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): October 22, 2020

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)	(IRS Employer
incorporation or organization)		Identification No.)

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

(304)530-1000

(Registrant's telephone number, including area code)

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))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common	SMMF	NASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in 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. o

Section 2 - Financial Information

Item 2.02. Results of Operations and Financial Condition.

On October 22, 2020, Summit Financial Group, Inc. (“Summit”) issued a News Release announcing its earnings for the three and nine months ended September 30, 2020. 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 October 22, 2020

SIGNATURES

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: October 22, 2020	By: /s/ Julie R. Markwood
	Julie R. Markwood
	Senior Vice President and Chief Accounting Officer

EX-99

EXHIBIT 99

FOR RELEASE 6:00 AM ET, October 22, 2020

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

Telephone:    (304) 530-0552

Email:        rtissue@summitfgi.com

SUMMIT FINANCIAL GROUP REPORTS 37% INCREASE IN Q3 2020 EPS VERSUS Q2 2020

Q3 2020 Diluted EPS $0.74 compared to $0.54 for Q2 2020 and $0.65 for Q3 2019

MOOREFIELD, WV – October 22, 2020 (GLOBE NEWSWIRE) – Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ: SMMF) today reported third quarter 2020 net income of $9.62 million, or $0.74 per diluted share. In comparison, earnings for second quarter 2020 were $6.95 million, or $0.54 per diluted share, and for third quarter 2019 were $8.06 million, or $0.65 per diluted share.

For the nine months ended September 30, 2020, Summit recorded net income of $21.1 million, or $1.62 per diluted share, compared with $23.7 million, or $1.88 per diluted share, for the comparable 2019 nine-month period, representing a decrease of 11.1 percent or 13.8 percent per diluted share.

“I am very pleased to report Summit continues to rise to meet the unique challenges posed by 2020 and deliver well for our stakeholders,” commented H. Charles Maddy, III, President and Chief Executive Officer. “We posted another quarter of strong core operating performance, highlighted by record levels of net revenue resulting from continuing good growth in net interest income, a relatively stable net interest margin and well-controlled noninterest expenses. These results validate not only our core strategies but also our ability to remain disciplined in trying times. This is a tribute to our management and employees as they continue to put forth consistent, high levels of client service assisting our clients and communities.”

Highlights for Q3 2020

•Net interest income increased 29.5 percent (annualized) compared to Q2 2020 and increased 27.5 percent versus the same period in 2019, primarily due to loan growth and lower funding costs.

•Net interest margin in Q3 2020 decreased 4 basis points to 3.64 percent as compared to the linked quarter, as yield on interest earning assets and cost of deposits and other funding each declined 16 basis points.

•Excluding mortgage warehouse lines of credit, loan balances increased $40.8 million during the quarter.

•Provision for credit losses of $3.25 million in Q3 2020 compared to $3.00 million in Q2 2020 and $500,000 in Q3 2019; our increased credit provisions in 2020 are principally due to the estimated potential future economic impact of the COVID-19 crisis.Since year end 2019, Summit’s allowances for credit losses on loans and unfunded loan commitments have increased a combined 151 percent.

•Efficiency ratio improved to 48.95 percent compared to 51.97 percent in the linked quarter and 52.91 percent for Q3 2019.

•Net foreclosed properties expenses increased to $607,000 in Q3 2020 compared to $240,000 in Q2 2020 and $305,000 in Q3 2019; this is primarily the result of write downs of foreclosed properties to estimated fair values totaling $555,000 in Q3 2020 compared to $218,000 in Q2 2020 and $133,000 in Q3 2019, while realized net gains on sales of foreclosed properties were $44,000 and $61,000 during Q3 and Q2 2020, respectively and realized net losses of $66,000 during Q3 2019.

•Realized $1.52 million securities gains in Q3 2020 compared to no realized securities gains or losses in the linked quarter and realized securities gains of $453,000 in Q3 2019.

•Merger expenses were $28,000 in Q3 2020 compared to $637,000 in the linked quarter, and $74,000 in Q3 2019.

•Nonperforming assets as a percentage of total assets improved to 0.94 percent compared to 1.07 percent for the linked quarter and 1.28 percent at year end 2019.

•We announced our entering into a definitive merger agreement to acquire WinFirst Financial Corp. (“WinFirst”) and its wholly-owned subsidiary, WinFirst Bank, headquartered in Winchester, Kentucky.

Merger & Acquisition Activity

On September 28, 2020, Summit announced the signing of a definitive merger agreement between Summit Community Bank, Inc., a wholly-owned subsidiary of Summit, and WinFirst Corp., pursuant to which Summit Community Bank will acquire all of the outstanding shares of common stock of WinFirst in exchange for cash.This transaction is expected to close by year end 2020.WinFirst, a savings and loan holding company reported approximately $146 million in assets as of September 30, 2020 and operates two community banking offices in Winchester, Kentucky through its subsidiary, WinFirst Bank.Following the consummation of the merger, Summit Community Bank expects to consolidate WinFirst Bank with Summit Community Bank.

Further, on April 24, 2020, Summit Community Bank completed its acquisition of four branch banking offices located in the Eastern Panhandle of West Virginia from MVB Bank, Inc., a bank subsidiary of MVB Financial Corp. (NASDAQ: MVBF). Summit assumed approximately $195.0 million in deposits and acquired approximately $35.3 million in loans in conjunction with this purchase. Also, Summit completed its acquisition of Cornerstone Financial Services, Inc. (“Cornerstone”) and its subsidiary, Cornerstone Bank, headquartered in West Union, West Virginia on January 1, 2020. At consummation, Cornerstone had total assets of $195.0 million, loans of $39.8 million, and deposits of $173.0 million.

Accordingly, the results of operations of Cornerstone and acquired MVB Bank branches are included in Summit’s consolidated results of operations from the dates of acquisition, and

therefore Summit’s third quarter and first nine months of 2020 results reflect increased levels of average balances, income and expenses compared to comparable prior year periods.

Results from Operations

Total revenue for third quarter 2020, consisting of net interest income and noninterest income, increased 33.6 percent to $31.0 million, which included $1.52 million realized securities gains, compared to $23.2 million for third quarter 2019. For the year-to-date period ended September 30, 2020, total revenue was $83.6 million compared to $72.1 million for the same period of 2019, representing a 16.0 percent increase primarily as a result of higher net interest income.

For the third quarter of 2020, net interest income was $24.8 million, an increase of 27.5 percent from the $19.4 million reported in the prior-year third quarter and a 7.4 percent increase compared to the linked quarter. The net interest margin for third quarter 2020 was 3.64 percent compared to 3.68 percent for the linked quarter and 3.63 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 3.59 percent for Q3 2020, 3.61 percent for Q2 2020 and 3.59 percent for Q3 2019.

Noninterest income, consisting primarily of service fee income from community banking activities and trust and wealth management fees, for third quarter 2020 was $6.21 million compared to $3.60 million for the linked quarter and $3.76 million for the comparable period of 2019, which included $1.52 million realized securities gains. Excluding realized securities gains, noninterest income was $4.69 million for third quarter 2020 and $3.3 million for third quarter 2019.Mortgage origination revenue increased to $780,000 for Q3 2020 compared to $77,000 in Q3 2019 due to higher volumes of secondary market loans driven primarily by historically low interest rates.Also included in Q3 2020 noninterest income is one-time income approximating $475,000 earned in conjunction with the recent investment in $9.3 million of annuities.

We recorded a $3.25 million provision for credit losses during third quarter 2020 compared to $3.0 million for the linked quarter and $500,000 in Q3 2019. As result of the adoption of CECL, the provision for credit losses now represents an estimate of the full amount of expected credit losses relative to loans, whereas under the pre-CECL incurred loss accounting method, the provision was only an estimate of probable existing loan losses.

Q3 2020 total noninterest expense increased 21.1 percent to $15.5 million compared to $12.8 million for the prior-year third quarter.This year-over-year increase resulted primarily due to the acquisition of Cornerstone and MVB Bank branches during 2020. Additionally, other significant factors contributing to the changes in total noninterest expense period over period are as follows:higher FDIC premiums, as we fully utilized in prior periods our FDIC’s Small Bank Assessment Credits, increased write downs of foreclosed properties to estimated fair values totaling $555,000 in Q3 2020 compared to $218,000 in Q2 2020 and $133,000 in Q3 2019 and deferred director compensation expense totaling $325,000 in Q3 2020, compared to $6,000 in Q2 2020 and $432,000 in Q3 2019.Also, merger expenses have declined to $28,000 in Q3 2020 compared to $637,000 in Q2 2020 and $74,000 in Q3 2019.

Balance Sheet

At September 30, 2020, total assets were $2.95 billion, an increase of $543.4 million, or 22.6 percent since December 31, 2019. Total loans, net of unearned fees and allowance for loan losses, were $2.22 billion at September 30, 2020, up $322.0 million, or 16.9 percent, from the $1.90 billion reported at year-end 2019.Loans, excluding mortgage warehouse lines of credit, increased $40.8 million during the quarter, or 8.3 percent (annualized).Loans, excluding mortgage warehouse lines of credit, PPP loans and acquired Cornerstone and MVB loans, have increased $44.4 million, or 3.3 percent (on an annualized basis) since year-end 2019.

At September 30, 2020, core deposits were $2.30 billion, an increase of $618.5 million, or 36.8 percent, since year end 2019. During the first nine months of 2020, checking deposits increased $396.6 million or 44.5 percent, core time deposits grew by $41.4 million or 11.1 percent and savings deposits increased $180.5 million or 43.2 percent.Excluding acquired deposits (of both Cornerstone and MVB branches), core deposits have increased $250.5 million, or 14.9 percent, since year end 2019.

Shareholders’ equity was $272.0 million as of September 30, 2020 compared to $247.8 million at December 31, 2019.In conjunction with the acquisition of Cornerstone on January 1, 2020, Summit issued 570,000 shares of common stock valued at $15.4 million to the former Cornerstone shareholders.

Tangible book value per common share increased to $17.31 at September 30, 2020 compared to $16.63 at June 30, 2020, although it decreased from $18.11 at December 31, 2019 as result of the somewhat dilutive impacts of the Cornerstone and MVB Branches acquisitions. Summit had 12,932,415 outstanding common shares at Q3 2020 quarter end compared to 12,408,542 at year end 2019.

As announced in Q1 2020, the Board of Directors authorized the open market repurchase of up to 750,000 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. During Q3 2020, no shares of our common stock were repurchased under the Plan.

Asset Quality

We incurred net loan charge-offs of $1,014,000 in third quarter 2020 (0.18 percent of average loans annualized), which included an $880,000 charge-off of a commercial real estate relationship which had previously been fully reserved and exhibited weakness prior to the COVID-19 pandemic, compared to second quarter 2020 net loan recoveries of $51,000 while $3.20 million and $2.51 million were added to the allowance for loan credit losses through the provision for credit losses during Q3 2020 and Q2 2020, respectively. The allowance for loan credit losses stood at 1.30 percent of total loans as of September 30, 2020, compared to 0.68 percent at year-end 2019.

Similarly, during Q3 2020 and Q2 2020, we also added $48,000 and $493,000, respectively, to the allowance for credit losses on unfunded loan commitments through the provision for credit losses.

As of September 30, 2020, nonperforming assets (“NPAs”), consisting of nonperforming loans, foreclosed properties and repossessed assets, totaled $27.8 million, or 0.94 percent of assets. This compares to $30.5 million, or 1.07 percent of assets at the linked quarter-end and $33.7 million, or 1.45 percent of assets at the end of Q3 2019.

Our actions to identify and assess our COVID-19 related credit exposures by asset classes and borrower types continue, as does our loan modification program to assist both consumer and business borrowers that are experiencing financial hardships due to COVID-19 related challenges. Accordingly, the following tables summarize the aggregate balances of loans the Company has modified as result of COVID-19 as of September 30, 2020 and June 30, 2020 classified by types of loans and impacted borrowers.

			Loan Balances Modified Due to COVID-19 as of 9/30/20
Dollars in thousands	Total Loan Balance as of 9/30/20		Loans Modified to Interest Only Payments		Loans Modified to Payment Deferral		Total Loans Modified		Percentage of Loans Modified
Hospitality Industry	$	120,324	$	36,803	$	11,466	$	48,269	40.1	%
Non-Owner Occupied Retail Stores	108,326		19,497		—		19,497		18.0	%
Owner-Occupied Retail Stores	100,926		1,601		1,409		3,010		3.0	%
Restaurants	7,968		—		—		—		—	%
Oil & Gas Industry	24,404		914		—		914		3.7	%
Other Commercial Loans	1,084,385		40,846		—		40,846		3.8	%
Total Commercial Loans	1,446,333		99,661		12,875		112,536		7.8	%
Residential 1-4 Family Personal	263,315		195		991		1,186		0.5	%
Residential 1-4 Family Rentals	178,529		3,567		336		3,903		2.2	%
Home Equity Loans	82,991		—		—		—		—	%
Total Residential Real Estate Loans	524,835		3,762		1,327		5,089		1.0	%
Consumer Loans	34,655		34		22		56		0.2	%
Mortgage Warehouse Loans	243,730		—		—		—		—	%
Credit Cards and Overdrafts	2,251		—		—		—		—	%
Total Loans	$	2,251,804	$	103,457	$	14,224	$	117,681	5.2	%

			Loan Balances Modified Due to COVID-19 as of 6/30/20
Dollars in thousands	Total Loan Balance as of 6/30/20		Loans Modified to Interest Only Payments		Loans Modified to Payment Deferral		Total Loans Modified		Percentage of Loans Modified
Hospitality Industry	$	119,204	$	55,849	$	43,030	$	98,879	82.9	%
Non-Owner Occupied Retail Stores	109,078		38,354		13,802		52,156		47.8	%
Owner-Occupied Retail Stores	119,794		21,956		9,372		31,328		26.2	%
Restaurants	8,126		2,392		1,877		4,269		52.5	%
Oil & Gas Industry	31,977		914		4,378		5,292		16.5	%
Other Commercial Loans	1,005,740		88,285		34,634		122,919		12.2	%
Total Commercial Loans	1,393,919		207,750		107,093		314,843		22.6	%
Residential 1-4 Family Personal	267,170		3,933		13,404		17,337		6.5	%
Residential 1-4 Family Rentals	180,415		20,348		6,032		26,380		14.6	%
Home Equity Loans	88,929		—		569		569		0.6	%
Total Residential Real Estate Loans	536,514		24,281		20,005		44,286		8.3	%
Consumer Loans	34,640		595		605		1,200		3.5	%
Mortgage Warehouse Loans	252,472		—		—		—		—	%
Credit Cards and Overdrafts	2,162		—		—		—		—	%
Total Loans	$	2,219,707	$	232,626	$	127,703	$	360,329	16.2	%

About the Company

Summit Financial Group, Inc. is a $2.95 billion financial holding company headquartered in Moorefield, West Virginia. Summit provides community banking services primarily in the Eastern Panhandle, Southern and North Central regions of West Virginia and the Northern, Shenandoah Valley and Southwestern regions of Virginia, through its bank subsidiary, Summit Community Bank, Inc., which operates 41 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: the effect of the COVID-19 crisis, including the negative impacts and disruptions on the communities we serve, and the domestic and global economy, which may have an adverse effect on our business; current and future economic and market conditions, including the effects of declines in housing prices, high unemployment rates, U.S. fiscal debt, budget and tax matters, geopolitical matters, and any slowdown in global economic growth; fiscal and monetary policies of the Federal Reserve; future provisions for credit losses on loans and debt securities; changes in nonperforming assets; changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; the successful integration of operations of our acquisitions; 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) -- Q3 2020 vs Q3 2019
	For the Quarter Ended				Percent
Dollars in thousands	9/30/2020		9/30/2019		Change
Statements of Income
Interest income
Loans, including fees	$	26,807	$	24,940	7.5	%
Securities	2,382		2,184		9.1	%
Other	57		125		-54.4	%
Total interest income	29,246		27,249		7.3	%
Interest expense
Deposits	3,552		6,214		-42.8	%
Borrowings	928		1,615		-42.5	%
Total interest expense	4,480		7,829		-42.8	%
Net interest income	24,766		19,420		27.5	%
Provision for credit losses	3,250		500		n/m
Net interest income after provision for credit losses	21,516		18,920		13.7	%
Noninterest income
Insurance commissions	44		40		10.0	%
Trust and wealth management fees	622		632		-1.6	%
Mortgage origination revenue	780		77		n/m
Service charges on deposit accounts	1,138		1,312		-13.3	%
Bank card revenue	1,237		924		33.9	%
Realized securities gains	1,522		453		236.0	%
Bank owned life insurance and annuity income	795		247		221.9	%
Other income	69		74		-6.8	%
Total noninterest income	6,207		3,759		65.1	%
Noninterest expense
Salaries and employee benefits	8,108		7,044		15.1	%
Net occupancy expense	1,057		799		32.3	%
Equipment expense	1,474		1,296		13.7	%
Professional fees	364		388		-6.2	%
Advertising and public relations	145		177		-18.1	%
Amortization of intangibles	412		404		2.0	%
FDIC premiums	320		—		n/a
Bank card expense	589		455		29.5	%
Foreclosed properties expense, net	607		305		99.0	%
Merger-related expenses	28		74		-62.2	%
Other expenses	2,405		1,864		29.0	%
Total noninterest expense	15,509		12,806		21.1	%
Income before income taxes	12,214		9,873		23.7	%
Income tax expense	2,594		1,812		43.2	%
Net income	$	9,620	$	8,061	19.3	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary (unaudited) -- Q3 2020 vs Q3 2019
	For the Quarter Ended						Percent
	9/30/2020			9/30/2019			Change
Per Share Data
Earnings per common share
Basic	$	0.74		$	0.65		13.8	%
Diluted	$	0.74		$	0.65		13.8	%
Cash dividends	$	0.17		$	0.15		13.3	%
Dividend payout ratio	22.9		%	23.0		%	-0.4	%
Average common shares outstanding
Basic	12,922,158			12,412,982			4.1	%
Diluted	12,949,584			12,467,777			3.9	%
Common shares outstanding at period end	12,932,415			12,400,804			4.3	%
Performance Ratios
Return on average equity	14.38		%	13.51		%	6.4	%
Return on average tangible equity	18.12		%	15.55		%	16.5	%
Return on average assets	1.31		%	1.41		%	-7.1	%
Net interest margin (A)	3.64		%	3.63		%	0.3	%
Efficiency ratio (B)	48.95		%	52.91		%	-7.5	%
NOTE (A) - Presented on a tax-equivalent basis assuming a federal tax rate of 21%.
NOTE (B) - Computed on a tax equivalent basis excluding merger-related expenses, gains/losses on sales of assets, write-downs of OREO properties to fair value and amortization of intangibles.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Nine Month Performance Summary (unaudited) -- 2020 vs 2019
	For the Nine Months Ended				Percent
Dollars in thousands	9/30/2020		9/30/2019		Change
Statements of Income
Interest income
Loans, including fees	$	77,666	$	72,344	7.4	%
Securities	6,944		7,166		-3.1	%
Other	216		490		-55.9	%
Total interest income	84,826		80,000		6.0	%
Interest expense
Deposits	13,088		17,745		-26.2	%
Borrowings	2,463		4,998		-50.7	%
Total interest expense	15,551		22,743		-31.6	%
Net interest income	69,275		57,257		21.0	%
Provision for credit losses	11,500		1,050		n/m
Net interest income after provision for credit losses	57,775		56,207		2.8	%
Noninterest income
Insurance commissions	75		1,821		-95.9	%
Trust and wealth management fees	1,870		1,830		2.2	%
Mortgage origination revenue	1,636		392		n/m
Service charges on deposit accounts	3,283		3,716		-11.7	%
Bank card revenue	3,257		2,631		23.8	%
Realized securities gains	2,560		1,535		66.8	%
Gain on sale Summit Insurance Services, LLC	—		1,906		n/a
Bank owned life insurance income and annuity income	1,334		733		82.0	%
Other income	292		235		24.3	%
Total noninterest income	14,307		14,799		-3.3	%
Noninterest expense
Salaries and employee benefits	23,709		21,966		7.9	%
Net occupancy expense	2,917		2,602		12.1	%
Equipment expense	4,263		3,694		15.4	%
Professional fees	1,168		1,266		-7.7	%
Advertising and public relations	389		484		-19.6	%
Amortization of intangibles	1,251		1,300		-3.8	%
FDIC premiums	595		88		576.1	%
Bank card expense	1,652		1,367		20.8	%
Foreclosed properties expense, net	1,815		2,236		-18.8	%
Merger-related expenses	1,453		519		180.0	%
Other expenses	6,493		6,473		0.3	%
Total noninterest expense	45,705		41,995		8.8	%
Income before income taxes	26,377		29,011		-9.1	%
Income tax expense	5,302		5,293		0.2	%
Net income	$	21,075	$	23,718	-11.1	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Nine Month Performance Summary (unaudited) -- 2020 vs 2019
	For the Nine Months Ended						Percent
	9/30/2020			9/30/2019			Change
Per Share Data
Earnings per common share
Basic	$	1.63		$	1.89		-13.8	%
Diluted	$	1.62		$	1.88		-13.8	%
Cash dividends	$	0.51		$	0.44		15.9	%
Dividend payout ratio	31.4		%	23.2		%	35.3	%
Average common shares outstanding
Basic	12,934,401			12,555,411			3.0	%
Diluted	12,971,792			12,614,382			2.8	%
Common shares outstanding at period end	12,932,415			12,400,804			4.3	%
Performance Ratios
Return on average equity	10.72		%	13.48		%	-20.5	%
Return on average tangible equity	13.36		%	15.80		%	-15.4	%
Return on average assets	1.04		%	1.40		%	-25.7	%
Net interest margin (A)	3.69		%	3.67		%	0.5	%
Efficiency ratio (B)	50.70		%	55.34		%	-8.4	%
NOTE (A) - Presented on a tax-equivalent basis assuming a federal tax rate of 21%.
NOTE (B) - Computed on a tax equivalent basis excluding merger-related expenses 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	9/30/2020		6/30/2020		3/31/2020		12/31/2019		9/30/2019
Statements of Income
Interest income
Loans, including fees	$	26,807	$	25,624	$	25,235	$	24,772	$	24,940
Securities	2,382		2,253		2,310		2,195		2,184
Other	57		60		98		105		125
Total interest income	29,246		27,937		27,643		27,072		27,249
Interest expense
Deposits	3,552		4,186		5,351		5,952		6,214
Borrowings	928		685		849		1,292		1,615
Total interest expense	4,480		4,871		6,200		7,244		7,829
Net interest income	24,766		23,066		21,443		19,828		19,420
Provision for credit losses	3,250		3,000		5,250		500		500
Net interest income after provision for credit losses	21,516		20,066		16,193		19,328		18,920
Noninterest income
Insurance commissions	44		24		7		90		40
Mortgage origination revenue	780		641		214		379		77
Trust and wealth management fees	622		582		665		734		632
Service charges on deposit accounts	1,138		882		1,263		1,377		1,312
Bank card revenue	1,237		1,087		933		906		924
Realized securities gains (losses)	1,522		—		1,038		403		453
Bank owned life insurance and annuity income	795		275		264		310		247
Other income	69		107		118		205		74
Total noninterest income	6,207		3,598		4,502		4,404		3,759
Noninterest expense
Salaries and employee benefits	8,108		7,930		7,672		7,099		7,044
Net occupancy expense	1,057		977		883		815		799
Equipment expense	1,474		1,360		1,429		1,278		1,296
Professional fees	364		417		387		412		388
Advertising and public relations	145		93		152		214		177
Amortization of intangibles	412		410		429		401		404
FDIC premiums	320		110		165		—		—
Bank card expense	589		560		503		454		455
Foreclosed properties expense, net	607		240		966		262		305
Merger-related expenses	28		637		788		98		74
Other expenses	2,405		2,463		1,625		2,126		1,864
Total noninterest expense	15,509		15,197		14,999		13,159		12,806
Income before income taxes	12,214		8,467		5,696		10,573		9,873
Income tax expense	2,594		1,518		1,190		2,424		1,812
Net income	$	9,620	$	6,949	$	4,506	$	8,149	$	8,061

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Five Quarter Performance Summary (unaudited)
	For the Quarter Ended
	9/30/2020			6/30/2020			3/31/2020			12/31/2019			9/30/2019
Per Share Data
Earnings per common share
Basic	$	0.74		$	0.54		$	0.35		$	0.66		$	0.65
Diluted	$	0.74		$	0.54		$	0.35		$	0.65		$	0.65
Cash dividends	$	0.17		$	0.17		$	0.17		$	0.15		$	0.15
Dividend payout ratio	22.9		%	31.7		%	49.1		%	22.3		%	23.0		%
Average common shares outstanding
Basic	12,922,158			12,911,979			12,975,429			12,400,932			12,412,982
Diluted	12,949,584			12,943,804			13,028,409			12,458,702			12,467,777
Common shares outstanding at period end	12,932,415			12,922,045			12,920,244			12,408,542			12,400,804
Performance Ratios
Return on average equity	14.38		%	10.75		%	6.92		%	13.32		%	13.51		%
Return on average tangible equity	18.12		%	13.57		%	8.55		%	15.25		%	15.55		%
Return on average assets	1.31		%	1.02		%	0.73		%	1.39		%	1.41		%
Net interest margin (A)	3.64		%	3.68		%	3.76		%	3.63		%	3.63		%
Efficiency ratio (B)	48.95		%	51.97		%	51.41		%	52.25		%	52.91		%
NOTE (A) - Presented on a tax-equivalent basis assuming a federal tax rate of 21%.
NOTE (B) - Computed on a tax equivalent basis excluding merger-related expenses, 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	9/30/2020			6/30/2020			3/31/2020			12/31/2019			9/30/2019
Assets
Cash and due from banks	$	16,257		$	16,572		$	18,633		$	28,137		$	12,374
Interest bearing deposits other banks	92,729			26,218			22,821			33,751			40,296
Securities available for sale	297,989			322,539			305,045			276,355			265,347
Securities held to maturity	91,600			80,497			—			—			—
Loans, net	2,222,450			2,192,541			1,982,661			1,900,425			1,838,891
Property held for sale	17,831			17,954			18,287			19,276			20,979
Premises and equipment, net	52,880			51,847			47,078			44,168			43,592
Goodwill and other intangible assets	48,101			48,513			34,132			23,022			23,182
Cash surrender value of life insurance policies and annuities	57,029			55,315			46,497			43,603			43,216
Other assets	49,996			49,355			38,168			34,755			35,732
Total assets	$	2,946,862		$	2,861,351		$	2,513,322		$	2,403,492		$	2,323,609
Liabilities and Shareholders' Equity
Deposits	$	2,451,891		$	2,451,769		$	2,044,914		$	1,913,237		$	1,832,285
Short-term borrowings	140,145			90,945			161,745			199,345			206,694
Long-term borrowings and subordinated debentures	50,292			20,297			20,301			20,306			20,311
Other liabilities	32,571			34,909			30,337			22,840			21,897
Shareholders' equity	271,963			263,431			256,025			247,764			242,422
Total liabilities and shareholders' equity	$	2,946,862		$	2,861,351		$	2,513,322		$	2,403,492		$	2,323,609
Book value per common share	$	21.03		$	20.39		$	19.82		$	19.97		$	19.55
Tangible book value per common share	$	17.31		$	16.63		$	17.17		$	18.11		$	17.68
Tangible common equity to tangible assets	7.7		%	7.6		%	9.0		%	9.4		%	9.5		%

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Regulatory Capital Ratios (unaudited)
	9/30/2020		6/30/2020		3/31/2020		12/31/2019		9/30/2019
Summit Financial Group, Inc.
CET1 Risk-based Capital	9.9	%	9.7	%	10.8	%	11.1	%	11.2	%
Tier 1 Risk-based Capital	10.7	%	10.5	%	11.7	%	12.1	%	12.2	%
Total Risk Based Capital	12.9	%	11.3	%	12.5	%	12.7	%	12.8	%
Tier 1 Leverage	8.7	%	9.0	%	10.2	%	10.5	%	10.4	%
Summit Community Bank, Inc.
CET1 Risk-based Capital	11.8	%	10.5	%	11.7	%	12.1	%	12.2	%
Tier 1 Risk-based Capital	11.8	%	10.5	%	11.7	%	12.1	%	12.2	%
Total Risk Based Capital	12.7	%	11.4	%	12.5	%	12.7	%	12.9	%
Tier 1 Leverage	9.6	%	9.0	%	10.2	%	10.6	%	10.4	%

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Loan Composition (unaudited)
Dollars in thousands	9/30/2020		6/30/2020		3/31/2020		12/31/2019		9/30/2019
Commercial	$	338,685	$	311,755	$	224,659	$	207,138	$	199,391
Mortgage warehouse lines	243,730		252,472		166,826		126,237		145,039
Commercial real estate
Owner occupied	312,502		336,143		331,486		276,218		255,828
Non-owner occupied	618,624		593,168		580,619		629,206		567,670
Construction and development
Land and development	97,343		92,706		92,332		84,112		69,589
Construction	66,878		48,115		43,121		37,523		56,255
Residential real estate
Non-jumbo	368,008		371,225		378,540		354,963		359,399
Jumbo	73,836		76,360		64,944		70,947		69,815
Home equity	82,991		88,929		75,170		76,568		78,493
Consumer	35,905		35,781		36,611		36,470		36,982
Other	13,302		13,053		12,961		14,117		13,371
Total loans, net of unearned fees	2,251,804		2,219,707		2,007,269		1,913,499		1,851,832
Less allowance for credit losses	29,354		27,166		24,608		13,074		12,941
Loans, net	$	2,222,450	$	2,192,541	$	1,982,661	$	1,900,425	$	1,838,891

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Deposit Composition (unaudited)
Dollars in thousands	9/30/2020		6/30/2020		3/31/2020		12/31/2019		9/30/2019
Core deposits
Non interest bearing checking	$	420,070	$	443,190	$	337,446	$	260,553	$	241,999
Interest bearing checking	867,442		830,258		648,214		630,352		602,059
Savings	598,564		561,029		457,010		418,096		305,891
Time deposits	414,542		422,286		384,062		373,125		371,178
Total core deposits	2,300,618		2,256,763		1,826,732		1,682,126		1,521,127
Brokered deposits	64,120		90,279		111,156		150,554		227,369
Other non-core time deposits	87,153		104,727		107,026		80,557		83,789
Total deposits	$	2,451,891	$	2,451,769	$	2,044,914	$	1,913,237	$	1,832,285

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Asset Quality Information (unaudited)
	For the Quarter Ended
Dollars in thousands	9/30/2020			6/30/2020			3/31/2020			12/31/2019			9/30/2019
Gross loan charge-offs	$	1,259		$	218		$	698		$	455		$	843
Gross loan recoveries	(245)			(269)			(197)			(88)			(132)
Net loan charge-offs/(recoveries)	$	1,014		$	(51)		$	501		$	367		$	711
Net loan charge-offs to average loans (annualized)	0.18		%	-0.01		%	0.10		%	0.08		%	0.16		%
Allowance for loan credit losses	$	29,354		$	27,166		$	24,608		$	13,074		$	12,941
Allowance for loan credit losses as a percentage of period end loans	1.30		%	1.22		%	1.23		%	0.68		%	0.70		%
Allowance for credit losses on unfunded loan commitments	$	3.525		$	3,477		$	2,984		$	—		$	—
Nonperforming assets:
Nonperforming loans
Commercial	$	553		$	754		$	560		$	764		$	835
Commercial real estate	4,313			5,822			5,644			5,800			7,037
Residential construction and development	2			14			11			326			191
Residential real estate	5,104			5,873			4,343			4,404			4,461
Consumer	31			29			65			116			115
Other	—			35			100			100			100
Total nonperforming loans	10,003			12,527			10,723			11,510			12,739
Foreclosed properties
Commercial real estate	2,500			1,774			1,866			1,930			1,514
Commercial construction and development	4,154			4,511			4,511			4,601			4,909
Residential construction and development	10,330			10,645			10,774			11,169			12,847
Residential real estate	847			1,024			1,136			1,576			1,709
Total foreclosed properties	17,831			17,954			18,287			19,276			20,979
Other repossessed assets	—			—			49			17			16
Total nonperforming assets	$	27,834		$	30,481		$	29,059		$	30,803		$	33,734
Nonperforming loans to period end loans	0.44		%	0.56		%	0.53		%	0.60		%	0.69		%
Nonperforming assets to period end assets	0.94		%	1.07		%	1.16		%	1.28		%	1.45		%
Troubled debt restructurings
Performing	$	22,232		$	22,117		$	22,966		$	23,339		$	23,420
Nonperforming	2,988			3,003			2,831			2,337			2,443
Total troubled debt restructurings	$	25,220		$	25,120		$	25,797		$	25,676		$	25,863

Loans Past Due 30-89 Days (unaudited)
	For the Quarter Ended
Dollars in thousands	9/30/2020		6/30/2020		3/31/2020		12/31/2019		9/30/2019
Commercial	$	147	$	196	$	160	$	111	$	390
Commercial real estate	1,740		1,231		2,106		1,196		312
Construction and development	422		8		53		236		65
Residential real estate	4,464		2,763		5,178		4,775		5,573
Consumer	160		164		222		269		365
Other	2		3		7		25		63
Total	$	6,935	$	4,365	$	7,726	$	6,612	$	6,768

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q3 2020 vs Q2 2020 vs Q3 2019 (unaudited)
	Q3 2020						Q2 2020						Q3 2019
	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	$	2,251,722	$	26,656	4.71	%	$	2,118,158	$	25,466	4.84	%	$	1,813,555	$	24,786	5.42	%
Tax-exempt (2)	16,245		191		4.68	%	17,244		200		4.66	%	15,903		195		4.86	%
Securities
Taxable	261,231		1,445		2.20	%	248,792		1,453		2.35	%	203,288		1,566		3.06	%
Tax-exempt (2)	150,350		1,186		3.17	%	120,385		1,012		3.38	%	79,387		782		3.91	%
Interest bearing deposits other banks and Federal funds sold	60,639		57		0.37	%	41,776		60		0.58	%	35,214		125		1.41	%
Total interest earning assets	2,740,187		29,535		4.29	%	2,546,355		28,191		4.45	%	2,147,347		27,454		5.07	%
Noninterest earning assets
Cash & due from banks	16,603						16,672						12,815
Premises & equipment	52,329						50,457						43,160
Other assets	154,578						140,355						104,789
Allowance for credit losses	(28,144)						(25,799)						(13,276)
Total assets	$	2,935,553					$	2,728,040					$	2,294,835
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	850,281	$	380	0.18	%	$	764,852	$	369	0.19	%	$	594,772	$	1,621	1.08	%
Savings deposits	588,085		925		0.63	%	512,634		1,200		0.94	%	302,331		949		1.25	%
Time deposits	585,092		2,247		1.53	%	625,717		2,617		1.68	%	674,869		3,644		2.14	%
Short-term borrowings	165,555		734		1.76	%	95,744		499		2.10	%	202,425		1,372		2.69	%
Long-term borrowings and subordinated debentures	23,230		194		3.32	%	20,299		186		3.69	%	20,312		243		4.75	%
Total interest bearing liabilities	2,212,243		4,480		0.81	%	2,019,246		4,871		0.97	%	1,794,709		7,829		1.73	%
Noninterest bearing liabilities
Demand deposits	421,741						417,992						240,193
Other liabilities	33,978						32,238						21,320
Total liabilities	2,667,962						2,469,476						2,056,222
Shareholders' equity - common	267,591						258,564						238,613
Total liabilities and   shareholders' equity	$	2,935,553					$	2,728,040					$	2,294,835
NET INTEREST EARNINGS			$	25,055					$	23,320					$	19,625
NET INTEREST MARGIN					3.64	%					3.68	%					3.63	%
(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 $289,000, $254,000 and $205,000 for Q3 2020, Q2 2020 and Q3 2019, respectively.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
YTD 2020 vs YTD 2019 (unaudited)
	YTD 2020						YTD 2019
	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	$	2,102,331	$	77,211	4.91	%	$	1,758,645	$	71,877	5.46	%
Tax-exempt (2)	16,121		576		4.77	%	15,172		591		5.21	%
Securities
Taxable	256,322		4,657		2.43	%	200,947		4,858		3.23	%
Tax-exempt (2)	113,793		2,897		3.40	%	98,084		2,920		3.98	%
Interest bearing deposits other banks and Federal funds sold	46,074		215		0.62	%	41,642		490		1.57	%
Total interest earning assets	2,534,641		85,556		4.51	%	2,114,490		80,736		5.10	%
Noninterest earning assets
Cash & due from banks	15,901						12,941
Premises & equipment	49,655						40,983
Other assets	138,651						108,984
Allowance for loan losses	(25,618)						(13,283)
Total assets	$	2,713,230					$	2,264,115
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	753,384	$	1,830	0.32	%	$	575,817	$	5,016	1.16	%
Savings deposits	516,841		3,462		0.89	%	306,083		2,768		1.21	%
Time deposits	608,551		7,796		1.71	%	667,565		9,960		1.99	%
Short-term borrowings	127,109		1,863		1.96	%	196,622		4,241		2.88	%
Long-term borrowings and subordinated debentures	21,284		600		3.77	%	20,317		757		4.98	%
Total interest bearing liabilities	2,027,169		15,551		1.02	%	1,766,404		22,742		1.72	%
Noninterest bearing liabilities
Demand deposits	393,128						243,356
Other liabilities	30,741						19,669
Total liabilities	2,451,038						2,029,429
Shareholders' equity - common	262,192						234,686
Total liabilities and   shareholders' equity	$	2,713,230					$	2,264,115
NET INTEREST EARNINGS			$	70,005					$	57,994
NET INTEREST MARGIN					3.69	%					3.67	%
(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 $730,000 and $737,000 for the YTD 2020 and YTD 2019, respectively.

XML

Document and Entity Information Document	Oct. 22, 2020
Cover [Abstract]
Document Type	8-K
Document Period End Date	Oct. 22, 2020
Entity Registrant Name	Summit Financial Group, Inc.
Entity Central Index Key	0000811808
Amendment Flag	false
Entity Incorporation, State or Country Code	WV
Entity File Number	0-16587
Entity Tax Identification Number	55-0672148
Entity Address, Address Line One	300 North Main Street
Entity Address, City or Town	Moorefield
Entity Address, State or Province	WV
Entity Address, Postal Zip Code	26836
City Area Code	304
Local Phone Number	530-1000
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common
Trading Symbol	SMMF
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false