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):  April 30, 2010

Summit Financial Group, Inc.

(Exact name of registrant as specified in its charter)

West Virginia	0-16587	55-0672148
(State or Other Jurisdiction)	(Commission File Number)	(I.R.S. Employer Identification)

300 North Main Street

      Moorefield, WV                     26836

(Address of principal executive offices)   (Zip Code)

Registrant's telephone number, including area code

(304) 530-1000

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨      Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 2 – Financial Information

Item 2.02.  Results of Operations and Financial Condition.

On April 30, 2010, Summit Financial Group, Inc. (“Summit”) issued a News Release announcing its earnings for the first quarter 2010.  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

(c)   Exhibits

99           News Release issued on April 30, 2010

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

                                                                 SUMMIT FINANCIAL GROUP, INC.

Date:  April 30, 2010                                                                                                                                              By:   /s/ Julie R. Cook                                                      

                                                                          Julie R. Cook

                                                                         Vice President and

                                                                         Chief Accounting Officer

EX-99

Exhibit 99

FOR RELEASE 6:00 AM EDT, FRIDAY, APRIL 30, 2010

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

Telephone:                      (304) 530-0552

Email:                                rtissue@SummitFGI.com

SUMMIT FINANCIAL GROUP REPORTS 2010 FIRST QUARTER RESULTS

MOOREFIELD, WV – April 30, 2010 -- Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ:SMMF) today reported first quarter 2010 net income applicable to common shares of $46,000, or $0.01 per diluted share, compared  to 2009 first quarter net income of $1.77 million, or $0.24 per diluted share. Lower 2010 earnings reflect continued pressure from higher levels of nonperforming assets, requiring a larger loan loss provision and increasing levels of credit administration and regulatory expenses.

H. Charles Maddy III, President and Chief Executive Officer of Summit, commented, “We continue to see signs of the long-anticipated recovery in our market areas. There are signs of increasing activity in our northern Virginia real estate markets, primarily in the form of heightened investor interest. However, the volume of new residential construction activity has not yet been sufficient to have had a meaningful impact on property valuations, nor have we seen many deals actually completed.

“Like so many community banks, we have relied extensively on real estate lending to bolster growth and profits -- since this is how we can best serve our local businesses and retail customers. The recent declines in real estate activity and asset quality require that we refocus our strategies, and we have made substantial progress in several critical areas. Over the past year, we have transitioned to slower, or even negative, loan growth, lowered our portfolio risk, increased our reliance on retail deposits, and maintained our regulatory capital ratios in excess of “well-capitalized” levels. Year-over-year, loan growth declined by nearly $80 million, with substantial reductions in construction and development loans outstanding; retail deposits increased by $77 million, allowing us to pay down higher-priced wholesale funding; and lastly, we have been working hard to reduce our controllable expenses to partially offset the higher costs associated with increased levels of problem assets. Our operations continue to gain efficiencies, which should position us favorably in future quarters.”

Results from Operations

Total revenue, consisting of net interest income and noninterest income, was $12.7 million for the first quarter of 2010, a decline of 7.5 percent from the $13.8 million generated in the prior-year first quarter. Net interest income was $10.2 million, down 9.7 percent, or $1.1 million, from the 2009 first quarter. A 7.0 percent year-over-year decline in average earning assets, to $1.45 billion for the 2010 first quarter, was the primary factor impacting net interest income, combined with a four basis point contraction in the net interest margin, to 3.00 percent. Compared to the fourth quarter 2009 net interest margin of 2.83 percent, the current quarter improvement was 17 basis points, or 6.0 percent. Mr. Maddy pointed out that Summit’s net interest margin has remained relatively stable at three percent over the past year, despite higher levels of nonaccruing loans, and should remain at approximately this same level throughout 2010.

Noninterest income for the first quarter of 2010 on a GAAP basis was $2.52 million compared to $2.44 million for the 2009 first quarter, up 3.2 percent. Excluding

nonrecurring items aggregating $235,000 in the first quarter of 2010 and $41,000 for the year-ago quarter, which for both quarters consisted of gains from the sale of securities and other-than-temporary impairment (“OTTI”) charges on securities, 2010 noninterest income from operations declined by $118,000, or 4.9 percent, to $2.28 million. The $135,000 decline in insurance premiums from Summit’s insurance agency subsidiary was the primary factor contributing to lower noninterest income as employers curtailed benefits spending during the current recession.

The provision for loan losses was $5.35 million for the first quarter of 2010 compared to $4.0 million and $6.83 million, respectively, for the 2009 first and fourth quarters. Summit continues to build reserves to reflect a higher level of nonperforming loans compared to the year-ago level, as well as a higher level of net loan charge-offs: $4.5 million this past quarter compared to $3.67 million for the 2009 fourth quarter and a net recovery of $1.06 million for the year-ago quarter. At March 31, 2010, the loan loss reserve was1.58 percent of total loans compared with 1.47 percent and 1.82 percent at December 31, 2009 and March 31, 2009, respectively.

Noninterest expense for the 2010 first quarter was $7.6 million, down $141,000, or 1.8 percent, from the $7.75 million reported in the year-ago quarter. Costs associated with the problem credit administration, namely, property taxes, insurance, appraisals and collection costs increased to $232,000 for the first three months of 2010 compared to $55,000 during the same period last year, while FDIC premiums were $825,000 in the first quarter of 2010, $442,000 higher compared to the year-ago period. Summit partially offset rising credit and regulatory costs through disciplined control of overhead expenses; salaries and benefits, occupancy, and equipment expense together decreased by $571,000, or 10.5 percent, year over year.

Balance Sheet

As of March 31, 2010, total assets were $1.54 billion, a decline of approximately $48.1 million, or 3.0 percent, from December 31, 2009; over the past twelve months, assets declined by $62.5 million, or 3.9 percent. Total loans, net of unearned interest and fees, were $1.13 billion at March 31, 2010, down $24.0 million, or 2.1 percent, from the $1.15 billion reported at year-end 2009, and $77.7 million, or 6.4 percent lower than the year-ago quarter-end. Commercial real estate (“CRE”) loans comprised the largest loan category -- 40 percent of loans outstanding at March 31, 2010, while residential real estate loans contributed an additional 33 percent share. Whereas commercial, CRE and residential real estate loans outstanding all registered relatively modest declines over the past twelve months (down 5.6 percent, 0.7 percent and 2.5 percent, respectively), construction and development ("C&D") loans, currently at $151.3 million, or 13 percent of the 2010 loan portfolio, was the only category to have registered significant declines year-to-date (down $10.8 million or 6.7 percent), and over the past twelve months (down $60.6 million, or 28.6 percent), primarily through a combination of loan charge-offs and foreclosures.

Although total assets declined since year-end 2009 and for the past twelve months, retail deposits remained relatively unchanged since December 31, 2009, and increased substantially over the past twelve months, allowing Summit to reduce the level of wholesale borrowings and long-term debt. Retail deposits were $776.3 million as of March 31, 2010, up $0.7 million or 0.10 percent compared to December 31, 2009, but higher by $77.2 million, or 11.0 percent compared to the year-ago quarter. Savings account balances were still the fastest growth category, but at a lesser rate than in 2009 -- up $9.9 million, or 5.2 percent, from 2009 year-end compared to growth of $104 million, or 110 percent, since the prior-year first quarter.

While retail deposits have been stable since year-end 2009, short-term wholesale funding vehicles declined by a total of $29.3 million: brokered deposits by $7.0 million

(down 2.9 percent), to $234.8 million, and short-term FHLB borrowings by $22.3 million (down 44.8 percent), to $27.5 million. In addition, Summit reduced long-term FHLB advances by $20.2 million.

Asset Quality

Nonperforming assets (“NPAs”) at March 31, 2010 were $106.4 million, or 6.9 percent of total assets, compared to $107.5 million (6.8 percent of total assets) and $87.4 million (5.5 percent of total assets), respectively, for December 31 and March 31 of 2009. Nonperforming assets decreased by $1.1 million from 2009 year-end, but were higher by $19.0 million, or 21.7 percent, compared to March 31, 2009. C&D and CRE credits continue to account for the majority of problem assets, $57.9 million and $39.0 million, respectively, at March 31, 2010 compared to $50.1 million and $26.7 million for the year-ago quarter.

Nonperforming loans were $55.5 million at March 31, 2010, down $11.4 million from 2009 year-end, with CRE accounting for $33.9 million and C&D loans accounting for $16.7 million.  Much of the problem loan improvement can be attributed to the ongoing transition to OREO as Summit has progressed through the workout cycle. First quarter 2010 OREO was $50.6 million, up $10.3 million from the linked-quarter, with CRE properties accounting for $5.1 million and C&D properties for $41.3 million.

Nonperforming residential real estate assets were $8.4 million at March 2010 quarter-end, divided evenly between nonperforming loans and repossessed properties. The commercial loan portfolio has few problem loans – approximately $0.5 million on outstandings of $122 million.

At March 31, 2010, net loan charge-offs were $4.5 million, or 1.57 percent of average loans annualized, compared to $3.7 million (1.25 percent annualized) and a recovery of $1.1 million, respectively, for the 2009 fourth and first quarters. This compares with a provision for loan losses of $5.4 million for the 2010 quarter. As a result, the allowance for loan losses increased by $843,000 this past quarter, to $17.8 million or 1.58 percent of March 31, 2010 loans compared to 1.47 percent at December 31, 2009.

Capital Adequacy

Shareholders' equity at March 31, 2010 was $90.5 million compared to $83.6 million at March 31, 2009. The Bank continues to exceed regulatory standards for a “well capitalized” institution and is in compliance with all regulatory capital requirements, as its Total risk-based capital ratio was 11.90 percent, while its Tier 1 leverage capital ratio was 8.11 percent at March 31, 2010. Total common shares outstanding as of March 31, 2010 were 7,425,472.

In conclusion, Mr. Maddy referred to the groundwork Summit laid in 2009. “The hard lessons learned through this downturn should position us for higher performance in future quarters. Our results should reflect these improvements as the year progresses and the economy returns to a more normal state.”

About the Company

Summit Financial Group, Inc., a financial holding company with total assets of $1.6 billion, operates fifteen banking locations through its wholly-owned community bank, Summit Community Bank, headquartered in Moorefield, West Virginia.  Summit also operates Summit Insurance Services, LLC headquartered in Moorefield, West Virginia.

FORWARD-LOOKING STATEMENTS

This press release contains comments or information that constitute forward-looking statements (within the meaning of the Private Securities Litigation Act of 1995) that are based on current expectations that involve a number of risks and uncertainties.  Words such as “expects”, “anticipates”, “believes”, “estimates” and other similar expressions or future or conditional verbs such as “will”, “should”, “would” and “could” are intended to identify such forward-looking statements.

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

NON-GAAP FINANCIAL MEASURES

This press release contains financial information determined by methods other than in accordance with generally accepted accounting principles in the United States of America ("GAAP").  Specifically, Summit adjusted GAAP performance measures to exclude the effects of realized and unrealized securities gains and losses 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 -- Q1 2010 vs Q1 2009
	For the Quarter Ended						Percent
Dollars in thousands	3/31/2010			3/31/2009			Change
Condensed Statements of Income
Interest income
Loans, including fees	$	17,040		$	18,254			-6.7	%
Securities		3,594			4,737			-24.1	%
Other		11			-			n/a
Total interest income		20,645			22,991			-10.2	%
Interest expense
Deposits		5,498			6,620			-16.9	%
Borrowings		4,915			5,035			-2.4	%
Total interest expense		10,413			11,655			-10.7	%
Net interest income		10,232			11,336			-9.7	%
Provision for loan losses		5,350			4,000			33.8	%
Net interest income after provision
for loan losses		4,882			7,336			-33.5	%
Noninterest income
Insurance commissions		1,209			1,344			-10.0	%
Service fee income		707			736			-3.9	%
Realized securities gains (losses)		264			256			3.1	%
Other-than-temporary impairment of securities		(29	)		(215	)		-86.5	%
Other income		365			319			14.4	%
Total noninterest income		2,516			2,440			3.1	%
Noninterest expense
Salaries and employee benefits		3,723			4,279			-13.0	%
Net occupancy expense		521			597			-12.7	%
Equipment expense		629			568			10.7	%
Professional fees		274			334			-18.0	%
FDIC premiums		825			383			115.4	%
Other expenses		1,638			1,590			3.0	%
Total noninterest expense		7,610			7,751			-1.8	%
Income before income taxes		(212	)		2,025			-110.5	%
Income taxes		(332	)		260			-227.7	%
Net Income		120			1,765			-93.2	%
Preferred stock dividends		74			-			n/a
Net income applicable to common shares	$	46		$	1,765			-97.4	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary -- Q1 2010 vs Q1 2009
	For the Quarter Ended						Percent
	3/31/2010			3/31/2009			Change
Per Share Data
Earnings per share from continuing operations
Basic	$	0.01		$	0.24			-95.8	%
Diluted	$	0.01		$	0.24			-95.8	%
Average shares outstanding
Basic		7,425,472			7,415,310			0.1	%
Diluted		7,425,472			7,435,510			-0.1	%
Performance Ratios
Return on average equity		0.20	%		7.94	%		-97.5	%
Return on average assets		0.01	%		0.43	%		-97.7	%
Net interest margin		3.00	%		3.04	%		-1.3	%
Efficiency ratio - continuing operations (A)		57.78	%		54.63	%		5.8	%

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	3/31/2010			12/31/2009			9/30/2009		6/30/2009			3/31/2009
Condensed Statements of Income
Interest income
Loans, including fees	$	17,040		$	17,480		$	18,061	$	18,050		$	18,254
Securities		3,594			3,882			4,351		4,710			4,737
Other		11			6			5		1			-
Total interest income		20,645			21,368			22,417		22,761			22,991
Interest expense
Deposits		5,498			5,878			6,094		6,358			6,620
Borrowings		4,915			5,286			5,427		5,296			5,035
Total interest expense		10,413			11,164			11,521		11,654			11,655
Net interest income		10,232			10,204			10,896		11,107			11,336
Provision for loan losses		5,350			6,825			4,000		5,500			4,000
Net interest income after provision
for loan losses		4,882			3,379			6,896		5,607			7,336
Noninterest income
Insurance commissions		1,209			1,164			1,254		1,283			1,344
Service fee income		707			878			859		857			736
Realized securities gains (losses)		264			773			428		39			256
Other-than-temporary impairment of securities		(29	)		(383	)		-		(4,768	)		(215	)
Other income		365			437			291		247			319
Total noninterest income		2,516			2,869			2,832		(2,342	)		2,440
Noninterest expense
Salaries and employee benefits		3,723			3,459			3,862		4,308			4,279
Net occupancy expense		521			484			484		466			597
Equipment expense		629			529			527		527			568
Professional fees		274			342			330		403			334
FDIC premiums		825			935			660		1,245			383
Other expenses		1,638			1,822			2,004		1,760			1,590
Total noninterest expense		7,610			7,571			7,867		8,709			7,751
Income (loss) before income taxes		(212	)		(1,323	)		1,861		(5,444	)		2,025
Income taxes		(332	)		(889	)		458		(1,994	)		260
Net income (loss)		120			(434	)		1,403		(3,450	)		1,765
Preferred stock dividends		74			74			-		-			-
Net income (loss) applicable to common shares	$	46		$	(508	)	$	1,403	$	(3,450	)	$	1,765

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)
Five Quarter Performance Summary
	For the Quarter Ended
	3/31/2010			12/31/2009			9/30/2009			6/30/2009			3/31/2009
Per Share Data
Earnings per share
Basic	$	0.01		$	(0.07	)	$	0.19		$	(0.47	)	$	0.24
Diluted	$	0.01		$	(0.07	)	$	0.19		$	(0.46	)	$	0.24
Average shares outstanding
Basic		7,425,472			7,425,472			7,425,472			7,419,974			7,415,310
Diluted		7,425,472			7,425,472			7,432,584			7,431,969			7,435,510
Performance Ratios
Return on average equity		0.20	%		-2.21	%		6.49	%		-16.13	%		7.94	%
Return on average assets		0.01	%		-0.13	%		0.35	%		-0.86	%		0.43	%
Net interest margin		3.00	%		2.83	%		2.99	%		3.00	%		3.04	%
Efficiency ratio - (A)		57.78	%		57.33	%		56.27	%		56.50	%		54.63	%

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
	For the Quarter Ended
Dollars in thousands, except per share amounts	3/31/2010			12/31/2009			9/30/2009			6/30/2009			3/31/2009
Assets
Cash and due from banks	$	5,163		$	6,813		$	4,415		$	4,281		$	15,358
Interest bearing deposits other banks		9,032			34,247			6,195			10,505			114
Securities		262,566			271,654			285,156			289,267			295,706
Loans, net		1,112,526			1,137,336			1,156,432			1,165,653			1,186,042
Property held for sale		50,562			40,293			31,193			20,435			7,807
Intangible assets		9,265			9,353			9,441			9,529			9,617
Other assets		87,382			84,929			84,961			84,240			84,324
Total assets	$	1,536,496		$	1,584,625		$	1,577,793		$	1,583,910		$	1,598,968
Liabilities and Shareholders' Equity
Retail deposits	$	776,251		$	775,524		$	702,785		$	705,953		$	699,065
Brokered time deposits		234,785			241,814			267,237			248,271			256,293
Short-term borrowings		27,456			49,739			73,733			104,718			120,480
Long-term borrowings and
subordinated debentures		397,724			417,881			433,037			432,391			430,687
Other liabilities		9,746			9,007			9,064			8,824			8,839
Shareholders' equity		90,534			90,660			91,937			83,753			83,604
Total liabilities and shareholders' equity	$	1,536,496		$	1,584,625		$	1,577,793		$	1,583,910		$	1,598,968
Book value per common share (A)	$	11.18		$	11.19		$	11.35		$	11.28		$	11.27
Tangible book value per common share (A)	$	10.03		$	10.04		$	10.18		$	10.00		$	9.98
Tangible equity / Tangible assets		5.3	%		5.2	%		5.3	%		4.7	%		4.7	%

NOTE: (A) – Assumes conversion of convertible preferred stock

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Loan Composition
Dollars in thousands	3/31/2010		12/31/2009		9/30/2009		6/30/2009		3/31/2009
Commercial	$	121,514	$	122,508	$	125,743	$	126,661	$	128,707
Commercial real estate		456,120		465,037		457,669		459,671		452,987
Construction and development		151,281		162,080		176,783		183,733		211,849
Residential real estate		370,713		372,867		376,440		376,019		380,351
Consumer		26,974		28,203		29,555		30,179		30,201
Other		5,685		5,652		6,087		5,760		6,133
Total loans		1,132,287		1,156,347		1,172,277		1,182,023		1,210,228
Less unearned fees and interest		1,918		2,011		1,997		2,065		2,190
Total loans net of unearned fees and interest		1,130,369		1,154,336		1,170,280		1,179,958		1,208,038
Less allowance for loan losses		17,843		17,000		13,848		14,305		21,996
Loans, net	$	1,112,526	$	1,137,336	$	1,156,432	$	1,165,653	$	1,186,042

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Retail Deposit Composition
Dollars in thousands	3/31/2010		12/31/2009		9/30/2009		6/30/2009		3/31/2009
Non interest bearing checking	$	71,100	$	74,119	$	68,929	$	69,878	$	70,483
Interest bearing checking		148,657		148,587		154,683		152,498		155,157
Savings		198,303		188,419		115,767		105,828		94,294
Time deposits		358,191		364,399		363,406		377,749		379,131
Total retail deposits	$	776,251	$	775,524	$	702,785	$	705,953	$	699,065

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Asset Quality Information
	For the Quarter Ended
Dollars in thousands	3/31/2010			12/31/2009			9/30/2009			6/30/2009			3/31/2009
Gross loan charge-offs	$	4,606		$	3,864		$	4,586		$	13,288		$	522
Gross loan recoveries		(99	)		(192	)		(127	)		(98	)		(1,585	)
Net loan charge-offs	$	4,507		$	3,672		$	4,459		$	13,190		$	(1,063	)
Net loan charge-offs to average loans (annualized)		1.57	%		1.25	%		1.51	%		4.37	%		-0.35	%
Allowance for loan losses	$	17,843		$	17,000		$	13,848		$	14,305		$	21,996
Allowance for loan losses as a percentage
of period end loans		1.58	%		1.47	%		1.18	%		1.21	%		1.82	%
Nonperforming assets:
Nonperforming loans
Commercial	$	511		$	431		$	431		$	680		$	637
Commercial real estate		33,907			35,217			22,684			23,287			25,788
Construction and development		16,686			26,328			27,084			29,508			45,194
Residential real estate		4,220			4,563			8,578			8,116			7,933
Consumer		209			403			75			107			31
Total nonperforming loans		55,533			66,942			58,852			61,698			79,583
Foreclosed properties
Commercial real estate		5,086			4,788			4,873			4,561			961
Construction and development		41,261			32,258			25,278			14,904			6,726
Residential real estate		4,215			3,247			1,042			970			120
Total foreclosed properties		50,562			40,293			31,193			20,435			7,807
Other repossessed assets		291			269			1			11			17
Total nonperforming assets	$	106,386		$	107,504		$	90,046		$	82,144		$	87,407
Nonperforming loans to period end loans		4.90	%		5.79	%		5.02	%		5.22	%		6.58	%
Nonperforming assets to period end assets		6.92	%		6.78	%		5.71	%		5.19	%		5.47	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q1 2010 vs Q1 2009
	Q1 2010			Q1 2009
	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	$1,145,202	$16,957	6.01%	$1,202,666	$18,146	6.12%
Tax-exempt	6,685	126	7.64%	7,954	162	8.26%
Securities
Taxable	252,500	3,328	5.35%	298,157	4,224	5.75%
Tax-exempt	41,797	689	6.69%	46,040	777	6.84%
Interest bearing deposits other banks
and Federal funds sold	339	11	13.16%	292	-	0.00%
Total interest earning assets	1,446,523	21,111	5.92%	1,555,109	23,309	6.08%
Noninterest earning assets
Cash & due from banks	15,645			17,376
Premises & equipment	24,146			22,720
Other assets	84,777			47,453
Allowance for loan losses	(18,274)			(19,367)
Total assets	$1,552,817			$1,623,291
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$146,700	$173	0.48%	$153,938	$195	0.51%
Savings deposits	194,828	691	1.44%	75,096	341	1.84%
Time deposits	595,837	4,634	3.15%	646,913	6,084	3.81%
Short-term borrowings	44,966	57	0.51%	152,181	211	0.56%
Long-term borrowings and
subordinated debentures	400,687	4,858	4.92%	423,764	4,824	4.62%
	1,383,018	10,413	3.05%	1,451,892	11,655	3.26%
Noninterest bearing liabilities
Demand deposits	70,569			74,492
Other liabilities	7,872			8,017
Total liabilities	1,461,459			1,534,401
Shareholders' equity	91,358			88,890
Total liabilities and
shareholders' equity	$1,552,817			$1,623,291
NET INTEREST EARNINGS		$10,698			$11,654
NET INTEREST YIELD ON EARNING ASSETS			3.00%			3.04%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures
	For the Quarter Ended
Dollars in thousands	3/31/2010			3/31/2009
Net income - excluding securities gains/losses	$	(102	)	$	1,739
Securites gains/losses		235			41
Applicable income tax effect		(87	)		(15	)
		148			26
GAAP net income	$	46		$	1,765
Diluted earnings per share-
excluding securities gains/losses and
change in fair value of interest rate swaps	$	(0.01	)	$	0.23
Securities gains/losses		0.03			0.01
Applicable income tax effect		(0.01	)		-
		0.02			0.01
GAAP diluted earnings per share	$	0.01		$	0.24
Total revenue - excluding securities gains/losses	$	12,513		$	13,735
Securities gains/losses		235			41
GAAP total revenue	$	12,748		$	13,776
Total noninterest income - excluding securities
gains/losses	$	2,281		$	2,399
Securities gains/losses		235			41
GAAP total noninterest income	$	2,516		$	2,440