exhibit99608.htm

MOOREFIELD, WV -- July 25, 2008 -- Summit Financial Group, Inc. (the “Company” or “Summit”) (NASDAQ: SMMF) today reported second quarter 2008 net income of $2.6 million, or $0.35 per diluted share. This compares with second quarter 2007 earnings from continuing operations of $3.0 million, or $0.42 per diluted share. On a diluted per share basis, earnings for second quarter 2008 decreased 16.7 percent from 2007 second quarter earnings from continuing operations. For the second quarter of 2008, the returns on average shareholders' equity and average assets were 11.16 percent and 0.70 percent, respectively, compared with prior-year second quarter ratios of 14.15 percent and 0.94 percent, excluding discontinued operations.

Included in earnings for the current period was an other-than-temporary non-cash impairment charge of $1.5 million pre-tax, equivalent to $971,000 after-tax, or $0.13 per diluted share. This impairment charge relates to certain preferred stock issuances of the Fannie Mae and Freddie Mac which Summit continues to own. Excluding the impact of this impairment charge from current earnings and $273,000 of pre-tax losses ($172,000 after-tax) from mark-to-market changes in fair value of interest rate swaps occurring in second quarter 2007, pro forma second quarter net income was $3.6 million for 2008, or $0.48 per diluted share, compared with pro forma income from continuing operations for 2007 of $3.2 million, or $0.45 per diluted share, an improvement of 13.1 percent and 6.7 percent, respectively.

H. Charles Maddy, III, president and chief executive officer of Summit, remarked, “Given that nothing comes easy in banking these days, we’ve had a number of successes this quarter that make us quite pleased. Our community banking fundamentals are very sound: net interest income continues to grow as a result of strong loan growth; we are maintaining stability in our net interest margin; and we are diversifying our revenue stream. We are finally moving ahead with our acquisition of Greater Atlantic at much more favorable terms than before. This represents an opportunity to gain a foothold in some of the best markets for banking in the country, and in these trying times, a growing, healthy market is more valuable than ever.

Total revenue, consisting of net interest income and noninterest income from operations, was $12.5 million for the second quarter of 2008, up 22.3 percent from second quarter 2007 revenue of $10.2 million; excluding the impairment charge on securities and changes in fair value of interest rate swaps, total revenue for second quarter 2008 increased 33.8% to $14.0 million compared to second quarter 2007. Net interest income was $11.4 million for the current quarter, 19.4 percent higher than the $9.5 million reported for the year-ago quarter; the improvement resulted from the combined impact of a 16.9 percent increase in average earning assets and a 5 basis point increase in the net interest margin to 3.33 percent. Mr. Maddy remarked, “Compared to the margin contractions experienced by many banks following the Federal Reserve’s interest rate cuts beginning in the third quarter of last year, our net interest margin continues to be remarkably stable quarter over quarter within a range of nine basis points. We have maintained a slight bias toward liability sensitivity, and our strategy has been to remain neutral rather than exploit interest rate swings to generate revenue. We prefer to base our net interest income growth on expansion within our high-growth markets, which continue to generate quality loans and sufficient core deposits.”

Another of Summit’s goals is to strengthen fee-based revenues and diversify sources of income. Progress has been made toward meeting that goal with the acquisition of Kelly Agencies in third quarter 2007. Noninterest income, reported on a GAAP basis, was $1.1 million for the current second quarter compared with $696,000 for the year-ago quarter, an increase of 62.1 percent. Excluding the securities impairment charge of $1.5 million in the second quarter of 2008 and further excluding the change in fair value of interest rate swaps of $273,000 in the 2007 quarter, noninterest income totaled $2.7 million in the current year second quarter versus $969,000 a year ago.

Noninterest expense was $7.1 million in the second quarter of 2008, up 25.0 percent or $1.4 million from the year-ago quarter. Since current expense levels include the Kelly Agencies, which was acquired in third quarter 2007, a linked-quarter rather than year-ago comparison is more meaningful. Noninterest expense grew less than 1.0 percent or $60,000 from the linked quarter. Salaries and employee benefits – the largest component of noninterest expense - declined $208,000, or 4.7 percent, to $4.2 million from the first quarter of 2008, primarily as a result of reductions in employee incentive compensation.

Assets at June 30, 2008 were $1.5 billion, up $245.6 million, or 19.2 percent, over the prior-year second quarter. Loans, net of unearned income, were $1.1 billion at period end, up $182.9 million, or 19.1 percent, year over year. Residential real estate and commercial real estate were the major growth contributors, up $77.2 million and $67.6 million, respectively, from year-ago levels; they now constitute 31.6 percent and 36.9 percent, respectively, of total loans. Meanwhile, construction and development loans are growing at a much slower rate -- $11.7 million, or 5.9 percent year-over-year – becoming a smaller percentage of the loan portfolio (18.4 percent at June 30, 2008). Following modest growth in the first quarter of 2008, loans increased by $52.0 million or 19.1 percent (annualized) above the linked quarter.

Although nonperforming assets increased significantly over the last twelve months, recent growth has slowed and the level of troubled credits remains within reasonable limits in the context of the current economic climate. Nonperforming assets were $18.2 million, or 1.19 percent of total assets, at June 30, 2008, compared with $16.2 million, or 1.11 percent, for the linked quarter, and $8.2 million, or 0.64 percent, for the year-ago quarter. At June 30, 2008, foreclosed real estate represented $2.5 million of nonperforming assets, $341,000 higher than first quarter 2008 and $1.7 million above the year-ago second quarter.

Although we believe the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially. Factors that might cause such a difference include changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking laws and regulations; changes in tax laws; the impact of technological advances; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; and changes in the national and local economy. We undertake no obligation to revise these statements following the date of this press release.

This press release contains financial information determined by methods other than in accordance with generally accepted accounting principles in the United States of America ("GAAP"). Specifically, Summit adjusted several GAAP performance measures to exclude the effects of the non-cash, other-than-temporary impairment charge on securities recorded in the 2nd quarter of 2008 and to exclude the effects of the non-cash changes in fair value of interest rate swaps 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 -- Q2 2008 vs Q2 2007


	For the Quarter Ended						Percent
Dollars in thousands	6/30/2008			6/30/2007			Change
Condensed Statements of Income
Interest income
Loans, including fees	$	19,576		$	19,079			2.6	%
Securities		3,761			3,263			15.3	%
Other		3			27			-88.9	%
Total interest income		23,340			22,369			4.3	%
Interest expense
Deposits		6,435			8,882			-27.6	%
Borrowings		5,530			3,960			39.6	%
Total interest expense		11,965			12,842			-6.8	%
Net interest income		11,375			9,527			19.4	%
Provision for loan losses		1,750			390			348.7	%
Net interest income after provision
for loan losses		9,625			9,137			5.3	%
Noninterest income
Insurance commissions		1,275			209			510.0	%
Service fee income		824			736			12.0	%
Unrealized securities gains (losses)		(1,541	)		-			n/a
Net cash settlement on interest rate swaps		-			(179	)		-100.0	%
Change in fair value of interest rate swaps		-			(273	)		-100.0	%
Other income		570			203			180.8	%
Total noninterest income		1,128			696			62.1	%
Noninterest expense
Salaries and employee benefits		4,187			3,238			29.3	%
Net occupancy expense		443			408			8.6	%
Equipment expense		533			493			8.1	%
Professional fees		182			193			-5.7	%
Other expenses		1,804			1,386			30.2	%
Total noninterest expense		7,149			5,718			25.0	%
Income from continuing operations before income taxes		3,604			4,115			-12.4	%
Income taxes		1,010			1,135			-11.0	%
Income from continuing operations		2,594			2,980			-13.0	%
Discontinued operations
Exit costs and impairment of long-lived assets		-			43			n/m
Operating income (loss)		-			(227	)		n/m
Income (loss) from discontinued operations
before income taxes		-			(184	)		n/m
Income taxes		-			(66	)		n/m
Income (loss) from discontinued operations		-			(118	)		n/m

Net Income	$	2,594		$	2,862			-9.4	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary -- Q2 2008 vs Q2 2007

	For the Quarter Ended						Percent
	6/30/2008			6/30/2007			Change
Per Share Data
Earnings per share from continuing operations
Basic	$	0.35		$	0.42			-16.7	%
Diluted	$	0.35		$	0.42			-16.7	%
Earnings per share from discontinued operations
Basic	$	-		$	(0.02	)		-100.0	%
Diluted	$	-		$	(0.02	)		-100.0	%
Earnings per share
Basic	$	0.35		$	0.40			-12.5	%
Diluted	$	0.35		$	0.40			-12.5	%

Average shares outstanding
Basic		7,410,217			7,084,980			4.6	%
Diluted		7,448,170			7,148,241			4.2	%

Performance Ratios
Return on average equity		11.16	%		13.59	%		-17.9	%
Return on average equity - continuing operations		11.16	%		14.15	%		-21.1	%
Return on average assets		0.70	%		0.91	%		-23.1	%
Return on average assets - continuing operations		0.70	%		0.94	%		-25.5	%
Net interest margin		3.33	%		3.28	%		1.5	%
Efficiency ratio (A)		49.87	%		53.71	%		-7.1	%
Efficiency ratio - continuing operations (A)		49.87	%		51.46	%		-3.1	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Six Month Performance Summary -- 2008 vs 2007


	For the Six Months Ended						Percent
Dollars in thousands	6/30/2008			6/30/2007			Change
Condensed Statements of Income
Interest income
Loans, including fees	$	39,645		$	37,792			4.9	%
Securities		7,548			6,386			18.2	%
Other		6			33			-81.8	%
Total interest income		47,199			44,211			6.8	%
Interest expense
Deposits		13,559			17,910			-24.3	%
Borrowings		11,327			7,571			49.6	%
Total interest expense		24,886			25,481			-2.3	%
Net interest income		22,313			18,730			19.1	%
Provision for loan losses		2,750			780			252.6	%
Net interest income after provision
for loan losses		19,563			17,950			9.0	%
Noninterest income
Insurance commissions		2,602			415			527.0	%
Service fee income		1,567			1,353			15.8	%
Net cash settlement on interest rate swaps		(170	)		(363	)
Change in fair value of interest rate swaps		705			(47	)
Unrealized securities gains (losses)		(1,541	)		-			-
Other income		813			394			106.3	%
Total noninterest income		3,976			1,752			126.9	%
Noninterest expense
Salaries and employee benefits		8,581			6,463			32.8	%
Net occupancy expense		919			826			11.3	%
Equipment expense		1,068			940			13.6	%
Professional fees		300			367			-18.3	%
Other expenses		3,369			2,772			21.5	%
Total noninterest expense		14,237			11,368			25.2	%
Income from continuing operations before income taxes		9,302			8,334			11.6	%
Income taxes		2,884			2,421			19.1	%
Income from continuing operations		6,418			5,913			8.5	%
Discontinued operations
Exit costs and impairment of long-lived assets		-			123			n/a
Operating income (loss)		-			(598	)		-100.0	%
Income (loss) from discontinued operations
before income taxes		-			(475	)		-100.0	%
Income taxes		-			(163	)		-100.0	%
Income (loss) from discontinued operations		-			(312	)		-100.0	%

Net Income	$	6,418		$	5,601			14.6	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Six Month Performance Summary -- 2008 vs 2007

	For the Six Months Ended						Percent
	6/30/2008			6/30/2007			Change
Per Share Data
Earnings per share from continuing operations
Basic		0.87			0.83			4.8	%
Diluted		0.86			0.83			3.6	%
Earnings per share from discontinued operations
Basic		-			(0.04	)		-100.0	%
Diluted		-			(0.04	)		-100.0	%
Earnings per share
Basic	$	0.87		$	0.79			10.1	%
Diluted	$	0.86		$	0.79			8.9	%

Average shares outstanding
Basic		7,409,579			7,084,980			4.6	%
Diluted		7,448,974			7,147,784			4.2	%

Performance Ratios
Return on average equity		13.80	%		13.45	%		2.6	%
Return on average equity - continuing operations		13.80	%		14.20	%		-2.8	%
Return on average assets		0.88	%		0.89	%		-1.1	%
Return on average assets - continuing operations		0.88	%		0.94	%		-6.4	%
Net interest margin		3.31	%		3.27	%		1.2	%
Efficiency ratio (A)		50.96	%		55.74	%		-8.6	%
Efficiency ratio - continuing operations (A)		50.96	%		52.46	%		-2.9	%

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

	For the Quarter Ended
Dollars in thousands	6/30/2008			3/31/2008			12/31/2007			9/30/2007			6/30/2007
Condensed Statements of Income
Interest income
Loans, including fees	$	19,576		$	20,069		$	20,199		$	19,921		$	19,079
Securities		3,761			3,786			3,590			3,446			3,263
Other		3			4			8			9			27
Total interest income		23,340			23,859			23,797			23,376			22,369
Interest expense
Deposits		6,435			7,124			7,759			8,627			8,882
Borrowings		5,530			5,796			5,697			4,753			3,960
Total interest expense		11,965			12,920			13,456			13,380			12,842
Net interest income		11,375			10,939			10,341			9,996			9,527
Provision for loan losses		1,750			1,000			750			525			390
Net interest income after provision
for loan losses		9,625			9,939			9,591			9,471			9,137
Noninterest income
Insurance commissions		1,275			1,327			1,157			1,303			209
Service fee income		824			743			863			788			736
Unrealized securities gains (losses)		(1,541	)		-			-			-			-
Net cash settlement on interest rate swaps		-			(170	)		(183	)		(181	)		(179	)
Change in fair value of interest rate swaps		-			705			783			752			(273	)
Other income		570			243			78			244			203
Total noninterest income		1,128			2,848			2,698			2,906			696
Noninterest expense
Salaries and employee benefits		4,187			4,395			4,090			4,054			3,238
Net occupancy expense		443			476			466			466			408
Equipment expense		533			534			568			496			493
Professional fees		182			118			152			176			193
Other expenses		1,804			1,566			1,634			1,628			1,386
Total noninterest expense		7,149			7,089			6,910			6,820			5,718
Income before income taxes		3,604			5,698			5,379			5,557			4,115
Income taxes		1,010			1,874			1,511			1,802			1,135
Income from continuing operations		2,594			3,824			3,868			3,755			2,980
Discontinued operations
Exit costs and impairment of long-lived assets		-			-			(435	)		-			43
Operating income (loss)		-			-			(9,549	)		(200	)		(227	)
Income (loss) from discontinued operations
before income taxes		-			-			(9,984	)		(200	)		(184	)
Income taxes		-			-			(3,347	)		(69	)		(66	)
Income (loss) from discontinued operations		-			-			(6,637	)		(131	)		(118	)

Net Income	$	2,594		$	3,824		$	(2,769	)	$	3,624		$	2,862

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

	For the Quarter Ended
	6/30/2008			3/31/2008			12/31/2007			9/30/2007			6/30/2007
Per Share Data
Earnings per share from continuing operations
Basic	$	0.35		$	0.52		$	0.52		$	0.51		$	0.42
Diluted	$	0.35		$	0.51		$	0.52		$	0.50		$	0.42
Earnings per share from discontinued operations
Basic	$	-		$	-		$	(0.89	)	$	(0.02	)	$	(0.02	)
Diluted	$	-		$	-		$	(0.89	)	$	(0.02	)	$	(0.02	)
Earnings per share
Basic	$	0.35		$	0.52		$	(0.37	)	$	0.49		$	0.40
Diluted	$	0.35		$	0.51		$	(0.37	)	$	0.48		$	0.40

Average shares outstanding
Basic		7,410,217			7,408,941			7,401,684			7,399,213			7,084,980
Diluted		7,448,170			7,449,105			7,450,049			7,458,515			7,148,241

Performance Ratios
Return on average equity		11.16	%		16.55	%		-11.62	%		16.13	%		13.59	%
Return on average equity - continuing operations		11.16	%		16.55	%		16.23	%		16.71	%		14.15	%
Return on average assets		0.70	%		1.06	%		-0.81	%		1.11	%		0.91	%
Return on average assets - continuing operations		0.70	%		1.06	%		1.13	%		1.15	%		0.94	%
Net interest margin		3.33	%		3.28	%		3.24	%		3.28	%		3.28	%
Efficiency ratio - continuing operations (A)		49.87	%		52.11	%		53.03	%		53.91	%		51.46	%

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

	For the Quarter Ended
Dollars in thousands, except per share amounts	6/30/2008			3/31/2008			12/31/2007			9/30/2007			6/30/2007

Assets	$	1,525,978		$	1,465,110		$	1,435,536		$	1,340,679		$	1,280,428
Securities		307,232			302,029			300,066			279,289			259,526
Loans, net		1,130,483			1,079,223			1,052,489			986,437			949,175
Intangible assets		9,880			9,968			10,055			10,143			3,121
Retail deposits		634,007			652,148			652,296			638,633			626,617
Brokered time deposits		223,742			184,796			176,391			189,966			223,771
Short-term borrowings		147,900			93,950			172,055			124,699			100,901
Long-term borrowings and
subordinated debentures		419,775			431,918			335,327			283,268			236,347
Shareholders' equity		91,466			91,955			89,420			93,475			81,910

Book value per share	$	12.34		$	12.41		$	12.06		$	12.63		$	11.56
Tangible book value per share	$	11.01		$	11.07		$	10.70		$	11.26		$	11.12
Tangible equity / Tangible assets		5.4	%		5.6	%		5.6	%		6.3	%		6.2	%
Tier 1 leverage ratio		7.0	%		7.8	%		7.3	%		8.1	%		7.9	%

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

Dollars in thousands	6/30/2008		3/31/2008		12/31/2007		9/30/2007		6/30/2007

Commercial	$	112,793	$	111,442	$	92,599	$	87,018	$	81,292
Commercial real estate		422,393		396,414		384,478		352,396		354,833
Construction and development		210,417		209,257		225,270		212,570		198,721
Residential real estate		361,009		336,985		322,640		305,016		283,821
Consumer		30,361		30,206		31,956		33,254		33,937
Other		6,206		6,395		6,641		6,794		7,111
Total loans		1,143,179		1,090,699		1,063,584		997,048		959,715
Less unearned fees and interest		2,347		1,878		1,903		1,884		1,772
Total loans net of unearned fees and interest		1,140,832		1,088,821		1,061,681		995,164		957,943
Less allowance for loan losses		10,349		9,598		9,192		8,727		8,768
Loans, net	$	1,130,483	$	1,079,223	$	1,052,489	$	986,437	$	949,175

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

Dollars in thousands	6/30/2008		3/31/2008		12/31/2007		9/30/2007		6/30/2007

Non interest bearing checking	$	68,912	$	64,111	$	65,727	$	65,230	$	64,373
Interest bearing checking		194,255		201,820		222,825		230,491		230,509
Savings		60,245		53,427		40,845		39,596		41,910
Time deposits		310,595		332,790		322,899		303,316		289,825
Total retail deposits	$	634,007	$	652,148	$	652,296	$	638,633	$	626,617

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

	For the Quarter Ended
Dollars in thousands	6/30/2008			3/31/2008			12/31/2007			9/30/2007			6/30/2007

Gross loan charge-offs	$	1,079		$	646		$	332		$	599		$	141
Gross loan recoveries		(80	)		(52	)		(47	)		(33	)		(45	)
Net loan charge-offs	$	999		$	594		$	285		$	566		$	96

Net loan charge-offs to average loans (annualized)		0.36	%		0.22	%		0.11	%		0.23	%		0.04	%
Allowance for loan losses	$	10,349		$	9,598		$	9,192		$	8,727		$	8,768
Allowance for loan losses as a percentage
of period end loans		0.91	%		0.88	%		0.86	%		0.88	%		0.91	%
Nonperforming assets:
Nonperforming loans	$	15,614		$	13,957		$	10,333		$	6,916		$	7,307
Foreclosed properties and
other repossessed assets		2,546			2,205			2,058			815			851
Total	$	18,160		$	16,162		$	12,391		$	7,731		$	8,158

Nonperforming loans to period end loans		1.37	%		1.28	%		0.97	%		0.69	%		0.76	%
Nonperforming assets to period end assets		1.19	%		1.11	%		0.86	%		0.58	%		0.64	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Nonperforming Loans by Type

	For the Quarter Ended
Dollars in thousands	6/30/2008		3/31/2008		12/31/2007		9/30/2007		6/30/2007

Commercial	$	81	$	695	$	716	$	712	$	124
Commercial real estate		3,184		5,095		4,346		582		84
Construction and development		6,460		3,694		2,016		2,557		4,177
Residential real estate		5,521		4,247		3,012		2,871		2,683
Consumer		368		226		243		194		239
Total nonperforming loans	$	15,614	$	13,957	$	10,333	$	6,916	$	7,307

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q2 2008 vs Q2 2007
	Q2 2008	Q2 2007

	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	$	1,103,871		$	19,462		7.07	%	$	939,998		$	18,980		8.10	%
Tax-exempt		8,630			173		8.04	%		9,374			184		7.87	%
Securities
Taxable		249,082			3,161		5.09	%		211,592			2,739		5.19	%
Tax-exempt		51,881			895		6.92	%		45,587			783		6.89	%
Interest bearing deposits other banks
and Federal funds sold		419			2		1.91	%		2,459			29		4.73	%
Total interest earning assets		1,413,883			23,693		6.72	%		1,209,010			22,715		7.54	%

Noninterest earning assets
Cash & due from banks		20,670								14,525
Premises & equipment		22,016								22,190
Other assets		36,650								27,390
Allowance for loan losses		(10,043	)							(8,611	)
Total assets	$	1,483,176							$	1,264,504

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	199,754		$	618		1.24	%	$	229,444		$	2,084		3.64	%
Savings deposits		56,548			212		1.50	%		43,252			181		1.68	%
Time deposits		517,711			5,605		4.34	%		536,852			6,617		4.94	%
Short-term borrowings		101,913			571		2.25	%		71,451			960		5.39	%
Long-term borrowings and
subordinated debentures		426,656			4,959		4.66	%		223,021			3,000		5.40	%
		1,302,582			11,965		3.68	%		1,104,020			12,842		4.67	%
Noninterest bearing liabilities
Demand deposits		79,933								64,665
Other liabilities		7,650								11,551
Total liabilities		1,390,165								1,180,236

Shareholders' equity		93,011								84,268
Total liabilities and
shareholders' equity	$	1,483,176							$	1,264,504

NET INTEREST EARNINGS				$	11,728							$	9,873

NET INTEREST YIELD ON EARNING ASSETS							3.33	%							3.28	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
YTD 2008 vs YTD 2007
	For the Six Months Ended June 30,								For the Six Months Ended June 30,
	2008								2007
	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	$	1,088,544		$	39,410		7.28	%	$	934,513		$	37,645		8.12	%
Tax-exempt		8,790			356		8.14	%		9,147			358		7.89	%
Securities
Taxable		250,414			6,358		5.11	%		209,965			5,316		5.11	%
Tax-exempt		51,153			1,774		6.97	%		46,433			1,597		6.94	%
Interest bearing deposits other banks
and Federal funds sold		441			6		2.74	%		1,458			33		4.56	%
Total interest earning assets		1,399,342			47,904		6.88	%		1,201,516			44,949		7.54	%

Noninterest earning assets
Cash & due from banks		16,691								13,821
Premises & equipment		22,062								22,260
Other assets		36,426								27,452
Allowance for loan losses		(9,785	)							(8,376	)
Total assets	$	1,464,736							$	1,256,673

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	203,707		$	1,548		1.53	%	$	225,705		$	4,150		3.71	%
Savings deposits		51,549			407		1.59	%		44,820			398		1.79	%
Time deposits		511,873			11,604		4.56	%		546,634			13,362		4.93	%
Short-term borrowings		105,405			1,490		2.84	%		71,930			1,918		5.38	%
Long-term borrowings and
subordinated debentures		418,353			9,837		4.73	%		209,588			5,653		5.44	%
		1,290,887			24,886		3.88	%		1,098,677			25,481		4.68	%
Noninterest bearing liabilities
Demand deposits		72,203								62,986
Other liabilities		8,629								11,722
Total liabilities		1,371,719								1,173,385

Shareholders' equity		93,017								83,288
Total liabilities and
shareholders' equity	$	1,464,736							$	1,256,673

NET INTEREST EARNINGS				$	23,018							$	19,468

NET INTEREST YIELD ON EARNING ASSETS							3.31	%							3.27	%

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


	For the Quarter Ended						For the Six Months Ended
Dollars in thousands (except per share amounts)	6/30/2008			6/30/2007			6/30/2008			6/30/2007

Income from continuing operations - excluding other-
than- temporary charge on securities and change in
fair value of interest rate swaps	$	3,565		$	3,152		$	6,945		$	5,943

Other-than-temporary impairment charge on securities		(1,541	)		-			(1,541	)		-
Applicable income tax effect		570			-			570			-
Change in fair value of interest rate swaps		-			(273	)		705			(47	)
Applicable income tax effect		-			101			(261	)		17
		(971	)		(172	)		(527	)		(30	)

GAAP income from continuing operations	$	2,594		$	2,980		$	6,418		$	5,913

Diluted earnings per share from continuing operations -
excluding other-than-temporary impairment charge
on securities	$	0.48		$	0.45		$	0.93		$	0.84

Other-than-temporary impairment charge on securities		(0.21	)		-			(0.21	)		-
Applicable income tax effect		0.08			-			0.08			-
Change in fair value of interest rate swaps		-			(0.04	)		0.10			(0.01	)
Applicable income tax effect		-			0.01			(0.04	)		-
		(0.13	)		(0.03	)		(0.07	)		(0.01	)

GAAP diluted earnings per share	$	0.35		$	0.42		$	0.86		$	0.83


Total revenue - excluding other-than-temporary
impairment charge on securities and change in fair
value of interest rate swaps	$	14,044		$	10,496		$	27,125		$	20,529

Other-than-temporary impairment charge on securities		(1,541	)		-			(1,541	)		-
Change in fair value of interest rate swaps		-			(273	)		705			(47	)
		(1,541	)		(273	)		(836	)		(47	)

GAAP total revenue	$	12,503		$	10,223		$	26,289		$	20,482


Non-interest income - excluding other-than-temporary
impairment charge on securities and change in fair
value of interest rate swaps	$	2,669		$	969		$	4,812		$	1,799

Other-than-temporary impairment charge on securities		(1,541	)		-			(1,541	)		-
Change in fair value of interest rate swaps		-			(273	)		705			(47	)
		(1,541	)		(273	)		(836	)		(47	)

GAAP non-interest income	$	1,128		$	696		$	3,976		$	1,752