exhibit99pressrelease.htm

MOOREFIELD, WV – April 25, 2013 (GLOBE NEWSWIRE) – Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ: SMMF) today reported first quarter 2013 net income applicable to common shares of $1.60 million, or $0.19 per diluted share, compared to $1.50 million, or $0.18 per diluted share, for the first quarter of 2012. Q1 2013 earnings compared to Q1 2012 were positively impacted by a $1.5 million decrease in combined provision for loan losses and write downs of foreclosed properties, which was partially negated by $1.1 million reduction in realized securities gains.

Excluding from first quarter 2013 nonrecurring items (on a pre-tax basis) consisting of realized securities gains of $42,000, losses on sales of assets of $40,000, charges for other-than-temporary impairment (“OTTI”) of securities of $54,000 and write-downs of foreclosed properties of $929,000, pro forma first quarter 2013 earnings were approximately $2.21 million, or $0.26 per diluted share. Excluding from first quarter 2012 nonrecurring realized securities gains of $1.2 million, losses on sales of assets of $77,000, OTTI of securities of $229,000, and write-downs of foreclosed properties of $1.9 million, pro forma earnings of $2.17 million would have resulted, or $0.25 per diluted share.

H. Charles Maddy III, President and Chief Executive Officer of Summit, commented, “Our continued progress towards: achieving improved earnings performance, reducing our portfolio of problem assets, and strengthening our capital levels proceeds as planned. Reducing our portfolio of problem assets remains top priority, and we are very pleased to have reduced nonperforming assets in each of the five most recent quarters. While our disposal of foreclosed properties is still not at the pace we would like, we are encouraged to observe improvement in local real estate market conditions during the quarter just ended. We anticipate earnings may continue to fluctuate from quarter-to-quarter in the near term as our foreclosed properties are re-appraised and written-down to estimated fair values on an ongoing basis.”

For the first quarter of 2013, net interest income was $9.8 million, a decrease of 2.6 percent from the $10.0 million reported in the prior-year first quarter and decreased $138,000 compared to the linked quarter, reflecting reduced volumes of interest earning assets. The net interest margin for first quarter 2013 was 3.23 percent compared to 3.20 percent for the year-ago quarter, and 3.19 percent for the linked quarter, principally as result of maturing wholesale funds reissued at substantially lower rates which more than offset reductions in the yields on loans and securities.

Noninterest income, consisting primarily of insurance commissions from Summit's insurance agency subsidiary and service fee income from community banking activities, for first quarter 2013 was $1.78 million compared to $1.70 million for the comparable period of 2012. Excluding nonrecurring items (as enumerated above), noninterest income was $2.76 million for first quarter 2013, compared to $2.76 million reported for first quarter 2012.

At March 31, 2013, deposits were $1.07 billion, an increase of $39.2 million, or 3.8 percent, since year end 2012. During first quarter 2013, savings and time deposits grew by $4.5 million and $36.5 million, respectively, or 2.4 percent and 6.5 percent, respectively. Long-term borrowings and subordinated debentures declined by 16.6 percent since year end 2012, as the Company paid down $39.7 million in maturing borrowings, which was funded by issuance of long-term time deposits.

Summit's depository institution, Summit Community Bank, Inc. (the “Bank”), remains well in excess of regulatory requirements for a "well capitalized" institution at March 31, 2013. The Bank’s total risk-based capital ratio improved to 15.2 percent at March 31, 2013 compared to 15.0 percent at December 31, 2012, while its Tier 1 leverage capital ratio improved to 10.0 from the 9.8 percent reported at December 31, 2012. Total common shares outstanding as of March 31, 2013 were 7,437,472.

Summit Financial Group, Inc. is a $1.39 billion financial holding company headquartered in Moorefield, West Virginia. Summit provides community banking services primarily in the Eastern Panhandle and South Central regions of West Virginia and the Northern and Shenandoah Valley regions of Virginia, through its bank subsidiary, Summit Community Bank, Inc., which operates fifteen banking locations. Summit also operates Summit Insurance Services, LLC in Moorefield, West Virginia and Leesburg, Virginia.

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.

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, gains/losses on sales of assets, and write-downs of foreclosed properties to estimated fair value included in its Statements of Income. Management deems 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 2013 vs Q1 2012


	For the Quarter Ended						Percent
Dollars in thousands	3/31/2013			3/31/2012			Change
Condensed Statements of Income
Interest income
Loans, including fees	$	12,904		$	14,365		-10.2	%
Securities		1,664			2,421		-31.3	%
Other		1			11		-90.9	%
Total interest income		14,569			16,797		-13.3	%
Interest expense
Deposits		2,768			3,713		-25.5	%
Borrowings		2,043			3,066		-33.4	%
Total interest expense		4,811			6,779		-29.0	%
Net interest income		9,758			10,018		-2.6	%
Provision for loan losses		1,500			2,001		-25.0	%
Net interest income after provision
for loan losses		8,258			8,017		3.0	%

Noninterest income
Insurance commissions		1,184			1,158		2.2	%
Service fees related to deposit accounts		1,012			1,014		-0.2	%
Realized securities gains		42			1,165		-96.4	%
Gain (loss) on sale of assets		(40	)		(77	)	-48.1	%
Other-than-temporary impairment of securities		(54	)		(229	)	-76.4	%
Write-downs of foreclosed properties		(929	)		(1,912	)	-51.4	%
Other income		564			584		-3.4	%
Total noninterest income		1,779			1,703		4.5	%
Noninterest expense
Salaries and employee benefits		4,117			3,901		5.5	%
Net occupancy expense		457			479		-4.6	%
Equipment expense		598			594		0.7	%
Professional fees		251			304		-17.4	%
FDIC premiums		540			522		3.4	%
Foreclosed properties expense		279			374		-25.4	%
Other expenses		1,351			1,365		-1.0	%
Total noninterest expense		7,593			7,539		0.7	%
Income before income taxes		2,444			2,181		12.1	%
Income taxes		651			483		34.8	%
Net income		1,793			1,698		5.6	%
Preferred stock dividends		194			194		0.0	%

Net income applicable to common shares	$	1,599		$	1,504		6.3	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary -- Q1 2013 vs Q1 2012

	For the Quarter Ended						Percent
	3/31/2013			3/31/2012			Change
Per Share Data
Earnings per common share
Basic	$	0.22		$	0.20		10.0	%
Diluted	$	0.19		$	0.18		5.6	%

Average shares outstanding
Basic		7,432,254			7,425,472		0.1	%
Diluted		9,613,886			9,600,017		0.1	%

Performance Ratios
Return on average equity (A)		6.55	%		6.49	%	0.9	%
Return on average assets		0.52	%		0.47	%	10.6	%
Net interest margin		3.23	%		3.20	%	0.9	%
Efficiency ratio (B)		56.00	%		53.71	%	4.3	%

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

	For the Quarter Ended
Dollars in thousands	3/31/2013			12/31/2012			9/30/2012			6/30/2012			3/31/2012
Condensed Statements of Income
Interest income
Loans, including fees	$	12,904		$	13,512		$	13,648		$	14,041		$	14,365
Securities		1,664			1,703			1,934			2,225			2,421
Other		1			5			7			12			11
Total interest income		14,569			15,220			15,589			16,278			16,797
Interest expense
Deposits		2,768			3,017			3,067			3,360			3,713
Borrowings		2,043			2,307			2,587			2,947			3,066
Total interest expense		4,811			5,324			5,654			6,307			6,779
Net interest income		9,758			9,896			9,935			9,971			10,018
Provision for loan losses		1,500			2,498			2,000			2,001			2,001
Net interest income after provision
for loan losses		8,258			7,398			7,935			7,970			8,017

Noninterest income
Insurance commissions		1,184			1,082			1,052			1,141			1,158
Service fees related to deposit accounts		1,012			1,092			1,074			1,075			1,014
Gain (loss) on sale of assets		42			(94	)		16			(523	)		(77)
Realized securities gains (losses)		(40	)		103			760			320			1,165
Other-than-temporary impairment of securities		(54	)		(76	)		(39	)		(106	)		(229)
Write-downs of foreclosed properties		(929	)		(748	)		(2,571	)		(1,631	)		(1,912)
Other income		564			644			514			552			584
Total noninterest income		1,779			2,003			806			828			1,703
Noninterest expense
Salaries and employee benefits		4,117			3,799			3,940			3,892			3,901
Net occupancy expense		457			495			476			490			479
Equipment expense		598			576			576			603			594
Professional fees		251			314			289			242			316
FDIC premiums		540			535			510			500			522
Foreclosed properties expense		279			269			356			233			362
Other expenses		1,351			1,434			1,325			1,335			1,365
Total noninterest expense		7,593			7,422			7,472			7,295			7,539
Income before income taxes		2,444			1,979			1,269			1,503			2,181
Income taxes		651			(126	)		272			590			483
Net income		1,793			2,105			997			913			1,698
Preferred stock dividends		194			194			194			194			194
Net income applicable to common shares	$	1,599		$	1,911		$	803		$	719		$	1,504

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

	For the Quarter Ended
	3/31/2013			12/31/2012			9/30/2012			6/30/2012			3/31/2012
Per Share Data
Earnings per common share
Basic	$	0.22		$	0.26		$	0.11		$	0.10		$	0.20
Diluted	$	0.19		$	0.22		$	0.10		$	0.09		$	0.18

Average shares outstanding
Basic		7,432,254			7,425,472			7,425,472			7,425,472			7,425,472
Diluted		9,613,886			9,601,435			9,601,278			8,927,802			9,600,017

Performance Ratios
Return on average equity (A)		6.55	%		7.76	%		3.71	%		3.44	%		6.49%
Return on average assets		0.52	%		0.60	%		0.28	%		0.25	%		0.47%
Net interest margin		3.23	%		3.19	%		3.17	%		3.20	%		3.20%
Efficiency ratio (B)		56.00	%		54.00	%		54.37	%		53.13	%		53.71%

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

	For the Quarter Ended
Dollars in thousands, except per share amounts	3/31/2013			12/31/2012			9/30/2012			6/30/2012			3/31/2012

Assets
Cash and due from banks	$	3,906		$	3,833		$	3,752		$	4,266		$	4,059
Interest bearing deposits other banks		7,915			10,969			13,441			14,288			26,855
Securities		283,054			281,539			291,992			289,151			292,002
Loans, net		945,741			937,168			940,933			948,294			957,797
Property held for sale		54,625			56,172			56,033			60,069			61,584
Premises and equipment, net		21,023			21,129			21,265			21,470			21,756
Intangible assets		8,212			8,300			8,387			8,475			8,563
Cash surrender value of life insurance policies		29,791			29,553			30,065			29,808			29,559
Other assets		35,931			38,441			38,218			40,620			42,190
Total assets	$	1,390,198		$	1,387,104		$	1,404,086		$	1,416,441		$	1,444,365

Liabilities and Shareholders' Equity
Deposits	$	1,066,318		$	1,027,125		$	1,027,307		$	1,001,669		$	1,011,139
Short-term borrowings		5,960			3,958			20,957			10,957			15,956
Long-term borrowings and
subordinated debentures		199,977			239,657			240,133			290,024			303,510
Other liabilities		7,928			7,809			8,361			8,084			9,361
Shareholders' equity		110,015			108,555			107,328			105,707			104,399
Total liabilities and shareholders' equity	$	1,390,198		$	1,387,104		$	1,404,086		$	1,416,441		$	1,444,365

Book value per common share (A)	$	11.45		$	11.31		$	11.20		$	11.01		$	10.87
Tangible book value per common share (A)	$	10.60		$	10.44		$	10.33		$	10.13		$	9.98
Tangible equity / Tangible assets		7.4	%		7.3	%		7.1	%		6.9	%		6.7%

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Regulatory Capital Ratios

	3/31/2013		12/31/2012		9/30/2012		6/30/2012		3/31/2012
Summit Financial Group, Inc.
Total Risk Based Capital	14.1	%	14.0	%	13.8	%	13.6	%	13.3%
Tier 1 Risk Based Capital	11.8	%	11.6	%	11.3	%	11.1	%	10.8%
Tier 1 Leverage Ratio	8.4	%	8.3	%	8.0	%	7.9	%	7.8%

Summit Community Bank, Inc.
Total Risk Based Capital	15.2	%	15.0	%	14.6	%	14.3	%	14.0%
Tier 1 Risk Based Capital	13.9	%	13.7	%	13.3	%	13.1	%	12.7%
Tier 1 Leverage Ratio	10.0	%	9.8	%	9.5	%	9.3	%	9.1%

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

Dollars in thousands	3/31/2013		12/31/2012		9/30/2012		6/30/2012		3/31/2012

Commercial	$	86,877	$	85,829	$	88,997	$	92,060	$	99,386
Commercial real estate
Owner occupied		151,942		154,252		150,090		152,347		153,528
Non-owner occupied		288,475		276,082		279,132		280,891		275,727
Construction and development
Land and development		76,277		79,335		82,857		84,383		88,212
Construction		5,782		3,772		2,087		1,793		2,148
Residential real estate
Non-jumbo		213,965		216,714		215,584		217,321		219,485
Jumbo		62,849		61,567		62,748		61,962		62,836
Home equity		53,765		53,263		53,455		51,692		50,884
Consumer		19,638		20,586		21,290		21,212		21,573
Other		3,191		3,701		2,513		2,523		2,540
Total loans, net of unearned fees		962,761		955,101		958,753		966,184		976,319
Less allowance for loan losses		17,020		17,933		17,820		17,890		18,522
Loans, net	$	945,741	$	937,168	$	940,933	$	948,294	$	957,797

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

Dollars in thousands	3/31/2013		12/31/2012		9/30/2012		6/30/2012		3/31/2012
Non interest bearing checking	$	93,125	$	100,592	$	96,764	$	96,172	$	87,916
Interest bearing checking		181,327		175,706		177,236		164,867		172,506
Savings		197,587		193,039		197,610		204,509		212,402
Time deposits		594,279		557,788		555,697		536,121		538,315
Total deposits	$	1,066,318	$	1,027,125	$	1,027,307	$	1,001,669	$	1,011,139

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

	For the Quarter Ended
Dollars in thousands	3/31/2013			12/31/2012			9/30/2012			6/30/2012			3/31/2012
Gross loan charge-offs	$	2,497		$	2,545		$	2,142		$	2,790		$	1,340
Gross loan recoveries		(84	)		(160	)		(73	)		(156	)		(149)
Net loan charge-offs	$	2,413		$	2,385		$	2,069		$	2,634		$	1,191

Net loan charge-offs to average loans (annualized)		1.00	%		0.99	%		0.86	%		1.08	%		0.49%
Allowance for loan losses	$	17,020		$	17,933		$	17,820		$	17,890		$	18,523
Allowance for loan losses as a percentage
of period end loans		1.77	%		1.88	%		1.86	%		1.85	%		1.89%
Nonperforming assets:
Nonperforming loans
Commercial	$	4,763		$	5,002		$	5,343		$	6,476		$	2,477
Commercial real estate		1,525			2,556			2,803			3,536			4,282
Commercial construction and development		-			-			428			662			799
Residential construction and development		13,076			13,641			16,333			16,735			21,375
Residential real estate		16,869			16,522			18,809			18,550			17,754
Consumer		72			55			88			78			81
Total nonperforming loans		36,305			37,776			43,804			46,037			46,768
Foreclosed properties
Commercial		-			-			-			-			-
Commercial real estate		11,779			11,835			11,802			12,029			14,703
Commercial construction and development		16,670			17,597			17,683			18,632			17,377
Residential construction and development		21,929			23,074			23,769			26,014			25,724
Residential real estate		4,247			3,666			2,779			3,393			3,780
Total foreclosed properties		54,625			56,172			56,033			60,068			61,584
Other repossessed assets		19			6			-			-			266
Total nonperforming assets	$	90,949		$	93,954		$	99,837		$	106,105		$	108,618

Nonperforming loans to period end loans		3.77	%		3.96	%		4.57	%		4.76	%		4.79%
Nonperforming assets to period end assets		6.54	%		6.77	%		7.11	%		7.49	%		7.52%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q1 2013 vs Q1 2012

	Q1 2013							Q1 2012
	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	$	960,509		$	12,833	5.42	%	$	973,862		$	14,279	5.90%
Tax-exempt		5,965			106	7.21	%		7,248			130	7.21%
Securities
Taxable		216,306			1,030	1.93	%		234,973			1,699	2.91%
Tax-exempt		79,147			961	4.92	%		71,559			1,092	6.14%
Interest bearing deposits other banks
and Federal funds sold		7,510			1	0.05	%		24,882			11	0.18%
Total interest earning assets		1,269,437			14,931	4.77	%		1,312,524			17,211	5.27%

Noninterest earning assets
Cash & due from banks		4,240							4,073
Premises & equipment		21,101							21,978
Other assets		114,701							122,188
Allowance for loan losses		(17,572	)						(18,251	)
Total assets	$	1,391,907						$	1,442,512

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	174,724		$	70	0.16	%	$	160,147		$	82	0.21%
Savings deposits		195,556			309	0.64	%		211,783			381	0.72%
Time deposits		574,545			2,388	1.69	%		550,689			3,250	2.37%
Short-term borrowings		27,834			17	0.25	%		14,390			7	0.20%
Long-term borrowings and
subordinated debentures		209,255			2,027	3.93	%		305,027			3,059	4.03%
Total interest bearing liabilities		1,181,914			4,811	1.65	%		1,242,036			6,779	2.20%

Noninterest bearing liabilities
Demand deposits		92,926							87,000
Other liabilities		7,653							8,850
Total liabilities		1,282,493							1,337,886

Shareholders' equity - preferred		9,325							9,326
Shareholders' equity - common		100,089							95,300
Total liabilities and
shareholders' equity	$	1,391,907						$	1,442,512

NET INTEREST EARNINGS				$	10,120						$	10,432

NET INTEREST MARGIN						3.23	%						3.20%

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

	For the Quarter Ended
Dollars in thousands	3/31/2013			3/31/2012			12/31/2012

Net income applicable to common shares - excluding
realized securities gains, gains/losses on sales of assets,
other-than-temporary impairment of securities and
write-downs of foreclosed properties	$	2,217		$	2,167		$	2,424

Realized securities gains		42			1,165			103
Applicable income tax effect		(16	)		(431	)		(38)
Gain (loss) on sale of assets		(40	)		(77	)		(94)
Applicable income tax effect		15			28			35
Other-than-temporary impairment of securities		(54	)		(229	)		(76)
Applicable income tax effect		20			85			28
Write-downs foreclosed properties		(929	)		(1,912	)		(748)
Applicable income tax effect		344			707			277
		(618	)		(663	)		(513)
GAAP net income applicable to common shares	$	1,599		$	1,504		$	1,911



Diluted earnings per common share - excluding realized
securities gains, gains/losses on sales of assets,
other-than-temporary impairment of securities and
write-downs of foreclosed properties	$	0.26		$	0.25		$	0.28

Realized securities gains		-			0.12			0.01
Applicable income tax effect		-			(0.04	)		-
Gain (loss) on sale of assets		-			(0.01	)		(0.01)
Applicable income tax effect		-			-			-
Other-than-temporary impairment of securities		(0.01	)		(0.02	)		(0.01)
Applicable income tax effect		-			0.01			-
Write-downs of foreclosed properties		(0.10	)		(0.20	)		(0.08)
Applicable income tax effect		0.04			0.07			0.03
		(0.07	)		(0.07	)		(0.06)
GAAP diluted earnings per common share	$	0.19		$	0.18		$	0.22

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

	For the Quarter Ended
Dollars in thousands	3/31/2013			3/31/2012			12/31/2012

Total revenue - excluding realized securities gains,
gains/losses on sales of assets, other-than-temporary
impairment of securities and write-downs of
foreclosed properties	$	12,518		$	12,773		$	12,714

Realized securities gains		42			1,165			103
Gain (loss) on sale of assets		(40	)		(77	)		(94)
Other-than-temporary impairment of securities		(54	)		(229	)		(76)
Write-downs of foreclosed properties		(929	)		(1,912	)		(748)
		(981	)		(1,053	)		(815)
GAAP total revenue	$	11,537		$	11,720		$	11,899



Total noninterest income - excluding realized securities
gains, gains/losses on sales of assets, other-than-
temporary impairment of securities and write-downs
of foreclosed properties	$	2,760		$	2,755		$	2,818

Realized securities gains		42			1,165			103
Gain (loss) on sale of assets		(40	)		(77	)		(94)
Other-than-temporary impairment of securities		(54	)		(229	)		(76)
Write-downs of foreclosed properties		(929	)		(1,912	)		(748)
		(981	)		(1,053	)		(815)
GAAP total noninterest income	$	1,779		$	1,702		$	2,003

Loans Past Due 30-89 Days
	For the Quarter Ended
In thousands	3/31/2013		12/31/2012		9/30/2012		6/30/2012		3/31/2012

Commercial	$	27	$	180	$	874	$	300	$	689
Commercial real estate		2,161		437		1,264		1,787		2,776
Construction and development		64		-		56		293		518
Residential real estate		4,522		6,170		4,346		5,763		5,509
Consumer		277		326		313		408		242
Total	$	7,051	$	7,113	$	6,853	$	8,551	$	9,734