GlobeNewswire Inc | Oct 22, 2020 06:00AM EDT

October 22, 2020

MOOREFIELD, W.V., Oct. 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, Summits 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. 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 Summits consolidated results of operations from the dates of acquisition, and therefore Summits 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, Summits 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 FDICs 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 9/30/2020 Loans LoansDollars in Total Loan Modified to Modified Total Percentagethousands Balance as of 9/ Interest to Payment Loans of Loans 30/2020 Only Deferral Modified Modified PaymentsHospitality $ 120,324 $ 36,803 $ 11,466 $ 48,269 40.1 %IndustryNon-OwnerOccupied Retail 108,326 19,497 - 19,497 18.0 %StoresOwner-Occupied 100,926 1,601 1,409 3,010 3.0 %Retail StoresRestaurants 7,968 - - - 0.0 %Oil & Gas 24,404 914 - 914 3.7 %IndustryOther Commercial 1,084,385 40,846 - 40,846 3.8 %LoansTotal Commercial 1,446,333 99,661 12,875 112,536 7.8 %LoansResidential 1-4 263,315 195 991 1,186 0.5 %Family PersonalResidential 1-4 178,529 3,567 336 3,903 2.2 %Family RentalsHome Equity 82,991 - - - 0.0 %LoansTotalResidential Real 524,835 3,762 1,327 5,089 1.0 %Estate LoansConsumer Loans 34,655 34 22 56 0.2 %Mortgage 243,730 - - - 0.0 %Warehouse LoansCredit Cards and 2,251 - - - 0.0 %OverdraftsTotal Loans $ 2,251,804 $ 103,457 $ 14,224 $ 117,681 5.2 %

Loan Balances Modified Due to COVID-19 as of 6/30/2020 Loans LoansDollars in Total Loan Modified to Modified Total Percentagethousands Balance as of 6/ Interest to Payment Loans of Loans 30/2020 Only Deferral Modified Modified PaymentsHospitality $ 119,204 $ 55,849 $ 43,030 $ 98,879 82.9 %IndustryNon-OwnerOccupied Retail 109,078 38,354 13,802 52,156 47.8 %StoresOwner-Occupied 119,794 21,956 9,372 31,328 26.2 %Retail StoresRestaurants 8,126 2,392 1,877 4,269 52.5 %Oil & Gas 31,977 914 4,378 5,292 16.5 %IndustryOther Commercial 1,005,740 88,285 34,634 122,919 12.2 %LoansTotal Commercial 1,393,919 207,750 107,093 314,843 22.6 %LoansResidential 1-4 267,170 3,933 13,404 17,337 6.5 %Family PersonalResidential 1-4 180,415 20,348 6,032 26,380 14.6 %Family RentalsHome Equity 88,929 - 569 569 0.6 %LoansTotalResidential Real 536,514 24,281 20,005 44,286 8.3 %Estate LoansConsumer Loans 34,640 595 605 1,200 3.5 %Mortgage 252,472 - - - 0.0 %Warehouse LoansCredit Cards and 2,162 - - - 0.0 %OverdraftsTotal 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 impactsand disruptions on the communities we serve, and the domestic and global economy, which may have an adverse effect on our business; current and futureeconomic 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 anyslowdown 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 PercentDollars in thousands 9/30/2020 9/30/2019 ChangeStatements 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 21,516 18,920 13.7 %losses 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 expense 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 taxes 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 ChangePer 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 12,932,415 12,400,804 4.3 %end 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 Percent EndedDollars in thousands 9/30/2020 9/30/2019 ChangeStatements 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 57,775 56,207 2.8 %losses 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/mService 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 of Summit Insurance Services, LLC - 1,906 n/a Bank owned life insurance 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 expense 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 taxes 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 ChangePer 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 12,932,415 12,400,804 4.3 %end 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 QuarterPerformance Summary(unaudited) For the Quarter EndedDollars in 9/30/2020 6/30/2020 3/31/2020 12/31/ 9/30/2019thousands 2019Statements of IncomeInterest income Loans, including $ 26,807 $ 25,624 $ 25,235 $ 24,772 $ 24,940feesSecurities 2,382 2,253 2,310 2,195 2,184Other 57 60 98 105 125Total interest 29,246 27,937 27,643 27,072 27,249incomeInterest expense Deposits 3,552 4,186 5,351 5,952 6,214Borrowings 928 685 849 1,292 1,615Total interest 4,480 4,871 6,200 7,244 7,829expenseNet interest 24,766 23,066 21,443 19,828 19,420incomeProvision for 3,250 3,000 5,250 500 500credit losses Net interestincome after 21,516 20,066 16,193 19,328 18,920provision forcredit lossesNoninterest incomeInsurance 44 24 7 90 40commissionsMortgageorigination 780 641 214 379 77revenueTrust and wealth 622 582 665 734 632management feesService chargeson deposit 1,138 882 1,263 1,377 1,312accountsBank card revenue 1,237 1,087 933 906 924Realizedsecurities gains 1,522 - 1,038 403 453(losses)Bank owned lifeinsurance and 795 275 264 310 247annuity incomeOther income 69 107 118 205 74Total noninterest 6,207 3,598 4,502 4,404 3,759incomeNoninterest expenseSalaries and 8,108 7,930 7,672 7,099 7,044employee benefitsNet occupancy 1,057 977 883 815 799expenseEquipment expense 1,474 1,360 1,429 1,278 1,296Professional fees 364 417 387 412 388Advertising and 145 93 152 214 177public relationsAmortization of 412 410 429 401 404intangiblesFDIC premiums 320 110 165 - -Bank card expense 589 560 503 454 455Foreclosedproperties 607 240 966 262 305expense, netMerger-related 28 637 788 98 74expensesOther expenses 2,405 2,463 1,625 2,126 1,864Total noninterest 15,509 15,197 14,999 13,159 12,806expenseIncome before 12,214 8,467 5,696 10,573 9,873income taxesIncome tax 2,594 1,518 1,190 2,424 1,812expenseNet income $ 9,620 $ 6,949 $ 4,506 $ 8,149 $ 8,061

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)Five QuarterPerformance Summary(unaudited) For the Quarter Ended 9/30/2020 6/30/2020 3/31/2020 12/31/2019 9/30/2019Per Share DataEarnings per common shareBasic $ 0.74 $ 0.54 $ 0.35 $ 0.66 $ 0.65 Diluted $ 0.74 $ 0.54 $ 0.35 $ 0.65 $ 0.65 Cash $ 0.17 $ 0.17 $ 0.17 $ 0.15 $ 0.15 dividendsDividend 22.9 % 31.7 % 49.1 % 22.3 % 23.0 %payout ratio Averagecommon shares outstandingBasic 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 sharesoutstanding 12,932,415 12,922,045 12,920,244 12,408,542 12,400,804 at period end Performance RatiosReturn onaverage 14.38 % 10.75 % 6.92 % 13.32 % 13.51 %equityReturn onaverage 18.12 % 13.57 % 8.55 % 15.25 % 15.55 %tangibleequityReturn onaverage 1.31 % 1.02 % 0.73 % 1.39 % 1.41 %assetsNet interest 3.64 % 3.68 % 3.76 % 3.63 % 3.63 %margin (A)Efficiency 48.95 % 51.97 % 51.41 % 52.25 % 52.91 %ratio (B)

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.

SUMMITFINANCIALGROUP, INC. (NASDAQ:SMMF)SelectedBalance Sheet Data(unaudited) Dollars inthousands, 9/30/2020 6/30/2020 3/31/2020 12/31/2019 9/30/2019except pershare amounts Assets Cash and due $ 16,257 $ 16,572 $ 18,633 $ 28,137 $ 12,374 from banksInterestbearing 92,729 26,218 22,821 33,751 40,296 depositsother banksSecurities,available for 297,989 322,539 305,045 276,355 265,347 saleSecurities,held to 91,600 80,497 - - - maturityLoans, net 2,222,450 2,192,541 1,982,661 1,900,425 1,838,891 Property held 17,831 17,954 18,287 19,276 20,979 for salePremises andequipment, 52,880 51,847 47,078 44,168 43,592 netGoodwill andother 48,101 48,513 34,132 23,022 23,182 intangibleassetsCashsurrendervalue of life 57,029 55,315 46,497 43,603 43,216 insurancepolicies andannuitiesOther 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 Liabilitiesand Shareholders'EquityDeposits $ 2,451,891 $ 2,451,769 $ 2,044,914 $ 1,913,237 $ 1,832,285 Short-term 140,145 90,945 161,745 199,345 206,694 borrowingsLong-termborrowingsand 50,292 20,297 20,301 20,306 20,311 subordinateddebenturesOther 32,571 34,909 30,337 22,840 21,897 liabilitiesShareholders' 271,963 263,431 256,025 247,764 242,422 equityTotalliabilitiesand $ 2,946,862 $ 2,861,351 $ 2,513,322 $ 2,403,492 $ 2,323,609 shareholders'equity Book valueper common $ 21.03 $ 20.39 $ 19.82 $ 19.97 $ 19.55 shareTangible bookvalue per $ 17.31 $ 16.63 $ 17.17 $ 18.11 $ 17.68 common shareTangiblecommon equity 7.7 % 7.6 % 9.0 % 9.4 % 9.5 %to tangibleassets

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF) Regulatory Capital Ratios (unaudited) 9/30/ 6/30/ 3/31/ 12/31/ 9/30/ 2020 2020 2020 2019 2019Summit 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) LoanComposition (unaudited) Dollars in 9/30/2020 6/30/2020 3/31/2020 12/31/2019 9/30/2019thousands Commercial $ 338,685 $ 311,755 $ 224,659 $ 207,138 $ 199,391Mortgagewarehouse 243,730 252,472 166,826 126,237 145,039linesCommercial real estateOwner 312,502 336,143 331,486 276,218 255,828occupiedNon-owner 618,624 593,168 580,619 629,206 567,670occupiedConstructionand developmentLand and 97,343 92,706 92,332 84,112 69,589developmentConstruction 66,878 48,115 43,121 37,523 56,255Residential real estateConventional 368,008 371,225 378,540 354,963 359,399Jumbo 73,836 76,360 64,944 70,947 69,815Home equity 82,991 88,929 75,170 76,568 78,493Consumer 35,905 35,781 36,611 36,470 36,982Other 13,302 13,053 12,961 14,117 13,371Total loans,net of 2,251,804 2,219,707 2,007,269 1,913,499 1,851,832unearnedfeesLessallowance 29,354 27,166 24,608 13,074 12,941for creditlossesLoans, 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 9/30/2020 6/30/2020 3/31/2020 12/31/2019 9/30/2019thousandsCore depositsNon-interestbearing $ 420,070 $ 443,190 $ 337,446 $ 260,553 $ 241,999checkingInterestbearing 867,442 830,258 648,214 630,352 602,059checkingSavings 598,564 561,029 457,010 418,096 305,891Time 414,542 422,286 384,062 373,125 371,178depositsTotal core 2,300,618 2,256,763 1,826,732 1,682,126 1,521,127deposits Brokeredtime 64,120 90,279 111,156 150,554 227,369depositsOthernon-core 87,153 104,727 107,026 80,557 83,789timedepositsTotal $ 2,451,891 $ 2,451,769 $ 2,044,914 $ 1,913,237 $ 1,832,285deposits

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)Asset QualityInformation (unaudited) For the Quarter EndedDollars in 9/30/2020 6/30/2020 3/31/2020 12/31/2019 9/30/2019thousands Gross loan $ 1,259 $ 218 $ 698 $ 455 $ 843 charge-offsGross loan (245 ) (269 ) (197 ) (88 ) (132 )recoveriesNet loancharge-offs/ $ 1,014 $ (51 ) $ 501 $ 367 $ 711 (recoveries) Net loancharge-offs to 0.18 % -0.01 % 0.10 % 0.08 % 0.16 %average loans(annualized)Allowance forloan credit $ 29,354 $ 27,166 $ 24,608 $ 13,074 $ 12,941 lossesAllowance forloan creditlosses as a 1.30 % 1.22 % 1.23 % 0.68 % 0.70 %percentage ofperiod endloansAllowance forcredit losseson unfunded $ 3,525 $ 3,477 $ 2,984 $ - $ - loancommitmentsNonperforming assets:Nonperforming loansCommercial $ 553 $ 754 $ 560 $ 764 $ 835 Commercial 4,313 5,822 5,644 5,800 7,037 real estateResidentialconstruction 2 14 11 326 191 anddevelopmentResidential 5,104 5,873 4,343 4,404 4,461 real estateConsumer 31 29 65 116 115 Other - 35 100 100 100 Totalnonperforming 10,003 12,527 10,723 11,510 12,739 loansForeclosed propertiesCommercial 2,500 1,774 1,866 1,930 1,514 real estateCommercialconstruction 4,154 4,511 4,511 4,601 4,909 anddevelopmentResidentialconstruction 10,330 10,645 10,774 11,169 12,847 anddevelopmentResidential 847 1,024 1,136 1,576 1,709 real estateTotalforeclosed 17,831 17,954 18,287 19,276 20,979 propertiesOtherrepossessed - - 49 17 16 assetsTotalnonperforming $ 27,834 $ 30,481 $ 29,059 $ 30,803 $ 33,734 assets Nonperformingloans to 0.44 % 0.56 % 0.53 % 0.60 % 0.69 %period endloansNonperformingassets to 0.94 % 1.07 % 1.16 % 1.28 % 1.45 %period endassets Troubled debt restructuringsPerforming $ 22,232 $ 22,117 $ 22,966 $ 23,339 $ 23,420 Nonperforming 2,988 3,003 2,831 2,337 2,443 Total troubleddebt $ 25,220 $ 25,120 $ 25,797 $ 25,676 $ 25,863 restructurings

Loans Past Due 30-89 Days (unaudited) For the Quarter EndedDollars in thousands 9/30/ 6/30/ 3/31/ 12/31/ 9/30/ 2020 2020 2020 2019 2019 Commercial $ 147 $ 196 $ 160 $ 111 $ 390Commercial real estate 1,740 1,231 2,106 1,196 312Construction and 422 8 53 236 65developmentResidential real 4,464 2,763 5,178 4,775 5,573estateConsumer 160 164 222 269 365Other 2 3 7 25 63Total $ 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 Balances Expense Rate Balances Expense Rate Balances Expense Ratethousands ASSETS Interestearning assetsLoans, net ofunearned 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 16,245 191 4.68 % 17,244 200 4.66 % 15,903 195 4.86 %(2)Securities Taxable 261,231 1,445 2.20 % 248,792 1,453 2.35 % 203,288 1,566 3.06 %Tax-exempt 150,350 1,186 3.17 % 120,385 1,012 3.38 % 79,387 782 3.91 %(2)Interestbearingdeposits 60,639 57 0.37 % 41,776 60 0.58 % 35,214 125 1.41 %other banksand Federalfunds soldTotalinterest 2,740,187 29,535 4.29 % 2,546,355 28,191 4.45 % 2,147,347 27,454 5.07 %earningassets Noninterestearning assetsCash & due 16,603 16,672 12,815 from banksPremises & 52,329 50,457 43,160 equipmentOther assets 154,578 140,355 104,789 Allowance for (28,144 ) (25,799 ) (13,276 ) credit lossesTotal assets $ 2,935,553 $ 2,728,040 $ 2,294,835 LIABILITIESAND SHAREHOLDERS'EQUITY Liabilities Interestbearing liabilitiesInterestbearing $ 850,281 $ 380 0.18 % $ 764,852 $ 369 0.19 % $ 594,772 $ 1,621 1.08 %demanddepositsSavings 588,085 925 0.63 % 512,634 1,200 0.94 % 302,331 949 1.25 %depositsTime deposits 585,092 2,247 1.53 % 625,717 2,617 1.68 % 674,869 3,644 2.14 %Short-term 165,555 734 1.76 % 95,744 499 2.10 % 202,425 1,372 2.69 %borrowingsLong-termborrowingsand 23,230 194 3.32 % 20,299 186 3.69 % 20,312 243 4.75 %subordinateddebenturesTotalinterest 2,212,243 4,480 0.81 % 2,019,246 4,871 0.97 % 1,794,709 7,829 1.73 %bearingliabilities Noninterestbearing liabilitiesDemand 421,741 417,992 240,193 depositsOther 33,978 32,238 21,320 liabilitiesTotal 2,667,962 2,469,476 2,056,222 liabilities Shareholders' 267,591 258,564 238,613 equityTotalliabilitiesand $ 2,935,553 $ 2,728,040 $ 2,294,835 shareholders'equity NET INTEREST $ 25,055 $ 23,320 $ 19,625 EARNINGS NET INTEREST 3.64 % 3.68 % 3.63 %MARGIN (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 adjustedassuming a Federal tax rate of 21% for all periods presented.The taxequivalent 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 RatesYTD 2020 vs YTD 2019 (unaudited) YTD 2020 YTD 2019 Average Earnings Yield / Average Earnings Yield / / /Dollars in Balances Expense Rate Balances Expense Ratethousands ASSETS Interest earning assetsLoans, net ofunearned 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 bearingdeposits other 46,074 215 0.62 % 41,642 490 1.57 %banks and Federalfunds soldTotal interest 2,534,641 85,556 4.51 % 2,114,490 80,736 5.10 %earning assets Noninterest earning assetsCash & due from 15,901 12,941 banksPremises & 49,655 40,983 equipmentOther assets 138,651 108,984 Allowance for loan (25,618 ) (13,283 ) lossesTotal assets $ 2,713,230 $ 2,264,115 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Interest bearing liabilitiesInterestbearingdemand $ 753,384 $ 1,830 0.32 % $ 575,817 $ 5,016 1.16 %depositsSavings 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 127,109 1,863 1.96 % 196,622 4,241 2.88 %borrowingsLong-termborrowings 21,284 600 3.77 % 20,317 757 4.98 %andsubordinateddebentures 2,027,169 15,551 1.02 % 1,766,404 22,742 1.72 %Noninterestbearing liabilitiesDemand deposits 393,128 243,356 Other liabilities 30,741 19,669 Total liabilities 2,451,038 2,029,429 Shareholders' 262,192 234,686 equityTotal liabilitiesandshareholders' $ 2,713,230 $ 2,264,115 equity NET INTEREST $ 70,005 $ 57,994 EARNINGS NET INTEREST 3.69 % 3.67 %MARGIN (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 adjustedassuming a Federal tax rate of 21%.The tax equivalent adjustment resulted inan increase in interest income of $730,000 and $737,000 for theYTD 2020 andYTD 2019 periods, respectively.

Contact: Robert S. Tissue, Executive Vice President & CFOTelephone: (304) 530-0552Email: rtissue@summitfgi.com