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): July 25, 2019

Summit Financial Group, Inc.

(Exact name of registrant as specified in its charter)

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

300 North Main Street, Moorefield, West Virginia	26836
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (304) 530-1000

Not Applicable

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

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

[ ]	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ]	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ]	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ]	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

Emerging growth company ¨

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

Section 2 - Financial Information

Item 2.02. Results of Operations and Financial Condition

On July 25, 2019, Summit Financial Group, Inc. (“Summit”) issued a News Release announcing its earnings for the three months and six months ended June 30, 2019. This News Release is furnished as Exhibit 99 and is incorporated herein by reference.

Section 9 - Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits

(d)    Exhibits

99 News Release issued on July 25, 2019

SIGNATURES

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

	SUMMIT FINANCIAL GROUP, INC.
Date: July 25, 2019	By: /s/ Julie R. Markwood
	Julie R. Markwood
	Vice President & Chief Accounting Officer

2

EX-99

EXHIBIT 99

SUMMIT FINANCIAL GROUP REPORTS RECORD SECOND QUARTER AND FIRST HALF 2019 RESULTS

Q2 2019 Diluted EPS $0.68 compared to $0.56 for Q1 2019 and $0.51 for Q2 2018

MOOREFIELD, WV - July 25, 2019 (GLOBE NEWSWIRE) - Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ: SMMF) today reported record second quarter 2019 net income of $8.56 million, or $0.68 per diluted share. In comparison, earnings for first quarter 2019 were $7.09 million, or $0.56 per diluted share, and for second quarter 2018 were $6.28 million, or $0.51 per diluted share.

For the six months ended June 30, 2019, Summit recorded net income of $15.7 million, or $1.23 per diluted share, compared with $13.7 million, or $1.10 per diluted share, for the comparable 2018 six-month period, representing an increase of 14.1 percent or 11.8 percent per diluted share.

Both quarterly and six-month 2019 earnings were positively impacted by increased net interest income resulting primarily from loan growth as well as a higher net interest margin, significant realized securities gains, and the previously announced gain on sale of our insurance agency, Summit Insurance Services, LLC (“SIS”) in Q2. These results were partially offset by larger write-downs on foreclosed properties in Q2 with the goal of selling such properties more rapidly.

Summit completed its acquisition of Peoples Bankshares, Inc. (“PBI”) and its subsidiary, First Peoples Bank, headquartered in Mullens, West Virginia on January 1, 2019 and converted its business processes and accounts to that of Summit’s during Q2 2019; accordingly, PBI’s results of operations are included in Summit’s consolidated results of operations from the date of acquisition. Therefore, Summit’s second quarter and six months ended June 30, 2019 period results reflect increased levels of average balances, income and expenses compared to the same periods of 2018. At consummation, PBI had total assets of $133.1 million, loans of $42.4 million, and deposits of $112.9 million. In addition, our merger-related expenses totaled $382,000 in Q2 2019 versus $63,000 in the prior quarter.

Highlights for Q2 2019

• Loan balances, excluding mortgage warehouse lines of credit, grew $28.6 million during the quarter, and $61.5 million year-to-date;

• Net interest income increased 14.90 percent (annualized) primarily as result of loan growth and higher loan yields, while funding costs remained well controlled; these factors also contributed to the 6 basis points increase in net interest margin to 3.72 percent;

• Efficiency ratio was 56.21 percent compared to 55.88 percent for Q2 2018;

• Provision for loan losses was $300,000 for the quarter compared to $250,000 for the linked quarter;

• Realized securities gains of $1.09 million in Q2 2019;

• Write-downs of foreclosed properties were $1.20 million in Q2 2019 compared to $249,000 in Q1 2019, while the net gain on sales of foreclosed properties increased from $1,000 in Q1 2019 to $156,000 in Q2 2019; and

• Recognized a $1.91 million pre-tax gain on the sale of SIS.

H. Charles Maddy, III, President and Chief Executive Officer of Summit, commented, “I am very pleased to report that Summit achieved record earnings both for the quarter and the six-month periods just ended. I am particularly gratified by this past quarter’s solid core operating performance highlighted by our quarter-over-quarter strong lending activity, growth in net interest income and higher net interest margin. Further, this past quarter’s sale of SIS unlocked significant value for our shareholders, as the transaction resulted in a $0.54 increase in the Company’s tangible book value per share, while the entity’s earnings historically accounted for less than $0.01 per share of our quarterly earnings.”

Results from Operations

Total revenue for second quarter 2019, consisting of net interest income and noninterest income, increased 21.7 percent to $26.1 million, principally as a result of higher net interest income, increased realized securities gains and the gain on the sale of Summit Insurance Services, LLC, compared to $21.4 million for the second quarter 2018. For the year-to-date period ended June 30, 2019, total revenue was $48.9 million compared to $43.6 million for the same period of 2018, representing a 12.2 percent increase primarily as a result of higher net interest income and the gain on the sale of Summit Insurance Services, LLC.

For the second quarter of 2019, net interest income was $19.3 million, an increase of 11.5 percent from the $17.3 million reported in the prior-year second quarter and a 3.7 percent increase compared to the linked quarter. The net interest margin for second quarter 2019 was 3.72 percent compared to 3.66 percent for the linked quarter and 3.58 percent for the year-ago quarter. Excluding the impact of accretion and amortization of fair value acquisition accounting adjustments, Summit’s net interest margin would have been 3.62 percent for Q2 2019, 3.64 percent for Q1 2019 and 3.56 percent for Q2 2018.

Noninterest income, consisting primarily of insurance commissions from Summit's insurance agency subsidiary, trust and wealth management fees and service fee income from community banking activities, for second quarter 2019 was $6.81 million compared to $4.15 million for the comparable period of 2018. Excluding realized securities gains and the gain on the sale of Summit Insurance Services, LLC, noninterest income was $3.82 million for second quarter 2019, compared to $4.06 million reported for second quarter 2018 and $4.23 million for the linked quarter.

We recorded a $300,000 provision for loan losses during second quarter 2019 and $750,000 in Q2 2018. Our provision continues to be directionally consistent with changes in the credit quality in our loan portfolio.

Q2 2019 total noninterest expense increased 20.4 percent to $15.3 million compared to $12.7 million for the prior-year second quarter and increased 10.6 percent compared to the linked quarter. Our increased noninterest expense is principally due to higher foreclosed properties expense due to increased write-downs on foreclosed properties with the goal of selling such properties more rapidly and to merger-related expenses.

Noninterest expense for the first half of 2019 increased 16.5 percent compared to the first half of 2018. Our increased noninterest expense is principally due to expenses associated with the acquired PBI operations (including merger-related expenses), increased write-downs of foreclosed properties and to deferred director compensation plan expense of $594,000 for the first six months of 2019 compared to $145,000 for the same period of 2018. Under our director deferred compensation plans, directors optionally elect to defer their director fees into a "phantom" investment plan whereby the Company recognizes expense or benefit relative to the phantom returns or losses of such investments. As result of the stock market’s exceptionally robust performance during Q1 2019, we recognized significantly greater quarterly deferred director compensation expense than we recognized previously when market values were lower.

Balance Sheet

At June 30, 2019, total assets were $2.30 billion, an increase of $98.6 million, or 4.5 percent since December 31, 2018. Total loans, net of unearned fees and allowance for loan losses, were $1.81 billion at June 30, 2019, up $123.8 million, or 7.4 percent, from the $1.68 billion reported at year-end 2018. Loans, excluding mortgage warehouse lines of credit, increased $28.6 million during the quarter, or 6.8 percent (on an annualized basis), and have increased $61.5 million, or 7.4 percent (on an annualized basis) since year-end 2018.

At June 30, 2019, deposits were $1.80 billion, an increase of $162.7 million, or 10.0 percent, since year end 2018. During first half 2019, checking deposits increased $78.0 million or 10.5 percent, time deposits grew by $67.5 million or 11.1 percent and savings deposits increased $17.2 million or 6.1 percent.

Shareholders’ equity was $235.7 million as of June 30, 2019 compared to $219.8 million at December 31, 2018. In conjunction with the acquisition of PBI on January 1, 2019, Summit issued 465,931 shares of common stock valued at $9.0 million to the former PBI shareholders.

Tangible book value per common share increased to $17.04 at June 30, 2019 compared to $15.75 at December 31, 2018. Summit had 12,449,986 outstanding common shares at Q2 2019 quarter end compared to 12,312,933 at year end 2018.

As announced in Q3 2018, the Board of Directors authorized the open market repurchase of up to 500,000 shares of the issued and outstanding shares of Summit's common stock. The timing and quantity of stock purchases under this repurchase plan are at the discretion of management. The plan will expire December 31, 2019, but may be discontinued, suspended, or restarted at any time at the Company's discretion. During Q2 2019, 235,717 shares of our common stock were repurchased under the Plan at an average price of $25.74 per share. Through June 30, 2019, the Company has repurchased 447,540 shares under the Plan since its inception at an average price of $23.99 per share.

Asset Quality

As of June 30, 2019, nonperforming assets (“NPAs”), consisting of nonperforming loans, foreclosed properties, and repossessed assets, were $34.9 million, or 1.52 percent of assets. This compares to $34.4 million, or 1.53 percent of assets at the linked quarter-end, and $36.5 million, or 1.66 percent of assets at year end 2018. During Q2 2019, nonperforming loans increased $3.50 million as result of two commercial real estate loan relationships in Virginia totaling $3.85 million that became nonperforming, while foreclosed properties declined by $3.00 million as result of sales activity and the prior noted write-downs.

Second quarter 2019 net loan charge-offs were $280,000, or 0.06 percent of average loans annualized; while adding $300,000 to the allowance for loan losses through the provision for loan losses. The allowance for loan losses stood at 0.72 percent of total loans at June 30, 2019, compared to 0.77 percent at year-end 2018.

About the Company

Summit Financial Group, Inc. is a $2.30 billion financial holding company headquartered in Moorefield, West Virginia. Summit provides community banking services primarily in the Eastern Panhandle and Southern regions of West Virginia and the Northern, Shenandoah Valley and Southwestern regions of Virginia, through its bank subsidiary, Summit Community Bank, Inc., which operates thirty-two banking locations.

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.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary (unaudited) -- Q2 2019 vs Q2 2018
	For the Quarter Ended				Percent
Dollars in thousands	6/30/2019		6/30/2018		Change
Statements of Income
Interest income
Loans, including fees	$	24,352	$	20,962	16.2	%
Securities	2,396		2,303		4.0	%
Other	134		134		—	%
Total interest income	26,882		23,399		14.9	%
Interest expense
Deposits	5,967		4,309		38.5	%
Borrowings	1,652		1,815		-9.0	%
Total interest expense	7,619		6,124		24.4	%
Net interest income	19,263		17,275		11.5	%
Provision for loan losses	300		750		-60.0	%
Net interest income after provision for loan losses	18,963		16,525		14.8	%
Noninterest income
Insurance commissions	606		1,013		-40.2	%
Trust and wealth management fees	612		672		-8.9	%
Service charges on deposit accounts	1,224		1,116		9.7	%
Bank card revenue	893		801		11.5	%
Realized securities gains	1,086		87		n/m
Gain on sale of Summit Insurance Services, LLC	1,906		—		n/a
Bank owned life insurance income	248		249		-0.4	%
Other income	235		210		11.9	%
Total noninterest income	6,810		4,148		64.2	%
Noninterest expense
Salaries and employee benefits	7,576		6,922		9.4	%
Net occupancy expense	880		840		4.8	%
Equipment expense	1,219		1,071		13.8	%
Professional fees	475		385		23.4	%
Advertising and public relations	155		188		-17.6	%
Amortization of intangibles	420		413		1.7	%
FDIC premiums	88		240		-63.3	%
Bank card expense	473		361		31.0	%
Foreclosed properties expense, net of losses	1,545		350		341.4	%
Merger-related expense	382		—		n/a
Other expenses	2,116		1,965		7.7	%
Total noninterest expense	15,329		12,735		20.4	%
Income before income taxes	10,444		7,938		31.6	%
Income tax expense	1,880		1,658		13.4	%
Net income	$	8,564	$	6,280	36.4	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary (unaudited) -- Q2 2019 vs Q2 2018
	For the Quarter Ended						Percent
	6/30/2019			6/30/2018			Change
Per Share Data
Earnings per common share
Basic	$	0.68		$	0.51		33.3	%
Diluted	$	0.68		$	0.51		33.3	%
Cash dividends	$	0.15		$	0.13		15.4	%
Average common shares outstanding
Basic	12,539,095			12,366,522			1.4	%
Diluted	12,600,071			12,431,984			1.4	%
Common shares outstanding at period end	12,449,986			12,373,747			0.6	%
Performance Ratios
Return on average equity	14.62		%	12.16		%	20.2	%
Return on average tangible equity	17.02		%	14.68		%	15.9	%
Return on average assets	1.52		%	1.19		%	27.7	%
Net interest margin (A)	3.72		%	3.58		%	3.9	%
Efficiency ratio (B)	56.21		%	55.88		%	0.6	%
NOTE (A) - Presented on a tax-equivalent basis assuming a federal tax rate of 21%.
NOTE (B) - Computed on a tax equivalent basis excluding gains/losses on sales of assets, write-downs of OREO properties to fair value and amortization of intangibles.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Six Month Performance Summary (unaudited) -- 2019 vs 2018
	For the Six Months Ended				Percent
Dollars in thousands	6/30/2019		6/30/2018		Change
Statements of Income
Interest income
Loans, including fees	$	47,404	$	41,329	14.7	%
Securities	4,981		4,694		6.1	%
Other	365		274		33.2	%
Total interest income	52,750		46,297		13.9	%
Interest expense
Deposits	11,531		7,858		46.7	%
Borrowings	3,383		3,906		-13.4	%
Total interest expense	14,914		11,764		26.8	%
Net interest income	37,836		34,533		9.6	%
Provision for loan losses	550		1,250		-56.0	%
Net interest income after provision for loan losses	37,286		33,283		12.0	%
Noninterest income
Insurance commissions	1,780		2,126		-16.3	%
Trust and wealth management fees	1,198		1,339		-10.5	%
Service charges on deposit accounts	2,405		2,207		9.0	%
Bank card revenue	1,707		1,550		10.1	%
Realized securities gains	1,082		819		32.1	%
Gain on sale Summit Insurance Services, LLC	1,906		—		n/a
Bank owned life insurance income	486		523		-7.1	%
Other income	476		459		3.7	%
Total noninterest income	11,040		9,023		22.4	%
Noninterest expense
Salaries and employee benefits	14,923		13,744		8.6	%
Net occupancy expense	1,803		1,672		7.8	%
Equipment expense	2,398		2,153		11.4	%
Professional fees	878		719		22.1	%
Advertising and public relations	308		291		5.8	%
Amortization of intangibles	897		848		5.8	%
FDIC premiums	88		480		-81.7	%
Bank card expense	911		696		30.9	%
Foreclosed properties expense, net of losses	1,930		675		185.9	%
Merger-related expense	445		—		n/a
Other expenses	4,608		3,771		22.2	%
Total noninterest expense	29,189		25,049		16.5	%
Income before income taxes	19,137		17,257		10.9	%
Income tax expense	3,481		3,534		-1.5	%
Net income	$	15,656	$	13,723	14.1	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Six Month Performance Summary (unaudited) -- 2019 vs 2018
	For the Six Months Ended						Percent
	6/30/2019			6/30/2018			Change
Per Share Data
Earnings per common share
Basic	$	1.24		$	1.11		11.7	%
Diluted	$	1.23		$	1.10		11.8	%
Cash dividends	$	0.29		$	0.26		11.5	%
Average common shares outstanding
Basic	12,627,806			12,362,679			2.1	%
Diluted	12,688,865			12,425,751			2.1	%
Common shares outstanding at period end	12,449,986			12,373,747			0.6	%
Performance Ratios
Return on average equity	13.46		%	13.43		%	0.2	%
Return on average tangible equity	15.93		%	16.21		%	-1.7	%
Return on average assets	1.39		%	1.29		%	7.8	%
Net interest margin (A)	3.69		%	3.58		%	3.1	%
Efficiency ratio (B)	56.35		%	54.86		%	2.7	%
NOTE (A) - Presented on a tax-equivalent basis assuming a federal tax rate of 21%.
NOTE (B) - Computed on a tax equivalent basis excluding gains/losses on sales of assets, write-downs of OREO properties to fair value and amortization of intangibles.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Five Quarter Performance Summary (unaudited)
	For the Quarter Ended
Dollars in thousands	6/30/2019		3/31/2019			12/31/2018			9/30/2018		6/30/2018
Statements of Income
Interest income
Loans, including fees	$	24,352	$	23,051		$	22,659		$	21,295	$	20,962
Securities	2,396		2,586			2,527			2,367		2,303
Other	134		231			127			138		134
Total interest income	26,882		25,868			25,313			23,800		23,399
Interest expense
Deposits	5,967		5,564			5,103			4,714		4,309
Borrowings	1,652		1,731			2,158			1,873		1,815
Total interest expense	7,619		7,295			7,261			6,587		6,124
Net interest income	19,263		18,573			18,052			17,213		17,275
Provision for loan losses	300		250			500			500		750
Net interest income after provision for loan losses	18,963		18,323			17,552			16,713		16,525
Noninterest income
Insurance commissions	606		1,174			1,132			1,062		1,013
Trust and wealth management fees	612		586			627			687		672
Service charges on deposit accounts	1,224		1,180			1,209			1,215		1,116
Bank card revenue	893		814			809			793		801
Realized securities gains (losses)	1,086		(3		)	(205		)	8		87
Gain on sale of Summit Insurance Services, LLC	1,906		—			—			—		—
Bank owned life insurance income	248		238			248			250		249
Other income	235		241			367			196		210
Total noninterest income	6,810		4,230			4,187			4,211		4,148
Noninterest expense
Salaries and employee benefits	7,576		7,347			6,928			6,806		6,922
Net occupancy expense	880		924			836			856		840
Equipment expense	1,219		1,179			1,139			1,118		1,071
Professional fees	475		403			385			503		385
Advertising and public relations	155		153			193			170		188
Amortization of intangibles	420		476			410			413		413
FDIC premiums	88		—			140			210		240
Bank card expense	473		439			395			384		361
Foreclosed properties expense, net of losses	1,545		384			507			169		350
Merger-related expense	382		63			59			86		—
Other expenses	2,116		2,492			1,474			1,643		1,965
Total noninterest expense	15,329		13,860			12,466			12,358		12,735
Income before income taxes	10,444		8,693			9,273			8,566		7,938
Income tax expense	1,880		1,601			1,823			1,667		1,658
Net income	$	8,564	$	7,092		$	7,450		$	6,899	$	6,280

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Five Quarter Performance Summary (unaudited)
	For the Quarter Ended
	6/30/2019			3/31/2019			12/31/2018			9/30/2018			6/30/2018
Per Share Data
Earnings per common share
Basic	$	0.68		$	0.56		$	0.60		$	0.56		$	0.51
Diluted	$	0.68		$	0.56		$	0.60		$	0.55		$	0.51
Cash dividends	$	0.15		$	0.14		$	0.14		$	0.13		$	0.13
Average common shares outstanding
Basic	12,539,095			12,717,501			12,358,104			12,374,350			12,366,522
Diluted	12,600,071			12,778,644			12,407,678			12,439,051			12,431,984
Common shares outstanding at period end	12,449,986			12,661,528			12,312,933			12,382,450			12,373,747
Performance Ratios
Return on average equity	14.62		%	12.28		%	13.85		%	13.00		%	12.16		%
Return on average tangible equity	17.02		%	14.80		%	16.41		%	15.53		%	14.68		%
Return on average assets	1.52		%	1.27		%	1.38		%	1.31		%	1.19		%
Net interest margin (A)	3.72		%	3.66		%	3.61		%	3.53		%	3.58		%
Efficiency ratio (B)	56.21		%	56.50		%	51.02		%	54.25		%	55.88		%
NOTE (A) - Presented on a tax-equivalent basis assuming a federal tax rate of 21%.
NOTE (B) - Computed on a tax equivalent basis excluding gains/losses on sales of assets, write-downs of OREO properties to fair value and amortization of intangibles.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Selected Balance Sheet Data (unaudited)
Dollars in thousands, except per share amounts	6/30/2019			3/31/2019			12/31/2018			9/30/2018			6/30/2018
Assets
Cash and due from banks	$	13,481		$	14,265		$	23,061		$	9,382		$	8,314
Interest bearing deposits other banks	42,994			43,689			36,479			44,452			38,097
Securities	269,920			297,126			293,284			288,040			283,221
Loans, net	1,805,850			1,725,064			1,682,005			1,632,747			1,617,373
Property held for sale	21,390			24,393			21,432			22,017			21,606
Premises and equipment, net	42,896			39,345			37,553			36,888			36,017
Goodwill and other intangible assets	23,585			29,349			25,842			26,252			26,665
Cash surrender value of life insurance policies	42,976			42,714			42,420			42,208			41,932
Other assets	36,022			33,696			38,510			36,741			34,427
Total assets	$	2,299,114		$	2,249,641		$	2,200,586		$	2,138,727		$	2,107,652
Liabilities and Shareholders' Equity
Deposits	$	1,797,493		$	1,789,032		$	1,634,826		$	1,651,064		$	1,639,996
Short-term borrowings	225,343			186,292			309,084			238,403			202,429
Long-term borrowings and      subordinated debentures	20,315			20,319			20,324			20,328			40,332
Other liabilities	20,262			20,368			16,522			15,376			15,016
Shareholders' equity	235,701			233,630			219,830			213,556			209,879
Total liabilities and shareholders' equity	$	2,299,114		$	2,249,641		$	2,200,586		$	2,138,727		$	2,107,652
Book value per common share	$	18.93		$	18.45		$	17.85		$	17.25		$	16.96
Tangible book value per common share	$	17.04		$	16.13		$	15.75		$	15.13		$	14.81
Tangible common equity to tangible assets	9.3		%	9.2		%	8.9		%	8.9		%	8.8		%

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Regulatory Capital Ratios (unaudited)
	6/30/2019		3/31/2019		12/31/2018		9/30/2018		6/30/2018
Summit Financial Group, Inc.
CET1 Risk-based Capital	11.1	%	11.4	%	11.1	%	11.1	%	11.0	%
Tier 1 Risk-based Capital	12.1	%	12.5	%	12.2	%	12.2	%	12.1	%
Total Risk Based Capital	12.8	%	13.2	%	12.9	%	12.9	%	12.8	%
Tier 1 Leverage Ratio	10.4	%	10.2	%	10.1	%	10.1	%	9.9	%
Summit Community Bank, Inc.
CET1 Risk-based Capital	11.9	%	12.3	%	12.0	%	12.0	%	12.0	%
Tier 1 Risk-based Capital	11.9	%	12.3	%	12.0	%	12.0	%	12.0	%
Total Risk Based Capital	12.6	%	13.0	%	12.8	%	12.7	%	12.8	%
Tier 1 Leverage Ratio	10.2	%	10.0	%	10.0	%	9.9	%	9.8	%

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Loan Composition (unaudited)
Dollars in thousands	6/30/2019		3/31/2019		12/31/2018		9/30/2018		6/30/2018
Commercial	$	204,138	$	189,248	$	194,315	$	167,972	$	171,410
Mortgage warehouse lines	101,607		49,355		39,140		35,910		54,332
Commercial real estate
Owner occupied	262,901		256,671		257,256		261,290		256,827
Non-owner occupied	574,677		585,809		573,932		541,753		508,394
Construction and development
Land and development	67,769		64,192		68,833		71,819		74,018
Construction	46,975		36,040		24,731		25,703		25,711
Residential real estate
Non-jumbo	360,752		359,107		336,977		340,783		343,044
Jumbo	70,171		69,313		73,599		72,327		66,831
Home equity	81,373		80,370		80,910		82,018		82,409
Consumer	36,715		36,046		32,460		33,664		34,249
Other	11,924		12,045		12,899		12,452		12,728
Total loans, net of unearned fees	1,819,002		1,738,196		1,695,052		1,645,691		1,629,953
Less allowance for loan losses	13,152		13,132		13,047		12,944		12,580
Loans, net	$	1,805,850	$	1,725,064	$	1,682,005	$	1,632,747	$	1,617,373

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Deposit Composition (unaudited)
Dollars in thousands	6/30/2019		3/31/2019		12/31/2018		9/30/2018		6/30/2018
Core deposits
Non interest bearing checking	$	234,397	$	258,679	$	222,120	$	232,697	$	217,134
Interest bearing checking	588,948		560,800		523,257		505,411		472,041
Savings	301,403		310,646		284,173		301,269		322,940
Time deposits	365,275		359,141		316,914		316,941		322,801
Total core deposits	1,490,023		1,489,266		1,346,464		1,356,318		1,334,916
Brokered deposits	222,901		218,913		220,497		227,312		238,662
Other non-core time deposits	84,569		80,852		67,866		67,434		66,418
Total deposits	$	1,797,493	$	1,789,031	$	1,634,827	$	1,651,064	$	1,639,996

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Asset Quality Information (unaudited)
	For the Quarter Ended
Dollars in thousands	6/30/2019			3/31/2019			12/31/2018			9/30/2018			6/30/2018
Gross loan charge-offs	$	391		$	414		$	705		$	413		$	525
Gross loan recoveries	(111		)	(249		)	(307		)	(278		)	(97		)
Net loan charge-offs (recoveries)	$	280		$	165		$	398		$	135		$	428
Net loan charge-offs to average loans (annualized)	0.06		%	0.04		%	0.10		%	0.03		%	0.10		%
Allowance for loan losses	$	13,152		$	13,132		$	13,047		$	12,944		$	12,580
Allowance for loan losses as a percentage     of period end loans	0.72		%	0.76		%	0.77		%	0.79		%	0.77		%
Nonperforming assets:
Nonperforming loans
Commercial	$	948		$	729		$	935		$	801		$	954
Commercial real estate	6,544			2,981			3,239			5,090			3,238
Residential construction and development	66			24			3,198			3,200			3,233
Residential real estate	5,657			5,928			7,506			7,760			8,241
Consumer	160			182			147			118			110
Other	100			130			—			—			—
Total nonperforming loans	13,475			9,974			15,025			16,969			15,776
Foreclosed properties
Commercial real estate	1,544			1,841			1,762			1,762			1,818
Commercial construction and development	4,910			6,326			6,479			6,790			6,815
Residential construction and development	13,132			14,347			11,543			11,614			11,517
Residential real estate	1,804			1,879			1,648			1,851			1,456
Total foreclosed properties	21,390			24,393			21,432			22,017			21,606
Other repossessed assets	12			34			5			5			12
Total nonperforming assets	$	34,877		$	34,401		$	36,462		$	38,991		$	37,394
Nonperforming loans to period end loans	0.74		%	0.57		%	0.89		%	1.03		%	0.97		%
Nonperforming assets to period end assets	1.52		%	1.53		%	1.66		%	1.82		%	1.77		%

Loans Past Due 30-89 Days (unaudited)
	For the Quarter Ended
Dollars in thousands	6/30/2019		3/31/2019		12/31/2018		9/30/2018		6/30/2018
Commercial	$	375	$	264	$	219	$	607	$	319
Commercial real estate	1,719		4,128		161		988		546
Construction and development	235		179		194		393		264
Residential real estate	5,670		2,944		6,249		5,513		4,125
Consumer	234		432		593		345		337
Other	9		52		38		11		8
Total	$	8,242	$	7,999	$	7,454	$	7,857	$	5,599

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q2 2019 vs Q1 2019 vs Q2 2018 (unaudited)
	Q2 2019							Q1 2019							Q2 2018
	Average			Earnings/		Yield/		Average			Earnings /		Yield /		Average			Earnings /		Yield /
Dollars in thousands	Balances			Expense		Rate		Balances			Expense		Rate		Balances			Expense		Rate
ASSETS
Interest earning assets
Loans, net of unearned interest (1)
Taxable	$	1,749,032		$	24,184	5.55	%	$	1,712,286		$	22,907	5.43	%	$	1,618,726		$	20,820	5.16	%
Tax-exempt (2)	14,695			213		5.81	%	14,907			184		5.01	%	15,800			180		4.57	%
Securities
Taxable	203,049			1,607		3.17	%	195,932			1,687		3.49	%	160,632			1,240		3.10	%
Tax-exempt (2)	100,307			999		3.99	%	114,831			1,139		4.02	%	136,984			1,346		3.94	%
Interest bearing deposits other banks    and Federal funds sold	38,214			134		1.41	%	51,187			230		1.82	%	38,936			134		1.38	%
Total interest earning assets	2,105,297			27,137		5.17	%	2,089,143			26,147		5.08	%	1,971,078			23,720		4.83	%
Noninterest earning assets
Cash & due from banks	14,124							12,825							9,100
Premises & equipment	41,318							38,834							35,721
Other assets	109,642							112,910							108,073
Allowance for loan losses	(13,260		)					(13,309		)					(12,541		)
Total assets	$	2,257,121						$	2,240,403						$	2,111,431
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	575,240		$	1,731	1.21	%	$	556,766		$	1,663	1.21	%	$	457,016		$	901	0.79	%
Savings deposits	305,342			921		1.21	%	310,848			898		1.17	%	332,809			798		0.96	%
Time deposits	673,272			3,315		1.97	%	654,404			3,003		1.86	%	640,626			2,610		1.63	%
Short-term borrowings	187,120			1,397		2.99	%	200,297			1,472		2.98	%	187,475			1,242		2.66	%
Long-term borrowings and      subordinated debentures	20,317			255		5.03	%	20,321			259		5.17	%	52,147			573		4.41	%
Total interest bearing liabilities	1,761,291			7,619		1.74	%	1,742,636			7,295		1.70	%	1,670,073			6,124		1.47	%
Noninterest bearing liabilities
Demand deposits	241,811							248,354							219,134
Other liabilities	19,750							18,322							15,608
Total liabilities	2,022,852							2,009,312							1,904,815
Shareholders' equity - common	234,269							231,091							206,616
Total liabilities and   shareholders' equity	$	2,257,121						$	2,240,403						$	2,111,431
NET INTEREST EARNINGS				$	19,518						$	18,852						$	17,596
NET INTEREST MARGIN						3.72	%						3.66	%						3.58	%
(1) For purposes of this table, nonaccrual loans are included in average loan balances.
(2) Interest income on tax-exempt securities and loans has been adjusted assuming a Federal tax rate of 21% for all periods presented. The tax equivalent adjustment resulted in an increase in interest income of $255,000, $279,000 and $321,000 for Q2 2019, Q1 2019 and Q2 2018, respectively.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
YTD 2019 vs YTD 2018 (unaudited)
	YTD 2019							YTD 2018
	Average			Earnings /		Yield /		Average			Earnings /		Yield /
Dollars in thousands	Balances			Expense		Rate		Balances			Expense		Rate
ASSETS
Interest earning assets
Loans, net of unearned interest (1)
Taxable	$	1,730,801		$	47,090	5.49	%	$	1,615,289		$	41,043	5.12	%
Tax-exempt (2)	14,801			397		5.41	%	16,052			362		4.55	%
Securities
Taxable	199,759			3,292		3.32	%	176,091			2,612		2.99	%
Tax-exempt (2)	107,586			2,138		4.01	%	134,658			2,635		3.95	%
Interest bearing deposits other banks    and Federal funds sold	44,910			365		1.64	%	39,294			274		1.41	%
Total interest earning assets	2,097,857			53,282		5.12	%	1,981,384			46,926		4.78	%
Noninterest earning assets
Cash & due from banks	13,005							9,528
Premises & equipment	39,877							35,156
Other assets	111,334							107,603
Allowance for loan losses	(13,287		)					(12,639		)
Total assets	$	2,248,786						$	2,121,032
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	566,183		$	3,395	1.21	%	$	440,149		$	1,533	0.70	%
Savings deposits	307,990			1,819		1.19	%	339,546			1,515		0.90	%
Time deposits	663,853			6,317		1.92	%	631,634			4,810		1.54	%
Short-term borrowings	193,672			2,869		2.99	%	215,425			2,647		2.48	%
Long-term borrowings and      subordinated debentures	20,319			514		5.10	%	58,706			1,259		4.32	%
Total interest bearing liabilities	1,752,017			14,914		1.72	%	1,685,460			11,764		1.41	%
Noninterest bearing liabilities
Demand deposits	244,984							215,031
Other liabilities	19,096							16,188
Total liabilities	2,016,097							1,916,679
Shareholders' equity - common	232,689							204,353
Total liabilities and   shareholders' equity	$	2,248,786						$	2,121,032
NET INTEREST EARNINGS				$	38,368						$	35,162
NET INTEREST MARGIN						3.69	%						3.58	%
(1) For purposes of this table, nonaccrual loans are included in average loan balances.
(2) Interest income on tax-exempt securities and loans has been adjusted assuming a Federal tax rate of 21%. The tax equivalent adjustment resulted in an increase in interest income of $532,000 and $629,000 for the YTD 2019 and YTD 2018, respectively.