Summit Financial Group Reports Second Quarter and First

MOOREFIELD, W. Va., July 27, 2015 (GLOBE NEWSWIRE) -- Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ:SMMF) today reported second quarter 2015 net income applicable to common shares of $4.01 million, or $0.38 per diluted share, compared to $2.24 million, or $0.25 per diluted share, for the second quarter of 2014, representing an increase of 79.1 percent, or 52.0 percent per diluted share. Q2 2015 earnings compared to Q2 2014 were positively impacted by an $802,000 decline in write-downs of foreclosed properties, a $500,000 decrease in provision for loan losses, and a $1.14 million increase in net interest income.

Excluding from second quarter 2015 (on a pre-tax basis) realized securities gains of $170,000, losses on sales of foreclosed properties of $103,000, and write-downs of foreclosed properties of $160,000, Q2 2015 core earnings approximated $4.07 million, or $0.39 per diluted share. Excluding from second quarter 2014 (on a pre-tax basis) realized securities losses of $43,000, losses on sales of foreclosed properties of $54,000, $1,000 in other-than-temporary impairment of securities (“OTTI”) and write-downs of foreclosed properties of $962,000, Q2 2014 core earnings approximated $2.91 million, or $0.32 per diluted share.

For the six months ended June 30, 2015, Summit recorded net income applicable to common shares of $8.29 million, or $0.78 per diluted share, compared with $4.44 million, or $0.50 per diluted share, for the comparable 2014 six-month period, representing an increase of 87.0%, or 56.0% per diluted share.

Excluding from the six month period ended June 30, 2015 nonrecurring items (on a pre-tax basis) comprised of realized securities gains of $650,000, a $176,000 Federal Home Loan Bank of Pittsburgh (“FHLB”) special dividend, losses on sales of assets of $253,000, and write-downs of foreclosed properties of $732,000, and from the 2014 first six-month period realized securities losses of $64,000, losses on sales of assets of $129,000, OTTI charges of $1,000 and write-downs of foreclosed properties of $1.89 million, core earnings for first six months of 2015 were approximately $8.39 million, or $0.78 per diluted share, compared to $5.75 million, or $0.65 per diluted share, for the 2014 six month period.

Highlights for Q2 2015 include:

Net interest margin has increased 17 basis points since Q2 2014, although it declined 10 basis points compared to Q1 2015 principally due to a one-time FHLB special dividend paid in first quarter 2015 to its member banks.
Achieved loan growth of $25.2 million during the quarter, or 9.6 percent (on an annualized basis), and $44.7 million, or 8.6 percent (annualized) year-to-date.
Nonperforming assets declined for the fourteenth consecutive quarter. Compared to the linked quarter, nonperforming assets as a percentage of total assets declined from 3.18 percent to 3.05 percent, reaching its lowest level since Q2 2008; foreclosed properties are at the lowest level since Q3 2009.
Core revenues were relatively flat compared to the linked quarter, but have increased 8.3 percent compared to the year ago quarter.
Recorded charges of $160,000 to write-down foreclosed properties compared to $572,000 in Q1 2015 and $962,000 in Q2 2014.

H. Charles Maddy III, President and Chief Executive Officer of Summit, commented, “I am very pleased to report our Q2 2015 and year-to-date 2015 operating results. Our strong core earnings, growing loan portfolio, increasing revenues, stable net interest margin, strengthening capital and continued reductions in our portfolio of problem assets during the quarter are all very gratifying; perhaps more importantly, these results represent a continuation of recent similar trends giving us optimism as we look forward to the remainder of 2015 and beyond.”

Results from Operations

Total revenue for second quarter 2015, consisting of net interest income and noninterest income, grew 9.9 percent to $14.3 million compared to $13.0 million for the second quarter 2014. For the year-to-date period ended June 30, 2015, total revenue was $29.0 million compared to $25.8 million for the same period of 2014, representing a 12.1 percent increase.

Total core revenue (excluding nonrecurring items, enumerated above) was $14.1 million for second quarter 2015 compared to $13.1 million for the same prior-year quarter, an increase of 8.3 percent. For the first half of 2015, total core revenue (excluding nonrecurring items) was $28.2 million compared to $25.9 million for the first half of 2014, an 8.6 percent improvement.

For the second quarter of 2015, net interest income was $11.5 million, an increase of 11.0 percent from the $10.3 million reported in the prior-year second quarter and decreased $62,000 compared to the linked quarter. The net interest margin for second quarter 2015 was 3.49 percent compared to 3.32 percent for the year-ago quarter, and 3.59 percent for the linked quarter.

Noninterest income, consisting primarily of insurance commissions from Summit's insurance agency subsidiary and service fee income from community banking activities, for second quarter 2015 was $2.86 million compared to $2.71 million for the comparable period of 2014. Excluding realized securities gains/losses and OTTI of securities, noninterest income was $2.69 million for second quarter 2015, compared to $2.75 million reported for second quarter 2014.

The second quarter 2015 provision for loan losses totaled $500,000, compared to $250,000 for the linked quarter, and $1.0 million for the year-ago quarter.

Core noninterest expense continues to be well-controlled. Total noninterest expense decreased 5.5% to $8.06 million compared to $8.53 million for the prior-year second quarter. Excluding from noninterest expense (on a pre-tax basis) losses on sales of foreclosed properties of $103,000 in Q2 2015 and $54,000 in Q2 2014 and write-downs of foreclosed properties of $160,000 in Q2 2015 and $962,000 in Q2 2014, noninterest expense would have approximated $7.80 million for Q2 2015 compared to $7.51 million for the comparable period of 2014. Noninterest expense for the first half of 2015 decreased 4.5% compared to the first half of 2014.

Balance Sheet

At June 30, 2015, total assets were $1.48 billion, an increase of $36.4 million, or 2.5 percent since December 31, 2014. Total loans, net of unearned fees and allowance for loan losses, were $1.06 billion at June 30, 2015, up $44.6 million, or 4.4 percent, from the $1.02 billion reported at year-end 2014.

At June 30, 2015, deposits were $1.05 billion, a decrease of $8.0 million, or 0.8 percent, since year end 2014. During first half 2015, checking and savings declined by $3.2 million and $6.6 million, respectively, or 1.0 percent and 2.6 percent, respectively, while time deposits increased $1.9 million or 0.4 percent. Long-term borrowings and subordinated debentures declined by 13.4 percent since year end 2014, as the Company prepaid $14.3 million in subordinated debentures, which was funded by short-term borrowings.

Asset Quality

As of June 30, 2015, nonperforming assets (“NPAs”), consisting of nonperforming loans, foreclosed properties, and repossessed assets, were $45.1 million, or 3.05 percent of assets. This compares to $46.4 million, or 3.18 percent of assets at the linked quarter, and $63.0 million, or 4.39 percent of assets, at second quarter 2014.

Second quarter 2015 net loan charge-offs were $56,000, or 0.02 percent of average loans annualized; while adding $500,000 to the allowance for loan losses. The allowance for loan losses stood at $11.3 million, or 1.05 percent of total loans at June 30, 2015, compared to 1.08 percent at year-end 2014.

Capital Adequacy

Shareholders’ equity was $140.1 million as of June 30, 2015 compared to $131.6 million December 31, 2014 and $117.5 million at June 30, 2014. Tangible book value per common share increased to $12.22 at June 30, 2015 compared to $11.86 at December 31, 2014 and $11.40 at June 30, 2014.

At June 30, 2015, Summit’s and its depository institution’s, Summit Community Bank, Inc.’s (the “Bank’s”), regulatory risk-based capital ratios computed in accordance with the new Basel III regulatory capital guidelines effective January 1, 2015, were each well in excess of the regulatory minimum required ratio relative to each plus the respective applicable capital conservation buffer on a fully phased-in basis. Respectively, the Company’s and Bank’s Tier 1 leverage capital ratios were 10.4 percent and 10.6 percent at June 30, 2015 compared to 9.9 percent and 10.6 percent reported at December 31, 2014.

About the Company

Summit Financial Group, Inc. is a $1.48 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.

FORWARD-LOOKING STATEMENTS

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

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

NON-GAAP FINANCIAL MEASURES

This press release contains financial information determined by methods other than in accordance with generally accepted accounting principles in the United States of America ("GAAP"). Specifically, Summit adjusted GAAP performance measures to exclude the effects of realized and unrealized securities gains and losses, 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 -- Q2 2015 vs Q2 2014


		For the Quarter Ended					Percent
Dollars in thousands		6/30/2015		6/30/2014			Change
Condensed Statements of Income
	Interest income
	Loans, including fees	$	12,972	$	12,515			3.7	%
	Securities		1,685		1,827			-7.8	%
	Other		1		2			-50.0	%
	Total interest income		14,658		14,344			2.2	%
	Interest expense
	Deposits		2,074		2,335			-11.2	%
	Borrowings		1,126		1,689			-33.3	%
	Total interest expense		3,200		4,024			-20.5	%
	Net interest income		11,458		10,320			11.0	%
	Provision for loan losses		500		1,000			-50.0	%
	Net interest income after provision
	for loan losses		10,958		9,320			17.6	%

	Noninterest income
	Insurance commissions		1,080		1,091			-1.0	%
	Service fees related to deposit accounts		1,072		1,101			-2.6	%
	Realized securities gains (losses)		170		(43	)		n/m
	Other-than-temporary impairment of securities		-		(1	)		n/m
	Other income		538		557			-3.4	%
	Total noninterest income		2,860		2,705			5.7	%
	Noninterest expense
	Salaries and employee benefits		4,442		4,045			9.8	%
	Net occupancy expense		489		505			-3.2	%
	Equipment expense		560		513			9.2	%
	Professional fees		372		282			31.9	%
	FDIC premiums		320		495			-35.4	%
	Foreclosed properties expense		158		229			-31.0	%
	Loss on sales of foreclosed properties		103		54			90.7	%
	Write-downs of foreclosed properties		160		962			-83.4	%
	Other expenses		1,457		1,445			0.8	%
	Total noninterest expense		8,061		8,530			-5.5	%
	Income before income taxes		5,757		3,495			64.7	%
	Income taxes		1,747		1,063			64.3	%
	Net income		4,010		2,432			64.9	%
	Preferred stock dividends		-		193			n/m

Net income applicable to common shares		$	4,010	$	2,239			79.1	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary -- Q2 2015 vs Q2 2014

		For the Quarter Ended						Percent
		6/30/2015			6/30/2014			Change
Per Share Data
	Earnings per common share
	Basic	$	0.38		$	0.30			26.7	%
	Diluted	$	0.38		$	0.25			52.0	%

	Cash dividends	$	0.08		$	-			n/a

	Average common shares outstanding
	Basic		10,667,892			7,457,222			43.1	%
	Diluted		10,676,474			9,630,699			10.9	%

	Common shares outstanding at period end		10,843,676			7,457,222			45.4	%

Performance Ratios
	Return on average equity		11.67	%		8.37	%		39.4	%
	Return on average tangible equity		12.36	%		8.98	%		37.6	%
	Return on average assets		1.09	%		0.69	%		58.0	%
	Net interest margin		3.49	%		3.32	%		5.1	%
	Efficiency ratio (A)		52.05	%		52.86	%		-1.5	%

NOTE (A) – Computed on a tax equivalent basis excluding nonrecurring income and expense items and amortization of intangibles.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Six Month Performance Summary -- 2015 vs 2014


		For the Six Months Ended					Percent
Dollars in thousands		6/30/2015		6/30/2014			Change
Condensed Statements of Income
	Interest income
	Loans, including fees	$	25,821	$	24,731			4.4	%
	Securities		3,579		3,679			-2.7	%
	Other		2		4			-50.0	%
	Total interest income		29,402		28,414			3.5	%
	Interest expense
	Deposits		4,145		4,576			-9.4	%
	Borrowings		2,279		3,480			-34.5	%
	Total interest expense		6,424		8,056			-20.3	%
	Net interest income		22,978		20,358			12.9	%
	Provision for loan losses		750		2,000			-62.5	%
	Net interest income after provision
	for loan losses		22,228		18,358			21.1	%

	Noninterest income
	Insurance commissions		2,208		2,273			-2.9	%
	Service fees related to deposit accounts		2,048		2,144			-4.5	%
	Realized securities gains (losses)		650		(64	)		n/m
	Other-than-temporary impairment of securities		-		(1	)		-100.0	%
	Other income		1,093		1,137			-3.9	%
	Total noninterest income		5,999		5,489			9.3	%
	Noninterest expense
	Salaries and employee benefits		8,629		8,026			7.5	%
	Net occupancy expense		988		1,046			-5.5	%
	Equipment expense		1,095		1,079			1.5	%
	Professional fees		707		598			18.2	%
	FDIC premiums		650		997			-34.8	%
	Foreclosed properties expense		366		482			-24.1	%
	Loss on sales of foreclosed properties		253		129			96.1	%
	Write-downs of foreclosed properties		732		1,891			-61.3	%
	Other expenses		2,846		2,780			2.4	%
	Total noninterest expense		16,266		17,028			-4.5	%
	Income before income taxes		11,961		6,819			75.4	%
	Income taxes		3,667		1,997			83.6	%
	Net income		8,294		4,822			72.0	%
	Preferred stock dividends		-		387			n/m

	Net income applicable to common shares	$	8,294	$	4,435			87.0	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Six Month Performance Summary -- 2015 vs 2014

		For the Six Months Ended						Percent
		6/30/2015			6/30/2014			Change
Per Share Data
	Earnings per common share
	Basic	$	0.85		$	0.59			44.1	%
	Diluted	$	0.78		$	0.50			56.0	%

	Cash dividends	$	0.16		$	-			n/a

	Average common shares outstanding
	Basic		9,747,042			7,455,307			30.7	%
	Diluted		10,585,411			9,629,830			9.9	%

	Common shares outstanding at period end		10,843,676			7,457,222			45.4	%

Performance Ratios
	Return on average equity		12.22	%		8.42	%		45.1	%
	Return on average tangible equity		12.95	%		9.04	%		43.3	%
	Return on average assets		1.14	%		0.69	%		65.2	%
	Net interest margin		3.54	%		3.32	%		6.6	%
	Efficiency ratio (A)		50.65	%		53.49	%		-5.3	%

NOTE (A) – Computed on a tax equivalent basis excluding nonrecurring income and expense items and amortization of intangibles.

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

		For the Quarter Ended
Dollars in thousands		6/30/2015		3/31/2015		12/31/2014		9/30/2014		6/30/2014
Condensed Statements of Income
	Interest income
	Loans, including fees	$	12,972	$	12,848	$	12,666	$	13,033	$	12,515
	Securities		1,685		1,894		1,784		1,724		1,827
	Other		1		1		2		3		2
	Total interest income		14,658		14,743		14,452		14,760		14,344
	Interest expense
	Deposits		2,074		2,071		2,130		2,288		2,335
	Borrowings		1,126		1,152		1,371		1,395		1,689
	Total interest expense		3,200		3,223		3,501		3,683		4,024
	Net interest income		11,458		11,520		10,951		11,077		10,320

	Provision for loan losses		500		250		-		250		1,000
	Net interest income after provision
	for loan losses		10,958		11,270		10,951		10,827		9,320

	Noninterest income
	Insurance commissions		1,080		1,128		1,023		1,105		1,091
	Service fees related to deposit accounts		1,072		976		1,113		1,177		1,101
	Realized securities gains (losses)		170		480		149		128		(43	)
	Other-than-temporary impairment of securities		-		-		-		-		(1	)
	Other income		538		555		537		503		557
	Total noninterest income		2,860		3,139		2,822		2,913		2,705
	Noninterest expense
	Salaries and employee benefits		4,442		4,187		4,133		4,026		4,045
	Net occupancy expense		489		498		495		482		505
	Equipment expense		560		535		487		520		513
	Professional fees		372		335		452		380		282
	FDIC premiums		320		330		315		480		495
	Foreclosed properties expense		158		208		239		298		229
	Loss on sales of foreclosed properties		103		150		628		70		54
	Write-downs of foreclosed properties		160		572		300		1,580		962
	Other expenses		1,457		1,389		2,061		1,350		1,445
	Total noninterest expense		8,061		8,204		9,110		9,186		8,530
	Income before income taxes		5,757		6,205		4,663		4,554		3,495
	Income taxes		1,747		1,920		1,464		1,218		1,063
	Net income		4,010		4,285		3,199		3,336		2,432
	Preferred stock dividends		-		-		191		193		193
	Net income applicable to common shares	$	4,010	$	4,285	$	3,008	$	3,143	$	2,239

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

		For the Quarter Ended
		6/30/2015			3/31/2015			12/31/2014			9/30/2014			6/30/2014
Per Share Data
	Earnings per common share
	Basic	$	0.38		$	0.49		$	0.39		$	0.42		$	0.30
	Diluted	$	0.38		$	0.41		$	0.32		$	0.35		$	0.25

	Cash dividends	$	0.08		$	0.08		$	-		$	-		$	-

	Average common shares outstanding
	Basic		10,667,892			8,815,961			7,796,508			7,457,222			7,457,222
	Diluted		10,676,474			10,493,323			9,963,214			9,630,293			9,630,699

	Common shares outstanding at period end		10,843,676			10,586,242			8,301,746			7,457,222			7,457,222

Performance Ratios
	Return on average equity		11.67	%		12.79	%		10.10	%		11.13	%		8.37	%
	Return on average tangible equity		12.36	%		13.56	%		10.76	%		11.90	%		8.98	%
	Return on average assets		1.09	%		1.18	%		0.89	%		0.93	%		0.69	%
	Net interest margin		3.49	%		3.59	%		3.42	%		3.47	%		3.32	%
	Efficiency ratio (A)		52.05	%		49.27	%		53.07	%		51.19	%		52.86	%

NOTE (A) – Net income divided by average total shareholders’ equity.

NOTE (B) – Computed on a tax equivalent basis excluding nonrecurring income and expense items and amortization of intangibles.

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

		For the Quarter Ended
Dollars in thousands, except per share amounts		6/30/2015			3/31/2015			12/31/2014			9/30/2014			6/30/2014

Assets
	Cash and due from banks	$	3,988		$	3,850		$	3,728		$	3,933		$	3,749
	Interest bearing deposits other banks		9,274			8,437			8,783			9,300			9,970
	Securities		276,661			282,135			282,834			282,401			287,883
	Loans, net		1,064,472			1,039,669			1,019,842			993,347			992,816
	Property held for sale		31,500			34,368			37,529			47,252			48,783
	Premises and equipment, net		20,490			20,208			20,060			20,132			20,301
	Intangible assets		7,598			7,648			7,698			7,748			7,798
	Cash surrender value of life insurance policies		37,222			36,961			36,700			36,417			36,151
	Other assets		28,764			27,216			26,394			28,139			28,507
	Total assets	$	1,479,969		$	1,460,492		$	1,443,568		$	1,428,669		$	1,435,958

Liabilities and Shareholders' Equity
	Deposits	$	1,053,310		$	1,058,308		$	1,061,314		$	1,054,454		$	1,057,795
	Short-term borrowings		174,599			148,985			123,633			127,432			91,729
	Long-term borrowings and
	subordinated debentures		98,625			101,602			113,879			114,855			158,331
	Other liabilities		13,363			15,708			13,098			10,566			10,638
	Shareholders' equity		140,072			135,889			131,644			121,362			117,465
	Total liabilities and shareholders' equity	$	1,479,969		$	1,460,492		$	1,443,568		$	1,428,669		$	1,435,958

	Book value per common share (A)	$	12.92		$	12.84		$	12.60		$	12.62		$	12.21
	Tangible book value per common share (A)	$	12.22		$	12.11		$	11.86		$	11.81		$	11.40
	Tangible equity to tangible assets		9.0	%		8.8	%		8.6	%		8.0	%		7.7	%
	Tangible common equity to tangible assets		9.0	%		8.8	%		8.0	%		7.3	%		7.0	%

NOTE (A) – Assumes conversion of convertible preferred stock

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

		6/30/2015			3/31/2015			12/31/2014			9/30/2014			6/30/2014
Summit Financial Group, Inc.
	CET1 Risk-based Capital		11.6	%		11.3	%		n/a			n/a			n/a
	Tier 1 Risk-based Capital		13.2	%		13.0	%		13.3	%		12.5	%		12.4	%
	Total Risk-based Capital		14.2	%		14.0	%		14.9	%		14.3	%		14.2	%
	Tier 1 Leverage Ratio		10.4	%		10.1	%		9.9	%		9.2	%		9.0	%

Summit Community Bank, Inc.
	CET1 Risk-based Capital		13.4	%		13.5	%		n/a			n/a			n/a
	Tier 1 Risk-based Capital		13.4	%		13.5	%		14.2	%		14.4	%		14.5	%
	Total Risk-based Capital		14.4	%		14.5	%		15.3	%		15.5	%		15.6	%
	Tier 1 Leverage Ratio		10.6	%		10.5	%		10.6	%		10.5	%		10.6	%

NOTE (A) – Computed in accordance with Basel III regulatory capital guidelines beginning January 1, 2015

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

Dollars in thousands	6/30/2015		3/31/2015		12/31/2014		9/30/2014		6/30/2014

Commercial	$	97,284	$	89,928	$	88,590	$	83,762	$	90,096
Commercial real estate
Owner occupied		191,743		180,269		157,783		156,765		154,260
Non-owner occupied		331,056		325,764		317,136		314,577		314,439
Construction and development
Land and development		64,435		66,558		67,881		61,088		64,246
Construction		18,214		19,094		28,591		27,239		20,902
Residential real estate
Non-jumbo		220,199		219,938		220,071		218,125		219,569
Jumbo		49,203		50,492		52,879		51,917		52,487
Home equity		72,504		68,894		67,115		64,256		61,248
Consumer		18,683		18,485		19,456		19,906		19,777
Other		12,423		11,074		11,507		6,753		6,798
Total loans, net of unearned fees		1,075,744		1,050,496		1,031,009		1,004,388		1,003,822
Less allowance for loan losses		11,272		10,827		11,167		11,041		11,006
Loans, net	$	1,064,472	$	1,039,669	$	1,019,842	$	993,347	$	992,816

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

Dollars in thousands	6/30/2015		3/31/2015		12/31/2014		9/30/2014		6/30/2014
Non interest bearing checking	$	113,256	$	117,049	$	115,427	$	104,442	$	106,134
Interest bearing checking		202,957		196,606		204,030		195,183		187,855
Savings		246,949		257,687		253,578		255,880		243,323
Time deposits		490,148		486,966		488,279		498,949		520,483
Total deposits	$	1,053,310	$	1,058,308	$	1,061,314	$	1,054,454	$	1,057,795

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

		For the Quarter Ended
Dollars in thousands		6/30/2015			3/31/2015			12/31/2014			9/30/2014			6/30/2014

	Gross loan charge-offs	$	463		$	782		$	362		$	297		$	1,312
	Gross loan recoveries		(407	)		(192	)		(488	)		(82	)		(249	)
	Net loan charge-offs	$	56		$	590		$	(126	)	$	215		$	1,063

	Net loan charge-offs to average loans (annualized)		0.02	%		0.23	%		-0.05	%		0.09	%		0.43	%
	Allowance for loan losses	$	11,272		$	10,827		$	11,167		$	11,041		$	11,006
	Allowance for loan losses as a percentage
	of period end loans		1.05	%		1.03	%		1.08	%		1.10	%		1.10	%

	Nonperforming assets:
	Nonperforming loans
	Commercial	$	1,065		$	788		$	392		$	309		$	415
	Commercial real estate		2,421			1,340			1,844			936			1,537
	Commercial construction and development		-			-			-			-			3,601
	Residential construction and development		5,627			5,333			4,619			4,592			5,248
	Residential real estate		4,433			4,491			5,556			5,257			3,289
	Consumer		45			65			83			146			129
	Total nonperforming loans		13,591			12,017			12,494			11,240			14,219
	Foreclosed properties
	Commercial		-			110			110			110			110
	Commercial real estate		3,279			3,657			5,204			5,815			5,762
	Commercial construction and development		10,178			10,191			10,179			10,178			10,363
	Residential construction and development		15,839			17,590			19,267			20,431			20,557
	Residential real estate		2,204			2,819			2,769			10,718			11,991
	Total foreclosed properties		31,500			34,367			37,529			47,252			48,783
	Other repossessed assets		55			55			221			34			-
	Total nonperforming assets	$	45,146		$	46,439		$	50,244		$	58,526		$	63,002

	Nonperforming loans to period end loans		1.26	%		1.14	%		1.21	%		1.12	%		1.42	%
	Nonperforming assets to period end assets		3.05	%		3.18	%		3.48	%		4.10	%		4.39	%

Loans Past Due 30-89 Days
		For the Quarter Ended
In thousands		6/30/2015		3/31/2015		12/31/2014		9/30/2014		6/30/2014

	Commercial	$	344	$	387	$	382	$	253	$	376
	Commercial real estate		4,945		783		266		1,094		1,032
	Construction and development		21		2,735		2,278		324		156
	Residential real estate		3,932		3,614		7,413		5,087		5,775
	Consumer		211		148		269		427		585
	Other		7		18		14		18		-
	Total	$	9,460	$	7,685	$	10,622	$	7,203	$	7,924

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q2 2015 vs Q2 2014
	Q2 2015								Q2 2014
	Average			Earnings /		Yield /			Average			Earnings /		Yield /
Dollars in thousands	Balances			Expense		Rate			Balances			Expense		Rate

ASSETS
Interest earning assets
Loans, net of unearned interest
Taxable	$	1,046,203		$	12,854		4.93	%	$	978,842		$	12,428		5.09	%
Tax-exempt		12,466			179		5.76	%		7,597			133		7.02	%
Securities
Taxable		216,063			1,093		2.03	%		213,560			1,198		2.25	%
Tax-exempt		74,430			898		4.84	%		82,958			952		4.60	%
Interest bearing deposits other banks
and Federal funds sold		7,923			1		0.05	%		8,413			2		0.10	%
Total interest earning assets		1,357,085			15,025		4.44	%		1,291,370			14,713		4.57	%

Noninterest earning assets
Cash & due from banks		3,973								3,785
Premises & equipment		20,409								20,433
Other assets		96,231								114,917
Allowance for loan losses		(11,095	)							(11,440	)
Total assets	$	1,466,603							$	1,419,065

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	206,597		$	59		0.11	%	$	190,146		$	54		0.11	%
Savings deposits		251,802			429		0.68	%		237,789			388		0.65	%
Time deposits		486,396			1,586		1.31	%		524,111			1,894		1.45	%
Short-term borrowings		154,704			125		0.32	%		79,687			59		0.30	%
Long-term borrowings and
subordinated debentures		100,583			1,001		3.99	%		159,550			1,629		4.10	%
Total interest bearing liabilities		1,200,082			3,200		1.07	%		1,191,283			4,024		1.35	%

Noninterest bearing liabilities
Demand deposits		114,327								101,874
Other liabilities		14,771								9,694
Total liabilities		1,329,180								1,302,851

Shareholders' equity - preferred		-								9,283
Shareholders' equity - common		137,423								106,931
Total liabilities and
shareholders' equity	$	1,466,603							$	1,419,065

NET INTEREST EARNINGS				$	11,825							$	10,689

NET INTEREST MARGIN							3.49	%							3.32	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
YTD 2015 vs YTD 2014

	YTD 2015								YTD 2014
	Average			Earnings /		Yield /			Average			Earnings /		Yield /
Dollars in thousands	Balances			Expense		Rate			Balances			Expense		Rate

ASSETS
Interest earning assets
Loans, net of unearned interest
Taxable	$	1,040,935		$	25,588		4.96	%	$	968,221		$	24,572		5.12	%
Tax-exempt		12,516			353		5.69	%		6,719			241		7.23	%
Securities
Taxable		213,252			2,368		2.24	%		215,220			2,481		2.32	%
Tax-exempt		75,744			1,835		4.89	%		79,218			1,815		4.62	%
Interest bearing deposits other banks
and Federal funds sold		7,504			2		0.05	%		8,666			3		0.07	%
Total interest earning assets		1,349,951			30,146		4.50	%		1,278,044			29,112		4.59	%

Noninterest earning assets
Cash & due from banks		3,827								3,841
Premises & equipment		20,307								20,506
Other assets		97,454								115,454
Allowance for loan losses		(11,166	)							(12,200	)
Total assets	$	1,460,373							$	1,405,645

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	203,237		$	118		0.12	%	$	188,573		$	106		0.11	%
Savings deposits		253,093			857		0.68	%		223,240			707		0.64	%
Time deposits		486,187			3,169		1.31	%		527,097			3,763		1.44	%
Short-term borrowings		149,769			238		0.32	%		77,444			111		0.29	%
Long-term borrowings and
subordinated debentures		103,148			2,041		3.99	%		167,013			3,368		4.07	%
		1,195,434			6,423		1.08	%		1,183,367			8,055		1.37	%
Noninterest bearing liabilities
Demand deposits		114,761								98,525
Other liabilities		14,435								9,155
Total liabilities		1,324,630								1,291,047

Shareholders' equity - preferred		3,602								9,287
Shareholders' equity - common		132,141								105,311
Total liabilities and
shareholders' equity	$	1,460,373							$	1,405,645

NET INTEREST EARNINGS				$	23,723							$	21,057

NET INTEREST MARGIN							3.54	%							3.32	%

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

	For the Quarter Ended									For the Six Months Ended
Dollars in thousands	6/30/2015			3/31/2015			6/30/2014			6/30/2015			6/30/2014


Core earnings applicable to common shares	$	4,069		$	4,326		$	2,907		$	8,394		$	5,748

FHLB special dividend		-			176			-			176			-
Applicable income tax effect		-			(65	)		-			(65	)		-
Realized securities gains (losses)		170			480			(43	)		650			(64	)
Applicable income tax effect		(63	)		(178	)		16			(241	)		24
Gain (loss) on sale of foreclosed properties		(103	)		(150	)		(54	)		(253	)		(129	)
Applicable income tax effect		38			56			20			94			48
Other-than-temporary impairment of securities		-			-			(1	)		-			(1	)
Applicable income tax effect		-			-			-			-			-
Write-downs foreclosed properties		(160	)		(572	)		(962	)		(732	)		(1,891	)
Applicable income tax effect		59			212			356			271			700
		(59	)		(41	)		(668	)		(100	)		(1,313	)
GAAP net income applicable to common shares	$	4,010		$	4,285		$	2,239		$	8,294		$	4,435



Core diluted earnings per common share	$	0.39		$	0.41		$	0.32		$	0.78		$	0.65

FHLB special dividend		-			0.02			-			0.02			-
Applicable income tax effect		-			(0.01	)		-			(0.01	)		-
Realized securities gains (losses)		0.02			0.05			-			0.06			(0.01	)
Applicable income tax effect		(0.01	)		(0.02	)		-			(0.02	)		-
Gain (loss) on sale of foreclosed properties		(0.01	)		(0.01	)		(0.01	)		(0.02	)		(0.01	)
Applicable income tax effect		-			-			-			0.01			-
Other-than-temporary impairment of securities		-			-			-			-			-
Applicable income tax effect		-			-			-			-			-
Write-downs of foreclosed properties		(0.01	)		(0.05	)		(0.10	)		(0.07	)		(0.20	)
Applicable income tax effect		-			0.02			0.04			0.03			0.07
		(0.01	)		-			(0.07	)		-			(0.15	)
GAAP diluted earnings per common share	$	0.38		$	0.41		$	0.25		$	0.78		$	0.50

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

	For the Quarter Ended							For the Six Months Ended
Dollars in thousands	6/30/2015		3/31/2015		6/30/2014			6/30/2015		6/30/2014

Total core revenue	$	14,148	$	14,003	$	13,069		$	28,151	$	25,911

FHLB special dividend		-		176		-			176		-
Realized securities gains/(losses)		170		480		(43	)		650		(64	)
Other-than-temporary impairment of securities		-		-		(1	)		-		(1	)
		170		656		(44	)		826		(65	)
GAAP total revenue	$	14,318	$	14,659	$	13,025		$	28,977	$	25,846


Total core noninterest income	$	2,690	$	2,659	$	2,749		$	5,349	$	5,553

Realized securities gains/(losses)		170		480		(43	)		650		(64	)
Other-than-temporary impairment of securities		-		-		(1	)		-		(1	)
		170		480		(44	)		650		(65	)
GAAP total noninterest income	$	2,860	$	3,139	$	2,705		$	5,999	$	5,488


Total core noninterest expense	$	7,798	$	7,482	$	7,514		$	15,281	$	15,008

(Gains)/losses on sales of foreclosed properties		103		150		54			253		129
Write-downs of foreclosed properties		160		572		962			732		1,891
		263		722		1,016			985		2,020
GAAP total noninterest expense	$	8,061	$	8,204	$	8,530		$	16,266	$	17,028

Summit Financial Group Reports Second Quarter and First Half 2015 Results

Q2 2015 Diluted EPS $0.38 Compared to $0.25 for Q2 2014 and $0.41 for Q1 2015

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