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 25, 2018

Summit Financial Group, Inc.

(Exact name of registrant as specified in its charter)

West Virginia	No. 0-16587	55-0672148
(State or other jurisdiction of	(Commission File Number)	(I.R.S. Employer
incorporation or organization)		Identification No.)

300 North Main Street

Moorefield, West Virginia 26836

(Address of Principal Executive Offices)

(304) 530-1000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or 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))

Indicate by check mark whether the registrant is an emerging growth company as defined by Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

2

Section 2 - Financial Information

Item 2.02. Results of Operations and Financial Condition

On October 25, 2018, Summit Financial Group, Inc. (“Summit”) issued a News Release announcing its earnings for the three months and nine months ended September 30, 2018. 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 25, 2018

SIGNATURE

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 25, 2018	By: /s/ Julie R. Markwood
	Julie R. Markwood
	Vice President & Chief Accounting Officer

3

EX-99

EXHIBIT 99

FOR RELEASE 6:00 AM ET, October 25, 2018

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

Telephone:(304) 530-0552

Email:rtissue@summitfgi.com

SUMMIT FINANCIAL GROUP REPORTS THIRD QUARTER AND FIRST NINE MONTHS 2018 RESULTS

Q3 2018 Diluted EPS up 14.6% to $0.55 compared to $0.48 for Q3 2017

MOOREFIELD, WV - October 25, 2018 (GLOBE NEWSWIRE) - Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ: SMMF) today reported record third quarter 2018 net income of $6.90 million, or $0.55 per diluted share, compared to $5.93 million, or $0.48 per diluted share, for the third quarter of 2017, an increase of 16.3 percent, or 14.6 percent per diluted share.

For the nine months ended September 30, 2018, Summit recorded net income of $20.62 million, or $1.66 per diluted share, compared with $9.59 million, or $0.81 per diluted share, for the comparable 2017 nine-month period, representing an increase of 115.0 percent or 104.9 percent per diluted share. The lower earnings in the 2017 period were principally attributable to a legal settlement during first quarter 2017 which reduced earnings by $0.54 per diluted share.

Highlights for Q3 2018 include:

• Loan balances, excluding mortgage warehouse lines of credit, increased $34.2 million during the quarter, or 8.7 percent (on an annualized basis);

• Core deposits grew $21.4 million quarter-over-quarter, or 6.4 percent (on an annualized basis);

• Net interest margin for the quarter declined 5 basis points to 3.53 percent compared to Q2 2018;

• Efficiency ratio improved to 54.25 percent compared to 55.88 percent for the linked-quarter;

• Provision for loan losses decreased $250,000 compared to the prior quarter; and

• Write-downs of foreclosed properties were $39,000 in Q3 2018 compared to $163,000 in Q2 2018, while the net loss on sales of foreclosed properties decreased to $18,000 in Q3 2018 from a net loss of $58,000 in Q2 2018.

H. Charles Maddy, III, President and Chief Executive Officer of Summit, commented, “I am very pleased to report that Summit achieved record third quarter earnings for the quarter just ended. Further, I am particularly gratified by this past quarter’s robust lending activity, solid deposit growth and strong core operating performance, and I optimistically look forward to the remainder of the year and beyond into 2019 as we seek to be a consistent, high-performing community banking institution. Our pending acquisition of Peoples Bankshares, Inc., expected to close at beginning of 2019, will serve to combine Summit with a financially strong bank that has a similar culture, core values and guiding principles as ours, and shares the same commitment to build long-term client relationships by providing ‘Service Beyond Expectations’.”

Results from Operations

Total revenue for third quarter 2018, consisting of net interest income and noninterest income, increased 0.9 percent to $21.4 million compared to $21.2 million for the third quarter 2017. For the year-to-date period ended September 30, 2018, total revenue was $65.0 million compared to $59.2 million for the same period of 2017, representing a 9.8 percent increase primarily due to the acquisition of First Century Bankshares, Inc. in Q2 2017.

For the third quarter of 2018, net interest income was unchanged at $17.2 million compared to the prior-year third quarter and remained nearly unchanged compared to the linked quarter. The net interest margin for third quarter 2018 was 3.53 percent compared to 3.65 percent for the same year-ago quarter, and 3.58 percent for the linked quarter. 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 3.51 percent for Q3 2018 and 3.54 percent for first nine months of 2018.

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 2018 was $4.21 million compared to $4.00 million for the comparable period of 2017. Excluding realized securities gains, noninterest income was $4.20 million for third quarter 2018, compared to $3.97 million reported for third quarter 2017 and $4.06 million for the linked quarter.

We recorded a $500,000 provision for loan losses during third quarter 2018 and $375,000 in Q3 2017. The need for increased loan loss provisioning during 2018 is directionally consistent with changes in the credit quality in our loan portfolio.

Q3 2018 total noninterest expense decreased 0.7 percent to $12.36 million compared to $12.45 million for the prior-year third quarter. Noninterest expense for the first nine months of 2018 decreased 17.6 percent compared to the first nine months of 2017 principally due to 1) $86,000 in merger expenses being incurred in 2018 through September 30 compared to $1.58 million in the 2017 nine-month period and 2) 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 2018 increased 5.4 percent to $37.4 million compared to $35.5 million for the first nine months of 2017, principally as result of the FCB acquisition.

Balance Sheet

At September 30, 2018, total assets were $2.14 billion, an increase of $4.5 million, or 0.2 percent since December 31, 2017. Total loans, net of unearned fees and allowance for loan losses, were $1.63 billion at September 30, 2018, up $39.0 million, or 2.4 percent, from the $1.59 billion reported at year-end 2017. Loans, excluding mortgage warehouse lines of credit, increased $34.2 million during the quarter, or 8.7 percent (on an annualized basis), and have grown $34.2 million or 2.9 percent (on an annualized basis) since year-end 2017.

At September 30, 2018, deposits were $1.65 billion, an increase of $50.5 million, or 3.2 percent, since year end 2017. During first nine months of 2018, checking deposits increased $110.0 million or 17.5 percent, time deposits declined by $2.6 million or 0.4 percent and savings deposits declined $56.9 million or 15.9 percent.

Shareholders’ equity was $213.6 million as of September 30, 2018 compared to $201.5 million at December 31, 2017.

Tangible book value per common share increased to $15.13 at September 30, 2018 compared to $14.08 at December 31, 2017. Summit had 12,382,450 outstanding common shares at Q3 2018 quarter end compared to 12,358,562 at year end 2017.

Asset Quality

As of September 30, 2018, nonperforming assets (“NPAs”), consisting of nonperforming loans, foreclosed properties, and repossessed assets, were $39.0 million, or 1.82 percent of assets. This compares to $37.4 million, or 1.77 percent of assets at the linked quarter-end, and $38.7 million, or 1.84 percent of assets, at third quarter-end 2017.

Third quarter 2018 net loan charge-offs were $135,000, or 0.03 percent of average loans annualized; while adding $500,000 to the allowance for loan losses through the provision for loan losses. The allowance for loan losses stood at 0.79 percent of total loans at September 30, 2018, compared to 0.78 percent at year-end 2017. If the acquired FCB and HCB loans which were recorded at fair value on the acquisition dates were excluded, the allowance for loan losses to total loans ratio at September 30, 2018 and December 31, 2017 would have been 0.87 percent and 0.91 percent, respectively.

About the Company

Summit Financial Group, Inc. is a $2.14 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.

ADDITIONAL INFORMATION ABOUT THE MERGER WITH PEOPLES BANKSHARES, INC. (“PEOPLES”) AND WHERE TO FIND IT

This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. In connection with the proposed Merger, Summit has filed with the SEC a Registration Statement on Form S-4 with respect to the offering of Summit common stock as the Merger Consideration under the Securities Act, which includes a proxy statement of Peoples seeking approval of the Merger by Peoples’ shareholders and a prospectus of Summit. Peoples delivered the proxy statement/prospectus to its shareholders. In addition, Summit may file other relevant documents concerning the proposed Merger with the SEC. Investors and security holders are urged to read the registration statement and proxy statement/prospectus and other relevant documents because they contain important information about the proposed Merger.

Investors and security holders may obtain free copies of these documents through the website maintained by the SEC at http://www.sec.gov. Security holders of Summit and Peoples may also obtain free copies of these documents by directing a request to Ms. Teresa Ely, Summit’s Director of Shareholder Relations, by telephone at (304) 530-0526 or by email at tely@summitfgi.com or by accessing these documents at Summit’s website: www.summitfgi.com.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary (unaudited) -- Q3 2018 vs Q3 2017
	For the Quarter Ended				Percent
Dollars in thousands	9/30/2018		9/30/2017		Change
Statements of Income
Interest income
Loans, including fees	$	21,295	$	19,490	9.3	%
Securities	2,367		2,397		-1.3	%
Other	138		149		-7.4	%
Total interest income	23,800		22,036		8.0	%
Interest expense
Deposits	4,714		2,963		59.1	%
Borrowings	1,873		1,841		1.7	%
Total interest expense	6,587		4,804		37.1	%
Net interest income	17,213		17,232		-0.1	%
Provision for loan losses	500		375		33.3	%
Net interest income after provision for loan losses	16,713		16,857		-0.9	%
Noninterest income
Insurance commissions	1,062		1,043		1.8	%
Trust and wealth management fees	687		589		16.6	%
Service charges on deposit accounts	1,215		1,162		4.6	%
Bank card revenue	793		738		7.5	%
Realized securities gains	8		26		-69.2	%
Bank owned life insurance income	250		255		-2.0	%
Other income	196		187		4.8	%
Total noninterest income	4,211		4,000		5.3	%
Noninterest expense
Salaries and employee benefits	6,806		6,610		3.0	%
Net occupancy expense	856		847		1.1	%
Equipment expense	1,118		1,093		2.3	%
Professional fees	503		373		34.9	%
Advertising and public relations	170		137		24.1	%
Amortization of intangibles	413		448		-7.8	%
FDIC premiums	210		310		-32.3	%
Bank card expense	384		395		-2.8	%
Foreclosed properties expense, net of losses	169		233		-27.5	%
Merger-related expense	86		11		681.8	%
Other expenses	1,643		1,990		-17.4	%
Total noninterest expense	12,358		12,447		-0.7	%
Income before income taxes	8,566		8,410		1.9	%
Income tax expense	1,667		2,480		-32.8	%
Net income	$	6,899	$	5,930	16.3	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary (unaudited) -- Q3 2018 vs Q3 2017
	For the Quarter Ended						Percent
	9/30/2018			9/30/2017			Change
Per Share Data
Earnings per common share
Basic	$	0.56		$	0.48		16.7	%
Diluted	$	0.55		$	0.48		14.6	%
Cash dividends	$	0.13		$	0.11		18.2	%
Average common shares outstanding
Basic	12,374,350			12,299,987			0.6	%
Diluted	12,439,051			12,318,959			1.0	%
Common shares outstanding at period end	12,382,450			12,311,723			0.6	%
Performance Ratios
Return on average equity	13.00		%	12.10		%	7.4	%
Return on average tangible equity	14.85		%	14.12		%	5.2	%
Return on average assets	1.31		%	1.14		%	14.9	%
Net interest margin	3.53		%	3.65		%	-3.3	%
Efficiency ratio (A)	54.25		%	54.51		%	-0.5	%
NOTE (A) - Computed on a tax equivalent basis excluding gains/losses on sales of assets, write-downs of OREO properties to fair value and amortization of intangibles.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Nine Month Performance Summary (unaudited) -- 2018 vs 2017
	For the Nine Months Ended				Percent
Dollars in thousands	9/30/2018		9/30/2017		Change
Statements of Income
Interest income
Loans, including fees	$	62,624	$	54,878	14.1	%
Securities	7,060		6,597		7.0	%
Other	412		466		-11.6	%
Total interest income	70,096		61,941		13.2	%
Interest expense
Deposits	12,572		7,987		57.4	%
Borrowings	5,779		5,245		10.2	%
Total interest expense	18,351		13,232		38.7	%
Net interest income	51,745		48,709		6.2	%
Provision for loan losses	1,750		875		100.0	%
Net interest income after provision for loan losses	49,995		47,834		4.5	%
Noninterest income
Insurance commissions	3,188		3,000		6.3	%
Trust and wealth management fees	2,026		1,284		57.8	%
Service charges on deposit accounts	3,421		2,910		17.6	%
Bank card revenue	2,343		1,955		19.8	%
Realized securities gains	828		58		n/m
Bank owned life insurance income	773		758		2.0	%
Other income	656		531		23.5	%
Total noninterest income	13,235		10,496		26.1	%
Noninterest expense
Salaries and employee benefits	20,550		18,555		10.8	%
Net occupancy expense	2,528		2,239		12.9	%
Equipment expense	3,271		2,859		14.4	%
Professional fees	1,222		1,012		20.8	%
Advertising and public relations	461		393		17.3	%
Amortization of intangibles	1,261		974		29.5	%
FDIC premiums	690		815		-15.3	%
Bank card expense	1,080		1,113		-3.0	%
Foreclosed properties expense, net of losses	843		824		2.3	%
Litigation settlement	—		9,900		n/a
Merger-related expense	86		1,575		n/m
Other expenses	5,415		5,140		5.4	%
Total noninterest expense	37,407		45,399		-17.6	%
Income before income taxes	25,823		12,931		99.7	%
Income tax expense	5,201		3,339		55.8	%
Net income	$	20,622	$	9,592	115.0	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Nine Month Performance Summary (unaudited) -- 2018 vs 2017
	For the Nine Months Ended						Percent
	9/30/2018			9/30/2017			Change
Per Share Data
Earnings per common share
Basic	$	1.67		$	0.81		106.2	%
Diluted	$	1.66		$	0.81		104.9	%
Cash dividends	$	0.39		$	0.33		18.2	%
Average common shares outstanding
Basic	12,366,612			11,781,342			5.0	%
Diluted	12,430,227			11,807,002			5.3	%
Common shares outstanding at period end	12,382,450			12,311,723			0.6	%
Performance Ratios
Return on average equity	13.28		%	7.06		%	88.1	%
Return on average tangible equity	15.27		%	8.08		%	89.0	%
Return on average assets	1.30		%	0.65		%	100.0	%
Net interest margin	3.56		%	3.67		%	-3.0	%
Efficiency ratio (A)	54.66		%	52.76		%	3.6	%
NOTE (A) - Computed on a tax equivalent basis excluding gains/losses on sales of assets, litigation settlement, write-downs of OREO properties to fair value and amortization of intangibles.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Five Quarter Performance Summary (unaudited)
	For the Quarter Ended
Dollars in thousands	9/30/2018		6/30/2018		3/31/2018		12/31/2017			9/30/2017
Statements of Income
Interest income
Loans, including fees	$	21,295	$	20,962	$	20,366	$	20,031		$	19,490
Securities	2,367		2,303		2,391		2,412			2,397
Other	138		134		140		144			149
Total interest income	23,800		23,399		22,897		22,587			22,036
Interest expense
Deposits	4,714		4,309		3,549		3,224			2,963
Borrowings	1,873		1,815		2,091		1,925			1,841
Total interest expense	6,587		6,124		5,640		5,149			4,804
Net interest income	17,213		17,275		17,257		17,438			17,232
Provision for loan losses	500		750		500		375			375
Net interest income after provision for loan losses	16,713		16,525		16,757		17,063			16,857
Noninterest income
Insurance commissions	1,062		1,013		1,113		1,005			1,043
Trust and wealth management fees	687		672		667		578			589
Service charges on deposit accounts	1,215		1,116		1,091		1,200			1,162
Bank card revenue	793		801		749		742			738
Realized securities gains (losses)	8		87		732		(71		)	26
Bank owned life insurance income	250		249		275		258			255
Other income	196		210		249		219			187
Total noninterest income	4,211		4,148		4,876		3,931			4,000
Noninterest expense
Salaries and employee benefits	6,806		6,922		6,821		6,520			6,610
Net occupancy expense	856		840		832		772			847
Equipment expense	1,118		1,071		1,083		1,095			1,093
Professional fees	503		385		333		355			373
Advertising and public relations	170		188		103		185			137
Amortization of intangibles	413		413		436		435			448
FDIC premiums	210		240		240		250			310
Bank card expense	384		361		335		319			395
Foreclosed properties expense, net of losses	169		350		325		516			233
Merger-related expense	86		—		—		14			11
Other expenses	1,643		1,965		1,806		1,885			1,990
Total noninterest expense	12,358		12,735		12,314		12,346			12,447
Income before income taxes	8,566		7,938		9,319		8,648			8,410
Income tax expense	1,667		1,658		1,876		6,325			2,480
Net income	$	6,899	$	6,280	$	7,443	$	2,323		$	5,930

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Five Quarter Performance Summary (unaudited)
	For the Quarter Ended
	9/30/2018			6/30/2018			3/31/2018			12/31/2017			9/30/2017
Per Share Data
Earnings per common share
Basic	$	0.56		$	0.51		$	0.60		$	0.19		$	0.48
Diluted	$	0.55		$	0.51		$	0.60		$	0.19		$	0.48
Cash dividends	$	0.13		$	0.13		$	0.13		$	0.11		$	0.11
Average common shares outstanding
Basic	12,374,350			12,366,522			12,358,849			12,325,067			12,299,987
Diluted	12,439,051			12,431,984			12,383,757			12,371,507			12,318,959
Common shares outstanding at period end	12,382,450			12,373,747			12,366,360			12,358,562			12,311,723
Performance Ratios
Return on average equity	13.00		%	12.16		%	14.73		%	4.62		%	12.10		%
Return on average tangible equity	14.85		%	13.98		%	17.04		%	5.36		%	14.12		%
Return on average assets	1.31		%	1.19		%	1.40		%	0.44		%	1.14		%
Net interest margin	3.53		%	3.58		%	3.58		%	3.65		%	3.65		%
Efficiency ratio (A)	54.25		%	55.88		%	53.84		%	52.44		%	54.51		%
NOTE (A) - Computed on a tax equivalent basis excluding gains/losses on sales of assets, write-downs of OREO properties to fair value and amortization of intangibles.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Selected Balance Sheet Data (unaudited)
Dollars in thousands, except per share amounts	9/30/2018			6/30/2018			3/31/2018			12/31/2017			9/30/2017
Assets
Cash and due from banks	$	9,382		$	8,314		$	9,042		$	9,641		$	9,220
Interest bearing deposits other banks	44,452			38,097			38,365			42,990			41,994
Securities	288,040			283,221			296,890			328,723			328,726
Loans, net	1,632,747			1,617,373			1,631,150			1,593,744			1,559,328
Property held for sale	22,017			21,606			21,442			21,470			22,622
Premises and equipment, net	36,888			36,017			35,554			34,209			34,220
Goodwill and other intangible assets	26,252			26,665			27,077			27,513			27,879
Cash surrender value of life insurance policies	42,208			41,932			41,668			41,358			41,076
Other assets	36,741			34,427			33,707			34,592			36,071
Total assets	$	2,138,727		$	2,107,652		$	2,134,895		$	2,134,240		$	2,101,136
Liabilities and Shareholders' Equity
Deposits	$	1,651,064		$	1,639,996		$	1,654,523		$	1,600,601		$	1,616,768
Short-term borrowings	238,403			202,429			193,513			250,499			202,988
Long-term borrowings and      subordinated debentures	20,328			40,332			65,336			65,340			65,344
Other liabilities	15,376			15,016			16,514			16,295			17,254
Shareholders' equity	213,556			209,879			205,009			201,505			198,782
Total liabilities and shareholders' equity	$	2,138,727		$	2,107,652		$	2,134,895		$	2,134,240		$	2,101,136
Book value per common share	$	17.25		$	16.96		$	16.55		$	16.30		$	16.15
Tangible book value per common share	$	15.13		$	14.81		$	14.36		$	14.08		$	13.88
Tangible common equity to tangible assets	8.9		%	8.8		%	8.4		%	8.3		%	8.2		%

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Regulatory Capital Ratios (unaudited)
	9/30/2018		6/30/2018		3/31/2018		12/31/2017		9/30/2017
Summit Financial Group, Inc.
CET1 Risk-based Capital	11.1	%	11.0	%	10.7	%	10.6	%	10.8	%
Tier 1 Risk-based Capital	12.2	%	12.1	%	11.8	%	11.8	%	11.9	%
Total Risk Based Capital	12.9	%	12.8	%	12.5	%	12.5	%	12.7	%
Tier 1 Leverage Ratio	10.1	%	9.9	%	9.5	%	9.4	%	9.5	%
Summit Community Bank, Inc.
CET1 Risk-based Capital	12.0	%	12.0	%	11.7	%	11.7	%	11.8	%
Tier 1 Risk-based Capital	12.0	%	12.0	%	11.7	%	11.7	%	11.8	%
Total Risk Based Capital	12.7	%	12.8	%	12.5	%	12.5	%	12.6	%
Tier 1 Leverage Ratio	9.9	%	9.8	%	9.5	%	9.4	%	9.4	%

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Loan Composition (unaudited)
Dollars in thousands	9/30/2018		6/30/2018		3/31/2018		12/31/2017		9/30/2017
Commercial	$	167,972	$	171,410	$	189,586	$	189,981	$	187,193
Mortgage warehouse lines	35,910		54,332		45,702		30,757		33,525
Commercial real estate
Owner occupied	272,475		262,174		265,075		250,202		239,840
Non-owner occupied	530,568		503,047		498,445		484,902		464,543
Construction and development
Land and development	71,819		74,018		66,841		67,219		71,412
Construction	25,703		25,711		33,327		33,412		28,756
Residential real estate
Non-jumbo	340,783		343,044		346,477		354,101		355,642
Jumbo	72,327		66,831		67,169		62,267		61,253
Home equity	82,018		82,409		83,382		84,028		82,720
Consumer	33,664		34,249		34,825		36,202		36,915
Other	12,452		12,728		12,578		13,238		9,994
Total loans, net of unearned fees	1,645,691		1,629,953		1,643,407		1,606,309		1,571,793
Less allowance for loan losses	12,944		12,580		12,257		12,565		12,465
Loans, net	$	1,632,747	$	1,617,373	$	1,631,150	$	1,593,744	$	1,559,328

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Deposit Composition (unaudited)
Dollars in thousands	9/30/2018		6/30/2018		3/31/2018		12/31/2017		9/30/2017
Core deposits
Non interest bearing checking	$	232,697	$	217,134	$	219,293	$	217,493	$	215,910
Interest bearing checking	505,411		472,041		447,172		410,606		397,843
Savings	301,269		322,940		346,962		358,168		362,653
Time deposits	316,941		322,801		318,556		318,036		322,338
Total core deposits	1,356,318		1,334,916		1,331,983		1,304,303		1,298,744
Brokered deposits	227,312		238,662		242,049		202,509		205,274
Other non-core time deposits	67,434		66,418		80,491		93,789		112,750
Total deposits	$	1,651,064	$	1,639,996	$	1,654,523	$	1,600,601	$	1,616,768

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Asset Quality Information (unaudited)
	For the Quarter Ended
Dollars in thousands	9/30/2018			6/30/2018			3/31/2018			12/31/2017			9/30/2017
Gross loan charge-offs	$	413		$	525		$	960		$	550		$	309
Gross loan recoveries	(278		)	(97		)	(153		)	(276		)	(67		)
Net loan charge-offs (recoveries)	$	135		$	428		$	807		$	274		$	242
Net loan charge-offs to average loans (annualized)	0.03		%	0.10		%	0.20		%	0.07		%	0.06		%
Allowance for loan losses	$	12,944		$	12,580		$	12,257		$	12,565		$	12,465
Allowance for loan losses as a percentage     of period end loans	0.79		%	0.77		%	0.75		%	0.78		%	0.79		%
Nonperforming assets:
Nonperforming loans
Commercial	$	801		$	954		$	734		$	696		$	757
Commercial real estate	5,090			3,238			3,400			3,164			2,773
Residential construction and development	3,200			3,233			3,642			3,569			3,931
Residential real estate	7,760			8,241			7,521			7,656			8,082
Consumer	118			110			160			238			529
Total nonperforming loans	16,969			15,776			15,457			15,323			16,072
Foreclosed properties
Commercial real estate	1,762			1,818			1,875			1,789			1,988
Commercial construction and development	6,790			6,815			7,140			7,392			7,392
Residential construction and development	11,614			11,517			11,053			11,182			11,852
Residential real estate	1,851			1,456			1,374			1,107			1,390
Total foreclosed properties	22,017			21,606			21,442			21,470			22,622
Other repossessed assets	5			12			18			68			12
Total nonperforming assets	$	38,991		$	37,394		$	36,917		$	36,861		$	38,706
Nonperforming loans to period end loans	1.03		%	0.97		%	0.94		%	0.95		%	1.02		%
Nonperforming assets to period end assets	1.82		%	1.77		%	1.73		%	1.73		%	1.84		%
Troubled debt restructurings
Performing	$	27,441		$	27,559		$	27,408		$	28,347		$	28,304
Nonperforming	113			281			76			26			760
Total troubled debt restructurings	$	27,554		$	27,840		$	27,484		$	28,373		$	29,064

Loans Past Due 30-89 Days (unaudited)
	For the Quarter Ended
Dollars in thousands	9/30/2018		6/30/2018		3/31/2018		12/31/2017		9/30/2017
Commercial	$	607	$	319	$	539	$	586	$	378
Commercial real estate	988		546		601		1,082		944
Construction and development	393		264		174		1,127		238
Residential real estate	5,513		4,125		5,218		7,236		6,260
Consumer	345		337		425		504		419
Other	11		8		15		38		92
Total	$	7,857	$	5,599	$	6,972	$	10,573	$	8,331

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q3 2018 vs Q2 2018 vs Q3 2017 (unaudited)
	Q3 2018							Q2 2018							Q3 2017
	Average			Earnings/		Yield/		Average			Earnings /		Yield /		Average			Earnings /		Yield /
Dollars in thousands	Balances			Expense		Rate		Balances			Expense		Rate		Balances			Expense		Rate
ASSETS
Interest earning assets
Loans, net of unearned interest
Taxable	$	1,615,700		$	21,154	5.19	%	$	1,618,726		$	20,820	5.16	%	$	1,539,945		$	19,387	4.99	%
Tax-exempt	15,688			178		4.50	%	15,800			180		4.57	%	16,314			158		3.84	%
Securities
Taxable	155,574			1,227		3.13	%	160,632			1,240		3.10	%	198,913			1,283		2.56	%
Tax-exempt	146,174			1,443		3.92	%	136,984			1,346		3.94	%	145,599			1,714		4.67	%
Interest bearing deposits other banks    and Federal funds sold	38,642			138		1.42	%	38,936			134		1.38	%	42,926			149		1.38	%
Total interest earning assets	1,971,778			24,140		4.86	%	1,971,078			23,720		4.83	%	1,943,697			22,691		4.63	%
Noninterest earning assets
Cash & due from banks	9,326							9,100							9,591
Premises & equipment	36,533							35,721							33,667
Other assets	108,628							108,073							113,723
Allowance for loan losses	(12,865		)					(12,541		)					(12,418		)
Total assets	$	2,113,400						$	2,111,431						$	2,088,260
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	486,107		$	1,168	0.95	%	$	457,016		$	901	0.79	%	$	384,539		$	323	0.33	%
Savings deposits	312,467			857		1.09	%	332,809			798		0.96	%	365,150			637		0.69	%
Time deposits	616,657			2,689		1.73	%	640,626			2,610		1.63	%	636,424			2,003		1.25	%
Short-term borrowings	211,211			1,436		2.70	%	187,475			1,242		2.66	%	205,536			1,160		2.24	%
Long-term borrowings and      subordinated debentures	39,265			437		4.42	%	52,147			572		4.40	%	65,346			681		4.13	%
Total interest bearing liabilities	1,665,707			6,587		1.57	%	1,670,073			6,123		1.47	%	1,656,995			4,804		1.15	%
Noninterest bearing liabilities
Demand deposits	219,986							219,134							217,760
Other liabilities	15,447							15,608							17,414
Total liabilities	1,901,140							1,904,815							1,892,169
Shareholders' equity - common	212,260							206,616							196,091
Total liabilities and   shareholders' equity	$	2,113,400						$	2,111,431						$	2,088,260
NET INTEREST EARNINGS				$	17,553						$	17,597						$	17,887
NET INTEREST MARGIN						3.53	%						3.58	%						3.65	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
YTD 2018 vs YTD 2017 (unaudited)
	YTD 2018							YTD 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	$	1,615,427		$	62,196	5.15	%	$	1,452,840		$	54,487	5.01	%
Tax-exempt	15,929			542		4.55	%	14,223			602		5.66	%
Securities
Taxable	169,177			3,839		3.03	%	199,995			3,742		2.50	%
Tax-exempt	138,539			4,078		3.94	%	124,860			4,392		4.70	%
Interest bearing deposits other banks    and Federal funds sold	39,075			412		1.41	%	43,862			466		1.42	%
Total interest earning assets	1,978,147			71,067		4.80	%	1,835,780			63,689		4.64	%
Noninterest earning assets
Cash & due from banks	9,459							8,071
Premises & equipment	35,620							30,904
Other assets	107,789							108,783
Allowance for loan losses	(12,715		)					(12,051		)
Total assets	$	2,118,300						$	1,971,487
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	455,637		$	2,701	0.79	%	$	342,358		$	722	0.28	%
Savings deposits	330,420			2,373		0.96	%	365,068			1,879		0.69	%
Time deposits	626,587			7,498		1.60	%	602,175			5,386		1.20	%
Short-term borrowings	214,005			4,084		2.55	%	200,929			3,233		2.15	%
Long-term borrowings and      subordinated debentures	52,155			1,696		4.35	%	65,725			2,012		4.09	%
Total interest bearing liabilities	1,678,804			18,352		1.46	%	1,576,255			13,232		1.12	%
Noninterest bearing liabilities
Demand deposits	216,701							196,019
Other liabilities	15,778							17,990
Total liabilities	1,911,283							1,790,264
Shareholders' equity - common	207,017							181,223
Total liabilities and   shareholders' equity	$	2,118,300						$	1,971,487
NET INTEREST EARNINGS				$	52,715						$	50,457
NET INTEREST MARGIN						3.56	%						3.67	%