pressrelease080610.htm

MOOREFIELD, WV – August 6, 2010 (GLOBE NEWSWIRE) – Summit Financial Group, Inc. ("Company" or "Summit") (NASDAQ: SMMF) today reported a second quarter net loss applicable to common shares of $2.95 million, or ($0.40) per diluted share, compared to a net loss of $3.45 million, or ($0.46) per diluted share for the second quarter of 2009. For the first six months of 2010, the Company recorded a net loss applicable to common shares of $2.91 million, or ($0.39) per diluted share, compared to a net loss of $1.69 million, or ($0.23) per diluted share for the first six-months of 2009.

H. Charles Maddy III, President and Chief Executive Officer of Summit, commented, “We remain disappointed by our operating results. However, there are some signs of improved real estate sales activity in our northern Virginia markets -- albeit valuations remain depressed. This past quarter, we sold $11 million of our problem assets, and we have another $11 million of nonperforming assets under contract which we expect to dispose of during the current quarter. We continue to aggressively manage our nonperforming assets through a combination of asset sales, loan work-outs and charge-offs.

“Our earnings continue to be reduced by higher provisions for loan losses, foregone interest income on nonperforming assets, and expenses associated with the administration and resolution of our problem asset portfolio. We have managed to offset much of the impact through improved efficiencies and a reduction in funding costs. Our portfolio of local deposits has grown significantly over the past year, allowing us to reduce our reliance on short-term borrowings in absolute dollar terms and as a percent of total deposits, enabling us to maintain a reasonably stable net interest margin over the past year.”

Noninterest income for the second quarter of 2010 was $1.68 million compared to a negative $2.34 million for the second quarter of 2009. Excluding one-time net charges of $0.94 million for the 2010 second quarter related to a $2.2 million write-down of foreclosed property, partially offset by a $1.26 million gain on the sale of securities, and for the second quarter of 2009, excluding an other-than-temporary impairment (“OTTI”) charge of $4.8 million, second quarter 2010 noninterest income from operations was $2.6 million, up 8.0 percent from the prior-year second quarter noninterest income from operations of $2.4 million.

Total assets at June 30, 2010 were $1.52 billion, a decline of approximately $64 million, or four percent over the past year, and $17 million, or one percent, from the previous quarter. Total loans, net of unearned interest and fees, were $1.09 billion at June 30, 2010, down $94.1 million from June 30, 2009 and $44.5 million from the linked quarter. Over the past twelve months, all loan categories experienced declines, in particular, construction and development (“C&D”) loans declined by $40 million, or 22 percent, and commercial real estate (“CRE”) declined by $27 million, or six percent. The majority of decline in CRE loans took place in the most recent quarter -- $23.8 million -- while C&D loans declined consistently throughout the past four quarters. CRE remains Summit’s largest loan category, at $432 million, or 40 percent of total loans at June 30, 2010, followed by residential real estate loans, at $363 million, or 33 percent of the total. C&D loans declined from 13.2 percent of the total portfolio at June 30, 2010 to 15.5 percent at June 30, 2009.

Retail deposits were $781 million at June 30, 2010, up $75 million, or 10.6 percent, over the past twelve months; the majority of this growth occurred in the fourth quarter of 2009, as fourth quarter savings/money market (“Savings”) accounts increased by $72.7 million. Over the past four quarters, Savings accounts grew by $90.4 million, enabling Summit to reduce short-term FHLB advances by $102 million. At June 30, 2010, Savings accounted for 25 percent of retail deposits, or $196.2 million, compared with 15 percent for the year-ago quarter.

At June 30, 2010, nonperforming assets (“NPAs”), consisting of nonperforming loans and repossessed assets, were $111.8 million, or 7.4 percent of total assets, compared to $106.4 million (6.9 percent of total assets) for the previous quarter and $82.1 million (5.2 percent of total assets) for June 30, 2009. Approximately 90 percent of Summit’s $111.8 million of NPAs consist of C&D (residential and commercial combined) and CRE problem credits: $69.8 million and $30.4 million, respectively, of total NPAs. This compares to C&D and CRE-related problem assets of $44.4 million and $27.8 million, respectively, for the year-ago quarter.

At June 30, 2010, net loan charge-offs were $5.6 million, or 1.94 percent of average loans annualized, compared to $4.5 million (1.57 percent annualized) and $13.2 million (4.37 percent annualized) for March 31, 2010 and June 30, 2009, respectively. Since year-end 2009, Summit has charged-off $10.5 million of loans while growing the allowance for loan losses by $3.8 million. As of June 30, 2010, the allowance for loan losses stood at $20.8 million, or 1.91 percent of total loans, compared to 1.58 percent in the linked-quarter and 1.47 percent at 2009 year-end.

Shareholders' equity at June 30, 2010 was $88.9 million compared to $83.8 million at June 30, 2009. Summit’s depository institution, Summit Community Bank, continues to exceed regulatory requirements for a "well capitalized" institution and is in compliance with all regulatory capital requirements; at June 30, 2010, its Total risk-based capital ratio was 12.02 percent, while its Tier 1 leverage capital ratio was 8.05 percent compared to 10.76% and 7.23%, respectively, at June 30, 2009. Total common shares outstanding as of June 30, 2010 were 7,425,472.

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.

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, unrealized OREO writedowns, and FDIC special assessment 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 2010 vs Q2 2009


	For the Quarter Ended						Percent
Dollars in thousands	6/30/2010			6/30/2009			Change
Condensed Statements of Income
Interest income
Loans, including fees	$	16,614		$	18,050			-8.0	%
Securities		3,592			4,710			-23.7	%
Other		2			1		NM
Total interest income		20,208			22,761			-11.2	%
Interest expense
Deposits		5,378			6,358			-15.4	%
Borrowings		4,894			5,296			-7.6	%
Total interest expense		10,272			11,654			-11.9	%
Net interest income		9,936			11,107			-10.5	%
Provision for loan losses		8,500			5,500			54.5	%
Net interest income after provision
for loan losses		1,436			5,607			-74.4	%
Noninterest income
Insurance commissions		1,223			1,283			-4.7	%
Service fee income		828			857			-3.4	%
Realized securities gains (losses)		1,256			39		NM
Other-than-temporary impairment of securities		-			(4,768	)	NM
Unrealized writedown OREO		(2,194	)		-		NM
Other income		568			247			130.0	%
Total noninterest income		1,681			(2,342	)		-171.8	%
Noninterest expense
Salaries and employee benefits		3,839			4,308			-10.9	%
Net occupancy expense		509			466			9.2	%
Equipment expense		634			527			20.3	%
Professional fees		262			403			-35.0	%
FDIC premiums		625			1,245			-49.8	%
Other expenses		1,787			1,760			1.5	%
Total noninterest expense		7,656			8,709			-12.1	%
Income before income taxes		(4,539	)		(5,444	)		-16.6	%
Income taxes		(1,661	)		(1,994	)		-16.7	%
Net income (loss)		(2,878	)		(3,450	)		-16.6	%
Preferred stock dividends		74			-		NM

Net income (loss) applicable to common shares	$	(2,952	)	$	(3,450	)		-14.4	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary -- Q2 2010 vs Q2 2009

	For the Quarter Ended						Percent
	6/30/2010			6/30/2009			Change
Per Share Data
Earnings per share from continuing operations
Basic	$	(0.40	)	$	(0.47	)		-14.9	%
Diluted	$	(0.40	)	$	(0.46	)		-13.0	%

Average shares outstanding
Basic		7,425,472			7,419,974			0.1	%
Diluted		7,425,472			7,431,969			-0.1	%

Performance Ratios
Return on average equity (A)		-13.16	%		-16.13	%		-18.4	%
Return on average assets		-0.75	%		-0.86	%		-12.8	%
Net interest margin		2.92	%		3.00	%		-2.7	%
Efficiency ratio (B)		59.14	%		56.50	%		4.7	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Six Month Performance Summary -- 2010 vs 2009


	For the Six Months Ended						Percent
Dollars in thousands	6/30/2010			6/30/2009			Change
Condensed Statements of Income
Interest income
Loans, including fees	$	33,654		$	36,303			-7.3	%
Securities		7,185			9,447			-23.9	%
Other		13			1		NM
Total interest income		40,852			45,751			-10.7	%
Interest expense
Deposits		10,876			12,979			-16.2	%
Borrowings		9,809			10,330			-5.0	%
Total interest expense		20,685			23,309			-11.3	%
Net interest income		20,167			22,442			-10.1	%
Provision for loan losses		13,850			9,500			45.8	%
Net interest income after provision
for loan losses		6,317			12,942			-51.2	%
Noninterest income
Insurance commissions		2,432			2,627			-7.4	%
Service fee income		1,535			1,593			-3.6	%
Realized securities gains (losses)		1,520			295		NM
Other-than-temporary impairment of securities		(29	)		(4,983	)	NM
Unrealized writedown OREO		(2,194	)		-		NM
Other income		934			567			64.7	%
Total noninterest income		4,198			99		NM
Noninterest expense
Salaries and employee benefits		7,563			8,587			-11.9	%
Net occupancy expense		1,031			1,063			-3.0	%
Equipment expense		1,264			1,095			15.4	%
Professional fees		536			737			-27.3	%
FDIC premiums		1,450			1,628			-10.9	%
Other expenses		3,422			3,350			2.1	%
Total noninterest expense		15,266			16,460			-7.3	%
Income (loss) before income taxes		(4,751	)		(3,419	)		39.0	%
Income taxes		(1,993	)		(1,734	)		14.9	%
Net income (loss)		(2,758	)		(1,685	)		63.7	%
Preferred stock dividends		148			-		NM

Net income (loss) applicable to common shares	$	(2,906	)	$	(1,685	)		72.5	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Six Month Performance Summary -- 2010 vs 2009

	For the Six Months Ended						Percent
	6/30/2010			6/30/2009			Change
Per Share Data
Earnings per share
Basic		(0.39	)		(0.23	)		69.6	%
Diluted		(0.39	)		(0.23	)		69.6	%

Average shares outstanding
Basic		7,425,472			7,417,642			0.1	%
Diluted		7,425,472			7,433,494			-0.1	%

Performance Ratios
Return on average equity (A)		-6.29	%		-3.89	%		61.7	%
Return on average assets		-0.36	%		-0.21	%		71.4	%
Net interest margin		2.96	%		3.02	%		-2.0	%
Efficiency ratio (B)		58.45	%		55.56	%		5.2	%

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

	For the Quarter Ended
Dollars in thousands	6/30/2010			3/31/2010			12/31/2009			9/30/2009		6/30/2009
Condensed Statements of Income
Interest income
Loans, including fees	$	16,614		$	17,040		$	17,480		$	18,061	$	18,050
Securities		3,592			3,594			3,882			4,351		4,710
Other		2			11			6			5		1
Total interest income		20,208			20,645			21,368			22,417		22,761
Interest expense
Deposits		5,378			5,498			5,878			6,094		6,358
Borrowings		4,894			4,915			5,286			5,427		5,296
Total interest expense		10,272			10,413			11,164			11,521		11,654
Net interest income		9,936			10,232			10,204			10,896		11,107
Provision for loan losses		8,500			5,350			6,825			4,000		5,500
Net interest income after provision
for loan losses		1,436			4,882			3,379			6,896		5,607
Noninterest income
Insurance commissions		1,223			1,209			1,164			1,254		1,283
Service fee income		828			707			878			859		857
Realized securities gains (losses)		1,256			264			773			428		39
Other-than-temporary impairment of securities		-			(29	)		(383	)		-		(4,768	)
Unrealized writedown OREO		(2,194	)		-			-			-		-
Other income		568			365			437			291		247
Total noninterest income		1,681			2,516			2,869			2,832		(2,342	)
Noninterest expense
Salaries and employee benefits		3,839			3,723			3,459			3,862		4,308
Net occupancy expense		509			521			484			484		466
Equipment expense		634			629			529			527		527
Professional fees		262			274			342			330		403
FDIC premiums		625			825			935			660		1,245
Other expenses		1,787			1,638			1,822			2,004		1,760
Total noninterest expense		7,656			7,610			7,571			7,867		8,709
Income (loss) before income taxes		(4,539	)		(212	)		(1,323	)		1,861		(5,444	)
Income taxes		(1,661	)		(332	)		(889	)		458		(1,994	)
Net income (loss)		(2,878	)		120			(434	)		1,403		(3,450	)
Preferred stock dividends		74			74			74			-		-
Net income (loss) applicable to common shares	$	(2,952	)	$	46		$	(508	)	$	1,403	$	(3,450	)

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

	For the Quarter Ended
	6/30/2010			3/31/2010			12/31/2009			9/30/2009			6/30/2009
Per Share Data
Earnings per share
Basic	$	(0.40	)	$	0.01		$	(0.07	)	$	0.19		$	(0.47	)
Diluted	$	(0.40	)	$	0.01		$	(0.07	)	$	0.19		$	(0.46	)

Average shares outstanding
Basic		7,425,472			7,425,472			7,425,472			7,425,472			7,419,974
Diluted		7,425,472			7,425,472			7,425,472			7,432,584			7,431,969

Performance Ratios
Return on average equity (A)		-13.16	%		0.20	%		-2.21	%		6.49	%		-16.13	%
Return on average assets		-0.75	%		0.01	%		-0.13	%		0.35	%		-0.86	%
Net interest margin		2.92	%		3.00	%		2.83	%		2.99	%		3.00	%
Efficiency ratio - (B)		59.14	%		57.78	%		57.33	%		56.27	%		56.50	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Selected Balance Sheet Data
	For the Quarter Ended
Dollars in thousands, except per share amounts	6/30/2010			3/31/2010			12/31/2009			9/30/2009			6/30/2009
Assets
Cash and due from banks	$	4,190		$	5,163		$	6,813		$	4,415		$	4,281
Interest bearing deposits other banks		24,810			9,032			34,247			6,195			10,505
Securities		258,971			262,566			271,654			285,156			289,267
Loans, net		1,065,118			1,112,526			1,137,336			1,156,432			1,165,653
Property held for sale		69,478			50,562			40,293			31,193			20,435
Intangible assets		9,178			9,265			9,353			9,441			9,529
Other assets		87,861			87,382			84,929			84,961			84,240
Total assets	$	1,519,606		$	1,536,496		$	1,584,625		$	1,577,793		$	1,583,910

Liabilities and Shareholders' Equity
Retail deposits	$	780,809		$	776,251		$	775,524		$	702,785		$	705,953
Brokered time deposits		240,329			234,785			241,814			267,237			248,271
Short-term borrowings		2,739			27,456			49,739			73,733			104,718
Long-term borrowings and
subordinated debentures		397,564			397,724			417,881			433,037			432,391
Other liabilities		9,311			9,746			9,007			9,064			8,824
Shareholders' equity		88,854			90,534			90,660			91,937			83,753
Total liabilities and shareholders' equity	$	1,519,606		$	1,536,496		$	1,584,625		$	1,577,793		$	1,583,910

Book value per common share (A)	$	10.97		$	11.18		$	11.19		$	11.35		$	11.28
Tangible book value per common share (A)	$	9.84		$	10.03		$	10.04		$	10.18		$	10.00
Tangible equity / Tangible assets		5.3	%		5.3	%		5.2	%		5.3	%		4.7	%

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

Dollars in thousands	6/30/2010		3/31/2010		12/31/2009		9/30/2009		6/30/2009
Commercial	$	117,334	$	121,514	$	122,508	$	125,743	$	126,661
Commercial real estate		432,321		456,120		465,037		457,669		459,671
Construction and development		143,907		151,281		162,080		176,783		183,733
Residential real estate		362,649		370,713		372,867		376,440		376,019
Consumer		25,968		26,974		28,203		29,555		30,179
Other		5,540		5,685		5,652		6,087		5,760
Total loans		1,087,719		1,132,287		1,156,347		1,172,277		1,182,023
Less unearned fees and interest		1,833		1,918		2,011		1,997		2,065
Total loans net of unearned fees and interest		1,085,886		1,130,369		1,154,336		1,170,280		1,179,958
Less allowance for loan losses		20,768		17,843		17,000		13,848		14,305
Loans, net	$	1,065,118	$	1,112,526	$	1,137,336	$	1,156,432	$	1,165,653

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Asset Quality Information
	For the Quarter Ended
Dollars in thousands	6/30/2010			3/31/2010			12/31/2009			9/30/2009			6/30/2009

Gross loan charge-offs	$	5,907		$	4,606		$	3,864		$	4,586		$	13,288
Gross loan recoveries		(332	)		(99	)		(192	)		(127	)		(98	)
Net loan charge-offs	$	5,575		$	4,507		$	3,672		$	4,459		$	13,190

Net loan charge-offs to average loans (annualized)		1.94	%		1.57	%		1.25	%		1.51	%		4.37	%
Allowance for loan losses	$	20,768		$	17,843		$	17,000		$	13,848		$	14,305
Allowance for loan losses as a percentage
of period end loans		1.91	%		1.58	%		1.47	%		1.18	%		1.21	%
Nonperforming assets:
Nonperforming loans
Commercial	$	1,347		$	511		$	431		$	431		$	680
Commercial real estate		15,387			33,907			35,217			22,684			23,287
Commercial construction and development		812			9,668			11,553			10,354			11,156
Residential construction and development		18,307			7,018			14,775			16,730			18,352
Residential real estate		6,125			4,220			4,563			8,578			8,116
Consumer		23			209			403			75			107
Total nonperforming loans		42,001			55,533			66,942			58,852			61,698
Foreclosed properties
Commercial real estate		15,011			5,086			4,788			4,873			4,561
Commercial construction and development		16,213			4,814			2,028			1,903			903
Residential construction and development		34,506			36,447			30,230			23,375			14,001
Residential real estate		3,748			4,215			3,247			1,042			970
Total foreclosed properties		69,478			50,562			40,293			31,193			20,435
Other repossessed assets		333			291			269			1			11
Total nonperforming assets	$	111,812		$	106,386		$	107,504		$	90,046		$	82,144

Nonperforming loans to period end loans		3.86	%		4.90	%		5.79	%		5.02	%		5.22	%
Nonperforming assets to period end assets		7.36	%		6.92	%		6.78	%		5.71	%		5.19	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q2 2010 vs Q2 2009
	Q2 2010			Q2 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	$1,116,980	$16,533	5.94%	$1,198,606	$17,936	6.00%
Tax-exempt	6,070	123	8.13%	8,312	171	8.25%
Securities
Taxable	247,404	3,226	5.23%	273,515	4,194	6.15%
Tax-exempt	41,156	685	6.75%	46,466	782	6.75%
Interest bearing deposits other banks
and Federal funds sold	1,075	2	0.75%	3,454	1	0.12%
Total interest earning assets	1,412,685	20,569	5.84%	1,530,353	23,084	6.05%

Noninterest earning assets
Cash & due from banks	13,454			20,355
Premises & equipment	23,926			23,649
Other assets	99,812			51,378
Allowance for loan losses	(19,003)			(23,151)
Total assets	$1,530,874			$1,602,584

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$145,966	$157	0.43%	$156,957	$196	0.50%
Savings deposits	196,653	637	1.30%	100,967	430	1.71%
Time deposits	601,629	4,585	3.06%	630,290	5,732	3.65%
Short-term borrowings	16,231	20	0.49%	107,922	146	0.54%
Long-term borrowings and
subordinated debentures	397,640	4,874	4.92%	431,828	5,150	4.78%
	1,358,119	10,273	3.03%	1,427,964	11,654	3.27%
Noninterest bearing liabilities
Demand deposits	71,934			81,022
Other liabilities	9,855			8,039
Total liabilities	1,439,908			1,517,025

Shareholders' equity - preferred	3,519			-
Shareholders' equity - common	87,447			85,559
Total liabilities and
shareholders' equity	$1,530,874			$1,602,584

NET INTEREST EARNINGS		$10,296			$11,430

NET INTEREST YIELD ON EARNING ASSETS			2.92%			3.00%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
YTD 2010 vs YTD 2009

	YTD 2010			YTD 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	$1,131,013	$33,491	5.97%	$1,200,625	$36,083	6.06%
Tax-exempt	6,376	247	7.81%	8,134	333	8.26%
Securities
Taxable	249,937	6,554	5.29%	285,779	8,418	5.94%
Tax-exempt	41,475	1,374	6.68%	46,254	1,559	6.80%
Interest bearing deposits other banks
and Federal funds sold	708	13	3.70%	1,882	1	0.11%
Total interest earning assets	1,429,509	41,679	5.88%	1,542,674	46,394	6.06%

Noninterest earning assets
Cash & due from banks	14,543			18,873
Premises & equipment	24,034			23,188
Other assets	92,337			48,919
Allowance for loan losses	(18,641)			(21,270)
Total assets	$1,541,782			$1,612,384

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$146,331	$330	0.45%	$155,456	$392	0.51%
Savings deposits	195,746	1,328	1.37%	88,103	770	1.76%
Time deposits	598,749	9,218	3.10%	638,556	11,817	3.73%
Short-term borrowings	30,519	78	0.52%	129,928	358	0.56%
Long-term borrowings and
subordinated debentures	399,155	9,732	4.92%	427,819	9,973	4.70%
	1,370,500	20,686	3.04%	1,439,862	23,310	3.26%
Noninterest bearing liabilities
Demand deposits	71,255			77,775
Other liabilities	8,865			8,028
Total liabilities	1,450,620			1,525,665

Shareholders' equity - preferred	3,519
Shareholders' equity - common	87,643			86,719
Total liabilities and
shareholders' equity	$1,541,782			$1,612,384

NET INTEREST EARNINGS		$20,993			$23,084

NET INTEREST YIELD ON EARNING ASSETS			2.96%			3.02%

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	6/30/2010			6/30/2009			6/30/2010			6/30/2009

Net income - excluding realized securities gains, other-than-
temporary impairment of securities, unrealized OREO
writedown, and FDIC special assessment	$	(2,361	)	$	(8	)	$	(2,464	)	$	1,731

Realized securities gains		1,256			39			1,520			295
Applicable income tax effect		(465	)		(14	)		(562	)		(109	)
Other-than-temporary impairment of securities		-			(4,768	)		(29	)		(4,983	)
Applicable income tax effect		-			1,764			11			1,844
Unrealized OREO writedown		(2,194	)		-			(2,194	)		-
Applicable income tax effect		812			-			812			-
FDIC special assessment		-			(735	)		-			(735	)
Applicable income tax effect		-			272			-			272
		(591	)		(3,442	)		(442	)		(3,416	)
GAAP net income	$	(2,952	)	$	(3,450	)	$	(2,906	)	$	(1,685	)

Diluted earnings per share - excluding realized securities gains
other-than-temporary impairment of securities, unrealized
OREO writedown, and FDIC special assessment	$	(0.32	)	$	0.01		$	(0.33	)	$	0.22

Realized securities gains		0.17			(0.01	)		0.20			0.04
Applicable income tax effect		(0.06	)		-			(0.07	)		(0.01	)
Other-than-temporary impairment of securities		-			(0.64	)		-			(0.67	)
Applicable income tax effect		-			0.24			-			0.25
Unrealized OREO writedown		(0.30	)		-			(0.30	)		-
Applicable income tax effect		0.11			-			0.11			-
FDIC special assessment		-			(0.10	)		-			(0.10	)
Applicable income tax effect		-			0.04			-			0.04
		(0.08	)		(0.47	)		(0.06	)		(0.45	)
GAAP diluted earnings per share	$	(0.40	)	$	(0.46	)	$	(0.39	)	$	(0.23	)

Total revenue - excluding realized securities gains,
other-than-temporary impairment of securities and
unrealized OREO writedown	$	12,555		$	13,494		$	25,068		$	27,229

Realized securities gains		1,256			39			1,520			295
Other-than-temporary impairment of securities		-			(4,768	)		(29	)		(4,983	)
Unrealized OREO writedown		(2,194	)		-			(2,194	)		-
		(938	)		(4,729	)		(703	)		(4,688	)
GAAP total revenue	$	11,617		$	8,765		$	24,365		$	22,541

Total noninterest income - excluding realized securities
gains, other-than-temporary impairment of securities
and unrealized OREO writedown	$	2,619		$	2,387		$	4,901		$	4,787

Realized securities gains		1,256			39			1,520			295
Other-than-temporary impairment of securities		-			(4,768	)		(29	)		(4,983	)
Unrealized OREO writedown		(2,194	)		-			(2,194	)		-
		(938	)		(4,729	)		(703	)		(4,688	)
GAAP total noninterest income	$	1,681		$	(2,342	)	$	4,198		$	99

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

Dollars in thousands	6/30/2010		3/31/2010		12/31/2009		9/30/2009		6/30/2009
Non interest bearing checking	$	73,519	$	71,100	$	74,119	$	68,929	$	69,878
Interest bearing checking		142,771		148,657		148,587		154,683		152,498
Savings		196,224		198,303		188,419		115,767		105,828
Time deposits		368,295		358,191		364,399		363,406		377,749
Total retail deposits	$	780,809	$	776,251	$	775,524	$	702,785	$	705,953