			13			n/m
Total interest income	61,941			46,354			33.6	%
Interest expense
Deposits	7,987			6,533			22.3	%
Borrowings	5,245			4,271			22.8	%
Total interest expense	13,232			10,804			22.5	%
Net interest income	48,709			35,550			37.0	%
Provision for loan losses	875			500			75.0	%
Net interest income after provision for loan losses	47,834			35,050			36.5	%
Noninterest income
Insurance commissions	3,000			3,030			-1.0	%
Trust and wealth management fees	1,284			358			258.7	%
Service fees related to deposit accounts	4,737			3,175			49.2	%
Realized securities gains	58			836			-93.1	%
Other income	1,417			1,202			17.9	%
Total noninterest income	10,496			8,601			22.0	%
Noninterest expense
Salaries and employee benefits	18,555			14,265			30.1	%
Net occupancy expense	2,239			1,576			42.1	%
Equipment expense	2,859			2,059			38.9	%
Professional fees	1,012			1,171			-13.6	%
Amortization of intangibles	974			150			549.3	%
FDIC premiums	815			800			1.9	%
Merger-related expense	1,575			345			356.5	%
Foreclosed properties expense	397			317			25.2	%
Gain on sales of foreclosed properties	(111		)	(451		)	-75.4	%
Write-downs of foreclosed properties	538			503			7.0	%
Litigation settlement	9,900			—			n/a
Other expenses	6,646			4,675			42.2	%
Total noninterest expense	45,399			25,410			78.7	%
Income before income taxes	12,931			18,241			-29.1	%
Income tax expense	3,339			5,655			-41.0	%
Net income	$	9,592		$	12,586		-23.8	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Nine Month Performance Summary -- 2017 vs 2016
	For the Nine Months Ended						Percent
	9/30/2017			9/30/2016			Change
Per Share Data
Earnings per common share
Basic	$	0.81		$	1.18		-31.4	%
Diluted	$	0.81		$	1.18		-31.4	%
Cash dividends	$	0.33		$	0.30		10.0	%
Average common shares outstanding
Basic	11,781,342			10,682,129			10.3	%
Diluted	11,807,002			10,692,346			10.4	%
Common shares outstanding at period end	12,311,723			10,701,841			15.0	%
Performance Ratios
Return on average equity	7.06		%	11.29		%	-37.5	%
Return on average tangible equity	8.08		%	11.88		%	-32.0	%
Return on average assets	0.65		%	1.09		%	-40.4	%
Net interest margin	3.67		%	3.40		%	7.9	%
Efficiency ratio (A)	52.76		%	54.84		%	-3.8	%
NOTE (A) - Computed on a tax equivalent basis excluding nonrecurring income and expense items and amortization of intangibles.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Five Quarter Performance Summary
	For the Quarter Ended
Dollars in thousands	9/30/2017			6/30/2017		3/31/2017			12/31/2016			9/30/2016
Condensed Statements of Income (unaudited)
Interest income
Loans, including fees	$	19,490		$	19,717	$	15,671		$	15,780		$	14,142
Securities	2,397			2,349		1,851			1,796			1,759
Other	149			165		152			161			5
Total interest income	22,036			22,231		17,674			17,737			15,906
Interest expense
Deposits	2,963			2,634		2,390			2,430			2,209
Borrowings	1,841			1,749		1,654			1,850			1,660
Total interest expense	4,804			4,383		4,044			4,280			3,869
Net interest income	17,232			17,848		13,630			13,457			12,037
Provision for loan losses	375			250		250			—			—
Net interest income after provision for loan losses	16,857			17,598		13,380			13,457			12,037
Noninterest income
Insurance commissions	1,043			988		968			992			1,016
Trust and wealth management fees	589			595		100			111			252
Service fees related to deposit accounts	1,863			1,706		1,168			1,194			1,138
Realized securities gains (losses)	26			90		(58		)	291			61
Other income	479			537		401			410			282
Total noninterest income	4,000			3,916		2,579			2,998			2,749
Noninterest expense
Salaries and employee benefits	6,610			6,758		5,187			5,308			4,819
Net occupancy expense	847			826		567			522			525
Equipment expense	1,093			1,031		735			700			716
Professional fees	373			354		285			344			270
Amortization of intangibles	448			429		97			97			50
FDIC premiums	310			295		210			75			200
Merger-related expenses	11			1,455		109			588			80
Foreclosed properties expense	171			122		104			97			100
(Gain) loss on sales of foreclosed properties	(29		)	73		(156		)	(465		)	(168		)
Write-downs of foreclosed properties	91			29		418			165			134
Litigation settlement	—			—		9,900			—			—
Other expenses	2,522			2,564		1,560			1,961			1,693
Total noninterest expense	12,447			13,936		19,016			9,392			8,419
Income (loss) before income taxes	8,410			7,578		(3,057		)	7,063			6,367
Income tax expense (benefit)	2,480			2,300		(1,441		)	2,353			2,086
Net income (loss)	$	5,930		$	5,278	$	(1,616	)	$	4,710		$	4,281

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Five Quarter Performance Summary
	For the Quarter Ended
	9/30/2017			6/30/2017			3/31/2017			12/31/2016			9/30/2016
Per Share Data
Earnings per common share
Basic	$	0.48		$	0.43		$	-0.15		$	0.44		$	0.40
Diluted	$	0.48		$	0.43		$	-0.15		$	0.44		$	0.40
Cash dividends	$	0.11		$	0.11		$	0.11		$	0.10		$	0.10
Average common shares outstanding
Basic	12,299,987			12,288,514			10,738,365			10,710,164			10,692,423
Diluted	12,318,959			12,299,187			10,738,365			10,762,445			10,727,140
Common shares outstanding at period end	12,311,723			12,299,726			10,750,477			10,736,970			10,701,841
Performance Ratios
Return on average equity	12.10		%	11.10		%	-4.11		%	12.22		%	11.29		%
Return on average tangible equity	14.12		%	12.95		%	-4.51		%	13.42		%	11.86		%
Return on average assets	1.14		%	1.01		%	-0.37		%	1.07		%	1.08		%
Net interest margin	3.65		%	3.81		%	3.54		%	3.34		%	3.32		%
Efficiency ratio - (A)	53.73		%	53.00		%	51.16		%	56.67		%	53.30		%
NOTE (A) - Computed on a tax equivalent basis excluding nonrecurring income and expense items and amortization of intangibles.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Selected Balance Sheet Data (unaudited)
Dollars in thousands, except per share amounts	9/30/2017			6/30/2017			3/31/2017			12/31/2016			9/30/2016
Assets
Cash and due from banks	$	9,220		$	9,294		$	19,326		$	4,262		$	25,067
Interest bearing deposits other banks	41,994			44,242			38,895			42,354			9,432
Securities	328,726			336,811			282,028			266,542			262,102
Loans, net	1,559,328			1,538,083			1,292,915			1,307,862			1,234,605
Property held for sale	22,622			23,592			23,491			24,504			24,767
Premises and equipment, net	34,220			33,234			26,377			23,737			21,802
Goodwill and other intangible assets	27,879			28,214			13,587			13,652			7,348
Cash surrender value of life insurance policies	41,076			41,189			39,412			39,143			38,504
Other assets	36,071			40,641			40,411			36,591			34,009
Total assets	$	2,101,136		$	2,095,300		$	1,776,442		$	1,758,647		$	1,657,636
Liabilities and Shareholders' Equity
Deposits	$	1,616,768		$	1,613,919		$	1,301,241		$	1,295,519		$	1,156,785
Short-term borrowings	202,988			205,728			228,868			224,461			234,657
Long-term borrowings and      subordinated debentures	65,344			65,348			65,804			66,259			93,735
Other liabilities	17,254			17,173			26,910			17,048			18,640
Shareholders' equity	198,782			193,132			153,619			155,360			153,819
Total liabilities and shareholders' equity	$	2,101,136		$	2,095,300		$	1,776,442		$	1,758,647		$	1,657,636
Book value per common share	$	16.15		$	15.70		$	14.29		$	14.47		$	14.37
Tangible book value per common share	$	13.88		$	13.41		$	13.03		$	13.20		$	13.69
Tangible common equity to tangible assets	8.2		%	8.0		%	7.9		%	8.1		%	8.9		%

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Regulatory Capital Ratios
	9/30/2017		6/30/2017		3/31/2017		12/31/2016		9/30/2016
Summit Financial Group, Inc.
CET1 Risk-based Capital	10.8	%	10.5	%	10.3	%	10.5	%	11.1	%
Tier 1 Risk-based Capital	11.9	%	11.7	%	11.5	%	11.8	%	12.4	%
Total Risk Based Capital	12.7	%	12.4	%	12.3	%	12.6	%	13.3	%
Tier 1 Leverage Ratio	9.5	%	9.2	%	9.4	%	9.4	%	10.4	%
Summit Community Bank, Inc.
CET1 Risk-based Capital	11.8	%	11.6	%	11.6	%	11.9	%	12.5	%
Tier 1 Risk-based Capital	11.8	%	11.6	%	11.6	%	11.9	%	12.5	%
Total Risk Based Capital	12.6	%	12.4	%	12.4	%	12.7	%	13.4	%
Tier 1 Leverage Ratio	9.4	%	9.2	%	9.4	%	9.5	%	10.5	%

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Loan Composition
Dollars in thousands	9/30/2017		6/30/2017		3/31/2017		12/31/2016		9/30/2016
Commercial	$	187,193	$	176,362	$	134,808	$	119,088	$	110,466
Mortgage warehouse lines	33,525		35,068		30,217		85,966		108,983
Commercial real estate
Owner occupied	239,840		239,108		217,733		203,047		192,254
Non-owner occupied	464,543		455,439		401,795		381,921		367,196
Construction and development
Land and development	71,412		74,155		68,079		72,042		65,430
Construction	28,756		22,967		16,511		16,584		11,276
Residential real estate
Non-jumbo	355,642		355,546		266,140		265,641		228,777
Jumbo	61,253		63,899		60,780		65,628		57,276
Home equity	82,720		81,192		75,299		74,596		75,161
Consumer	36,915		37,630		24,440		25,534		19,756
Other	9,994		9,049		8,831		9,489		9,649
Total loans, net of unearned fees	1,571,793		1,550,415		1,304,633		1,319,536		1,246,224
Less allowance for loan losses	12,465		12,332		11,718		11,674		11,619
Loans, net	$	1,559,328	$	1,538,083	$	1,292,915	$	1,307,862	$	1,234,605

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Deposit Composition
Dollars in thousands	9/30/2017		6/30/2017		3/31/2017		12/31/2016		9/30/2016
Non interest bearing checking	$	215,910	$	234,173	$	152,086	$	149,737	$	122,652
Interest bearing checking	397,843		372,327		275,678		262,591		212,172
Savings	362,653		373,439		342,548		337,348		321,563
Time deposits	640,362		633,980		530,929		545,843		500,398
Total deposits	$	1,616,768	$	1,613,919	$	1,301,241	$	1,295,519	$	1,156,785

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Asset Quality Information
	For the Quarter Ended
Dollars in thousands	9/30/2017			6/30/2017			3/31/2017			12/31/2016			9/30/2016
Gross loan charge-offs	$	309		$	114		$	315		$	400		$	331
Gross loan recoveries	(67		)	(478		)	(108		)	(456		)	(573		)
Net loan charge-offs (recoveries)	$	242		$	(364	)	$	207		$	(56	)	$	(242	)
Net loan charge-offs to average loans (annualized)	0.06		%	-0.09		%	0.06		%	-0.02		%	-0.09		%
Allowance for loan losses	$	12,465		$	12,332		$	11,718		$	11,674		$	11,619
Allowance for loan losses as a percentage     of period end loans	0.79		%	0.79		%	0.90		%	0.88		%	0.93		%
Nonperforming assets:
Nonperforming loans
Commercial	$	757		$	786		$	226		$	298		$	846
Commercial real estate	2,773			2,051			4,734			4,844			4,867
Residential construction and development	3,931			3,613			3,936			4,465			4,360
Residential real estate	8,082			6,860			5,886			4,815			4,174
Consumer	529			391			162			152			169
Total nonperforming loans	16,072			13,701			14,944			14,574			14,416
Foreclosed properties
Commercial real estate	1,988			2,126			1,749			1,749			1,749
Commercial construction and development	7,392			7,527			8,276			8,610			8,664
Residential construction and development	11,852			12,402			12,635			13,265			13,741
Residential real estate	1,390			1,537			831			880			613
Total foreclosed properties	22,622			23,592			23,491			24,504			24,767
Other repossessed assets	12			57			12			12			12
Total nonperforming assets	$	38,706		$	37,350		$	38,447		$	39,090		$	39,195
Nonperforming loans to period end loans	1.02		%	0.88		%	1.15		%	1.10		%	1.16		%
Nonperforming assets to period end assets	1.84		%	1.78		%	2.16		%	2.22		%	2.36		%
Troubled debt restructurings
Performing	$	28,304		$	26,472		$	28,183		$	28,066		$	28,287
Nonperforming	760			464			719			564			863
Total troubled debt restructurings	$	29,064		$	26,936		$	28,902		$	28,630		$	29,150

Loans Past Due 30-89 Days
	For the Quarter Ended
In thousands	9/30/2017		6/30/2017		3/31/2017		12/31/2016		9/30/2016
Commercial	$	378	$	470	$	162	$	175	$	405
Commercial real estate	944		976		2,758		434		626
Construction and development	238		308		291		552		235
Residential real estate	6,260		6,943		2,924		5,517		2,941
Consumer	419		548		155		375		144
Other	92		49		17		14		13
Total	$	8,331	$	9,294	$	6,307	$	7,067	$	4,364

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q3 2017 vs Q3 2016
	Q3 2017							Q3 2016
	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	$	1,539,945		$	19,387	4.99	%	$	1,187,205		$	14,008	4.69	%
Tax-exempt	16,314			158		3.84	%	14,300			202		5.62	%
Securities
Taxable	198,913			1,283		2.56	%	198,411			1,139		2.28	%
Tax-exempt	145,599			1,714		4.67	%	77,489			941		4.83	%
Interest bearing deposits other banks    and Federal funds sold	42,926			149		1.38	%	10,029			5		0.20	%
Total interest earning assets	1,943,697			22,691		4.63	%	1,487,434			16,295		4.36	%
Noninterest earning assets
Cash & due from banks	9,591							3,938
Premises & equipment	33,667							21,613
Other assets	113,723							87,636
Allowance for loan losses	(12,418		)					(11,567		)
Total assets	$	2,088,260						$	1,589,054
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	384,539		$	323	0.33	%	$	211,264		$	85	0.16	%
Savings deposits	365,150			637		0.69	%	316,358			608		0.76	%
Time deposits	636,424			2,003		1.25	%	481,060			1,516		1.25	%
Short-term borrowings	205,536			1,160		2.24	%	189,760			675		1.42	%
Long-term borrowings and      subordinated debentures	65,346			681		4.13	%	94,106			985		4.16	%
Total interest bearing liabilities	1,656,995			4,804		1.15	%	1,292,548			3,869		1.19	%
Noninterest bearing liabilities
Demand deposits	217,760							124,490
Other liabilities	17,414							20,280
Total liabilities	1,892,169							1,437,318
Shareholders' equity - common	196,091							151,736
Total liabilities and   shareholders' equity	$	2,088,260						$	1,589,054
NET INTEREST EARNINGS				$	17,887						$	12,426
NET INTEREST MARGIN						3.65	%						3.32	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q3 2017 vs Q2 2017
	Q3 2017							Q2 2017
	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	$	1,539,945		$	19,387	4.99	%	$	1,537,317		$	19,550	5.10	%
Tax-exempt	16,314			158		3.84	%	13,030			257		7.91	%
Securities
Taxable	198,913			1,283		2.56	%	214,601			1,330		2.49	%
Tax-exempt	145,599			1,714		4.67	%	133,130			1,568		4.72	%
Interest bearing deposits other banks    and Federal funds sold	42,926			149		1.38	%	47,937			165		1.38	%
Total interest earning assets	1,943,697			22,691		4.63	%	1,946,015			22,870		4.71	%
Noninterest earning assets
Cash & due from banks	9,591							10,101
Premises & equipment	33,667							34,441
Other assets	113,723							115,728
Allowance for loan losses	(12,418		)					(11,966		)
Total assets	$	2,088,260						$	2,094,319
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	384,539		$	323	0.33	%	$	378,350		$	252	0.27	%
Savings deposits	365,150			637		0.69	%	389,847			616		0.63	%
Time deposits	636,424			2,003		1.25	%	628,358			1,766		1.13	%
Short-term borrowings	205,536			1,160		2.24	%	200,209			1,079		2.16	%
Long-term borrowings and      subordinated debentures	65,346			681		4.13	%	65,692			670		4.09	%
Total interest bearing liabilities	1,656,995			4,804		1.15	%	1,662,456			4,383		1.06	%
Noninterest bearing liabilities
Demand deposits	217,760							221,245
Other liabilities	17,414							20,490
Total liabilities	1,892,169							1,904,191
Shareholders' equity - common	196,091							190,128
Total liabilities and   shareholders' equity	$	2,088,260						$	2,094,319
NET INTEREST EARNINGS				$	17,887						$	18,487
NET INTEREST MARGIN						3.65	%						3.81	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
YTD 2017 vs YTD 2016
	YTD 2017							YTD 2016
	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	$	1,452,840		$	54,487	5.01	%	$	1,134,463		$	40,788	4.80	%
Tax-exempt	14,223			602		5.66	%	14,890			624		5.60	%
Securities
Taxable	199,995			3,742		2.50	%	206,437			3,284		2.12	%
Tax-exempt	124,860			4,392		4.70	%	76,155			2,814		4.94	%
Interest bearing deposits other banks    and Federal funds sold	43,862			466		1.42	%	9,093			13		0.19	%
Total interest earning assets	1,835,780			63,689		4.64	%	1,441,038			47,523		4.41	%
Noninterest earning assets
Cash & due from banks	8,071							3,819
Premises & equipment	30,904							21,575
Other assets	108,783							89,013
Allowance for loan losses	(12,051		)					(11,517		)
Total assets	$	1,971,487						$	1,543,928
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	342,358		$	722	0.28	%	$	208,755		$	248	0.16	%
Savings deposits	365,068			1,879		0.69	%	296,458			1,663		0.75	%
Time deposits	602,175			5,386		1.20	%	474,691			4,622		1.30	%
Short-term borrowings	200,929			3,233		2.15	%	180,694			1,334		0.99	%
Long-term borrowings and      subordinated debentures	65,725			2,012		4.09	%	94,574			2,937		4.15	%
Total interest bearing liabilities	1,576,255			13,232		1.12	%	1,255,172			10,804		1.15	%
Noninterest bearing liabilities
Demand deposits	196,019							121,701
Other liabilities	17,990							18,423
Total liabilities	1,790,264							1,395,296
Shareholders' equity - common	181,223							148,632
Total liabilities and   shareholders' equity	$	1,971,487						$	1,543,928
NET INTEREST EARNINGS				$	50,457						$	36,719
NET INTEREST MARGIN						3.67	%						3.40	%