GlobeNewswire Inc | Apr 22, 2021 06:00AM EDT

April 22, 2021

MOOREFIELD, W.Va., April 22, 2021 (GLOBE NEWSWIRE) -- Summit Financial Group, Inc. (Company or Summit) (NASDAQ: SMMF) today reported first quarter 2021 net income of $10.4 million, or $0.80 per diluted share, both representing a quarterly record. In comparison, earnings for fourth quarter 2020 were $10.3 million, or $0.79 per diluted share, and for first quarter 2020 were $4.51 million, or $0.35 per diluted share.

H. Charles Maddy, III, President and Chief Executive Officer commented, For the second consecutive quarter, Summit achieved both record quarterly earnings per share and net income in Q1 2021. I am particularly pleased by our continued strong core operating performance, highlighted by our strong year-over-year growth in revenue, all while maintaining a relatively stable net interest margin and well-controlled noninterest expenses. Such results serve to validate not only our core growth strategies, but our ability to remain disciplined despite somewhat challenging economic conditions. I am inspired by our gaining momentum towards our goal to be a consistently growing, high-performing community banking institution.

Highlights for Q1 2021

-- Net interest income was nearly unchanged compared to Q4 2020, despite Q1 2021 having two less days than Q4 2020, and increased 22.4 percent year over year, primarily due to loan growth and lower funding costs. -- Net interest margin in Q1 2021 decreased 11 basis points to 3.65 percent as compared to the linked quarter, as yield on interest earning assets decreased 20 basis points while the cost of deposits and other funding declined 10 basis points. -- Excluding mortgage warehouse lines of credit and PPP loans, loan balances increased a net $135.8 million during the quarter. -- Recorded provision for credit losses of $1.50 million in Q1 2021 compared to $3.00 million in Q4 2020 and $5.25 million in Q1 2020; our increased credit provisions in 2020 were principally due to the estimated potential future economic impact of the COVID-19 crisis. -- Efficiency ratio was 49.79 percent compared to 49.38 percent in the linked quarter and 51.41 percent for Q1 2020. -- Net foreclosed properties expenses decreased to $227,000 in Q1 2021 compared to $676,000 in Q4 2020, as net losses on sales of foreclosed properties in Q1 2021 totaled $113,000 compared to $489,000 in Q4 2020, and write downs of foreclosed properties to estimated fair values totaled $23,000 in Q1 2021 compared to $64,000 in Q4 2020. During Q1 2020, such write downs totaled $946,000 and realized net gains were $61,000. -- Realized $476,000 securities gains in Q1 2021 compared to $912,000 in the linked quarter and $1.04 million in Q1 2020. -- Nonperforming assets as a percentage of total assets increased slightly to 1.21 percent compared to 1.16 percent for the linked quarter and 1.16 percent at first quarter end 2020.

Results from Operations

Total revenue for first quarter 2021, consisting of net interest income and noninterest income, increased 20.4 percent to $31.2 million, which included $476,000 in realized securities gains, compared to $25.9 million for first quarter 2020.

For the first quarter of 2021, net interest income was $26.3 million, an increase of 22.4 percent from the $21.4 million reported in the prior-year first quarter and remained nearly unchanged compared to the linked quarter. The net interest margin for first quarter 2021 was 3.65 percent compared to 3.76 percent for both the linked quarter and the year-ago quarter. Excluding the impact of accretion and amortization of fair value acquisition accounting adjustments, Summits net interest margin would have been 3.60 percent for Q1 2021, 3.70 percent for Q4 2020 and 3.70 percent for Q1 2020.

Noninterest income, consisting primarily of service fee income from community banking activities and trust and wealth management fees, for first quarter 2021 was $4.97 million compared to $5.78 million for the linked quarter and $4.50 million for the comparable period of 2020, which included realized securities gains of $476,000 in Q1 2021, $912,000 in the linked quarter and $1.04 million in Q1 2020. Excluding realized securities gains, noninterest income was $4.50 million for first quarter 2021 and $3.46 million for first quarter 2020. Mortgage origination revenue was $998,000 in Q1 2021 compared to $1.16 million for Q4 2020 and $214,000 in Q1 2020 due to higher volumes of secondary market loans driven primarily by historically low interest rates.

We recorded a $1.50 million provision for credit losses during first quarter 2021 compared to $3.00 million for the linked quarter and $5.25 million in Q1 2020.

Q1 2021 total noninterest expense decreased 1.0 percent to $16.4 million compared to the linked quarter and increased 9.6 percent compared to $15.0 million for the prior-year first quarter. This year-over-year increase resulted primarily due to the acquisition of Cornerstone, MVB Bank branches and WinFirst during 2020. Additionally, other significant factors contributing to the changes in total noninterest expense period over period are as follows: decreased write downs of foreclosed properties to estimated fair values totaling $23,000 in Q1 2021 compared to $64,000 in Q4 2020 and $946,000 in Q1 2020, net losses on sales of foreclosed properties in Q1 2021 of $113,000 compared to $489,000 in Q4 2020 and net gains of $61,000 during Q1 2020 and deferred director compensation expense totaling $236,000 in Q1 2021, compared to $571,000 in Q4 2020 and income of $483,000 in Q1 2020.

Balance Sheet

At March 31, 2021, total assets were $3.25 billion, an increase of $141.8 million, or 4.6 percent since December 31, 2020. Total loans, net of unearned fees and allowance for loan losses, were $2.42 billion at March 31, 2021, up $38.1 million, or 1.6 percent, from the $2.38 billion reported at year-end 2020. Loans, excluding mortgage warehouse lines of credit and PPP loans, increased $135.8 million during the quarter, or 26.0 percent (annualized), while net mortgage warehouse lines and PPP loans decreased $83.2 million and $12.6 million, respectively.

At March 31, 2021, core deposits were $2.61 billion, an increase of $149.8 million, or 6.1 percent, since year end 2020. During Q1 2021, checking deposits increased $118.5 million or 8.6 percent, core time deposits declined by $4.0 million or 0.9 percent and savings deposits increased $35.3 million or 5.7 percent.

Shareholders equity was $293.4 million as of March 31, 2021 compared to $281.6 million at December 31, 2020.

Tangible book value per common share increased to $18.47 as of March 31, 2021 compared to $17.50 at December 31, 2020 and $17.17 at March 31, 2020. Summit had 12,950,714 outstanding common shares at Q1 2021 quarter end compared to 12,942,004 at year end 2020.

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 Q1 2021, no shares of our common stock were repurchased under the Plan.

Asset Quality

We incurred net loan charge-offs of $189,000 in first quarter 2021 (0.03 percent of average loans annualized), compared to fourth quarter 2020 net loan charge-offs of $239,000 while $1.99 million and $2.34 million were added to the allowance for loan credit losses through the provision for credit losses during Q1 2021 and Q4 2020, respectively. The allowance for loan credit losses stood at 1.39 percent of total loans as of March 31, 2021, compared to 1.34 percent at year-end 2020.

During Q1 2021, we decreased our allowance for credit losses on unfunded loan commitments $485,000 primarily due to an improved economic forecast and during Q4 2020, we added $665,000 through the provision for credit losses.

As of March 31, 2021, nonperforming assets (NPAs), consisting of nonperforming loans, foreclosed properties and repossessed assets, totaled $39.3 million, or 1.21 percent of assets, which included a $3.3 million downgraded client relationship in the hospitality industry, compared to NPAs of $35.9 million, or 1.16 percent of assets at the linked quarter-end and $29.1 million, or 1.16 percent of assets at the end first quarter 2020. The Q1 2021 increase was partially offset by sales of $1.67 million of foreclosed properties during the quarter.

The following tables summarize the aggregate balances of loans the Company has modified as result of the COVID-19 pandemic as of March 31, 2021 and December 31, 2020 classified by types of loans and impacted borrowers.

Loan Balances Modified Due to COVID-19 as of 3/31/2021 Loans Loans Total Loan Modified Modified Total PercentageDollars in thousands Balance as to to Loans of Loans of Interest Payment Modified Modified 3/31/2021 Only Deferral PaymentsHospitality Industry $ 123,829 $ 14,546 $ 9,154 $ 23,700 19.1 %Non-Owner Occupied 146,837 7,223 - 7,223 4.9 %Retail StoresOwner-Occupied Retail 143,246 - - - 0.0 %StoresRestaurants 8,192 - - - 0.0 %Oil & Gas Industry 16,831 - - - 0.0 %Other Commercial Loans 1,235,204 - 581 581 0.0 %Total Commercial Loans 1,674,139 21,769 9,735 31,504 1.9 %Residential 1-4 Family 292,846 12 2,282 2,294 0.8 %PersonalResidential 1-4 Family 184,108 - - - 0.0 %RentalsHome Equity Loans 77,684 - - - 0.0 %Total Residential Real 554,638 12 2,282 2,294 0.4 %Estate LoansConsumer Loans 32,924 - 76 76 0.2 %Mortgage Warehouse Loans 187,995 - - - 0.0 %Credit Cards and 2,375 - - - 0.0 %OverdraftsTotal Loans $ 2,452,071 $ 21,781 $ 12,093 $ 33,874 1.4 %

Loan Balances Modified Due to COVID-19 as of 12/31/2020 Loans Loans Total Loan Modified Modified Total PercentageDollars in thousands Balance as to to Loans of of Interest Payment Modified Loans 12/31/2020 Only Deferral Modified PaymentsHospitality Industry $ 121,502 $ 40,513 $ 12,930 $ 53,443 44.0 %Non-Owner Occupied 135,405 7,223 447 7,670 5.7 %Retail StoresOwner-Occupied Retail 126,451 2,317 1,246 3,563 2.8 %StoresRestaurants 7,481 - - - 0.0 %Oil & Gas Industry 17,152 - - - 0.0 %Other Commercial Loans 1,134,759 12,006 286 12,292 1.1 %Total Commercial Loans 1,542,750 62,059 14,909 76,968 5.0 %Residential 1-4 Family 305,093 159 1,754 1,913 0.6 %PersonalResidential 1-4 Family 194,612 148 73 221 0.1 %RentalsHome Equity Loans 81,588 - - - 0.0 %Total Residential Real 581,293 307 1,827 2,134 0.4 %Estate LoansConsumer Loans 33,906 48 143 191 0.6 %Mortgage Warehouse Loans 251,810 - - - 0.0 %Credit Cards and 2,394 - - - 0.0 %OverdraftsTotal Loans $ 2,412,153 $ 62,414 $ 16,879 $ 79,293 3.3 %

About the Company

Summit Financial Group, Inc. is a $3.25 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, the Northern, Shenandoah Valley and Southwestern regions of Virginia and the central region of Kentucky, through its bank subsidiary, Summit Community Bank, Inc., which operates 43 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 pandemic, 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) Q1 2021 vs Q1 2020 For the Quarter Ended PercentDollars in thousands 3/31/2021 3/31/2020 ChangeStatements of Income Interest income Loans, including fees $ 27,538 $ 25,235 9.1 % Securities 2,157 2,310 -6.6 % Other 67 98 -31.6 % Total interest income 29,762 27,643 7.7 % Interest expense Deposits 2,496 5,351 -53.4 % Borrowings 1,014 849 19.4 % Total interest expense 3,510 6,200 -43.4 % Net interest income 26,252 21,443 22.4 % Provision for credit losses 1,500 5,250 n/m Net interest income after provision for credit losses 24,752 16,193 52.9 % Noninterest income Trust and wealth management fees 638 665 -4.1 % Mortgage origination revenue 998 214 366.4 % Service charges on deposit accounts 1,100 1,263 -12.9 % Bank card revenue 1,341 933 43.7 % Realized securities gains 476 1,038 -54.1 % Bank owned life insurance and annuity income 298 264 12.9 % Other income 123 125 -1.6 % Total noninterest income 4,974 4,502 10.5 % Noninterest expense Salaries and employee benefits 9,004 7,672 17.4 % Net occupancy expense 1,174 883 33.0 % Equipment expense 1,581 1,429 10.6 % Professional fees 338 387 -12.7 % Advertising and public relations 90 152 -40.8 % Amortization of intangibles 405 429 -5.6 % FDIC premiums 277 165 67.9 % Bank card expense 573 503 13.9 % Foreclosed properties expense, net 227 966 -76.5 % Merger-related expense 440 788 -44.2 % Other expenses 2,324 1,625 43.0 % Total noninterest expense 16,433 14,999 9.6 % Income before income taxes 13,293 5,696 133.4 % Income taxes 2,933 1,190 146.5 % Net income $ 10,360 $ 4,506 129.9 %

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) Quarterly Performance Summary (unaudited) Q1 2021 vs Q1 2020 For the Quarter Ended Percent 3/31/2021 3/31/2020 ChangePer Share Data Earnings per common share Basic $ 0.80 $ 0.35 128.6 % Diluted $ 0.80 $ 0.35 128.6 % Cash dividends $ 0.17 $ 0.17 0.0 % Dividend payout ratio 20.6 % 49.1 % -58.0 % Average common shares outstanding Basic 12,942,099 12,975,429 -0.3 % Diluted 13,002,062 13,028,409 -0.2 % Common shares outstanding at period 12,950,714 12,920,244 0.2 % end Performance Ratios Return on average equity 14.51 % 6.92 % 109.7 % Return on average tangible equity 18.49 % 8.55 % 116.3 % Return on average assets 1.31 % 0.73 % 79.5 % Net interest margin (A) 3.65 % 3.76 % -2.9 % Efficiency ratio (B) 49.79 % 51.41 % -3.2 %

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 3/31/2021 12/31/2020 9/30/2020 6/30/2020 3/31/2020thousandsStatements of Income Interest income Loans, $ 27,538 $ 27,897 $ 26,807 $ 25,624 $ 25,235 including fees Securities 2,157 2,228 2,382 2,253 2,310 Other 67 51 57 60 98 Total interest 29,762 30,176 29,246 27,937 27,643 income Interest expense Deposits 2,496 2,956 3,552 4,186 5,351 Borrowings 1,014 1,014 928 685 849 Total interest 3,510 3,970 4,480 4,871 6,200 expense Net interest 26,252 26,206 24,766 23,066 21,443 income Provision for 1,500 3,000 3,250 3,000 5,250 credit losses Net interest income after provision for credit 24,752 23,206 21,516 20,066 16,193 losses Noninterest income Trust and wealth 638 626 622 582 665 management fees Mortgage origination 998 1,163 780 641 214 revenue Service charges on 1,100 1,305 1,138 882 1,263 deposit accounts Bank card 1,341 1,237 1,237 1,087 933 revenue Realized securities 476 912 1,522 - 1,038 gains Bank owned life insurance 298 233 795 275 264 and annuity income Other income 123 301 113 131 125 Total noninterest 4,974 5,777 6,207 3,598 4,502 income Noninterest expense Salaries and employee 9,004 8,501 8,108 7,930 7,672 benefits Net occupancy 1,174 1,046 1,057 977 883 expense Equipment 1,581 1,502 1,474 1,360 1,429 expense Professional 338 370 364 417 387 fees Advertising and public 90 207 145 93 152 relations Amortization 405 409 412 410 429 of intangibles FDIC premiums 277 261 320 110 165 Bank card 573 573 589 560 503 expense Foreclosed properties 227 676 607 240 966 expense, net Merger-related 440 218 28 637 788 expenses Other expenses 2,324 2,843 2,405 2,463 1,625 Total noninterest 16,433 16,606 15,509 15,197 14,999 expense Income before 13,293 12,377 12,214 8,467 5,696 income taxes Income tax 2,933 2,126 2,594 1,518 1,190 expense Net income $ 10,360 $ 10,251 $ 9,620 $ 6,949 $ 4,506

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)Five Quarter Performance Summary (unaudited) For the Quarter Ended 3/31/2021 12/31/2020 9/30/2020 6/30/2020 3/31/2020 Per Share Data Earnings per common share Basic $ 0.80 $ 0.79 $ 0.74 $ 0.54 $ 0.35 Diluted $ 0.80 $ 0.79 $ 0.74 $ 0.54 $ 0.35 Cash $ 0.17 $ 0.17 $ 0.17 $ 0.17 $ 0.17 dividends Dividend 20.6 % 21.5 % 22.9 % 31.7 % 49.1 % payout ratio Average common shares outstanding Basic 12,942,099 12,932,768 12,922,158 12,911,979 12,975,429 Diluted 13,002,062 12,980,041 12,949,584 12,943,804 13,028,409 Common shares outstanding 12,950,714 12,942,004 12,932,415 12,922,045 12,920,244 at period end Performance Ratios Return on average 14.51 % 14.90 % 14.38 % 10.75 % 6.92 % equity Return on average 18.49 % 18.70 % 18.12 % 13.57 % 8.55 % tangible equity Return on average 1.31 % 1.37 % 1.31 % 1.02 % 0.73 % assets Net interest 3.65 % 3.76 % 3.64 % 3.68 % 3.76 % margin (A) Efficiency 49.79 % 49.38 % 48.95 % 51.97 % 51.41 % 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.

SUMMIT FINANCIALGROUP, INC. (NASDAQ: SMMF)Selected BalanceSheet Data (unaudited) Dollars inthousands, except 3/31/2021 12/31/2020 9/30/2020 6/30/2020 3/31/2020per share amounts Assets Cash and due $ 20,732 $ 19,522 $ 16,257 $ 16,572 $ 18,633 from banks Interest bearing 155,865 80,265 92,729 26,218 22,821 deposits other banks Debt securities, 311,384 286,127 297,989 322,539 305,045 available for sale Debt securities, 99,457 99,914 91,600 80,497 - held to maturity Loans, net 2,418,029 2,379,907 2,222,450 2,192,541 1,982,661 Property held 13,918 15,588 17,831 17,954 18,287 for sale Premises and 53,289 52,537 52,880 51,847 47,078 equipment, net Goodwill and other 54,239 55,123 48,101 48,513 34,132 intangible assets Cash surrender value of life insurance 59,740 59,438 57,029 55,315 46,497 policies and annuities Other assets 61,482 57,963 49,996 49,355 38,168 Total assets $ 3,248,135 $ 3,106,384 $ 2,946,862 $ 2,861,351 $ 2,513,322 Liabilities andShareholders' Equity Deposits $ 2,725,010 $ 2,595,651 $ 2,451,891 $ 2,451,769 $ 2,044,914 Short-term 140,145 140,146 140,145 90,945 161,745 borrowings Long-term borrowings and subordinated 49,681 49,652 50,292 20,297 20,301 debentures Other 39,854 39,355 32,571 34,909 30,337 liabilities Shareholders' 293,445 281,580 271,963 263,431 256,025 equity Total liabilities and $ 3,248,135 $ 3,106,384 $ 2,946,862 $ 2,861,351 $ 2,513,322 shareholders' equity Book value per $ 22.66 $ 21.76 $ 21.03 $ 20.39 $ 19.82 common share Tangible book value per $ 18.47 $ 17.50 $ 17.31 $ 16.63 $ 17.17 common share Tangible common equity 7.5 % 7.4 % 7.7 % 7.6 % 9.0 % to tangible assets

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF) Regulatory Capital Ratios (unaudited) 3/31/ 12/31/ 9/30/ 6/30/ 3/31/ 2021 2020 2020 2020 2020Summit Financial Group, Inc. CET1 Risk-based Capital 9.3 % 9.3 % 9.9 % 9.7 % 10.8 % Tier 1 Risk-based Capital 10.1 % 10.0 % 10.7 % 10.5 % 11.7 % Total Risk-based Capital 12.1 % 12.1 % 12.9 % 11.3 % 12.5 % Tier 1 Leverage 8.5 % 8.6 % 8.7 % 9.0 % 10.2 % Summit Community Bank, Inc. CET1 Risk-based Capital 11.1 % 11.1 % 11.8 % 10.5 % 11.7 % Tier 1 Risk-based Capital 11.1 % 11.1 % 11.8 % 10.5 % 11.7 % Total Risk-based Capital 12.0 % 12.0 % 12.7 % 11.4 % 12.5 % Tier 1 Leverage 9.3 % 9.5 % 9.6 % 9.0 % 10.2 %

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF) Loan Composition (unaudited) Dollars in thousands 3/31/2021 12/31/2020 9/30/2020 6/30/2020 3/31/2020 Commercial $ 358,971 $ 296,832 $ 338,685 $ 311,755 $ 224,659 Mortgage warehouse 168,582 251,815 243,730 252,472 166,826 linesCommercial real estate Owner 358,200 351,859 312,502 336,143 331,486 occupiedNon-owner 735,594 685,563 618,624 593,168 580,619 occupiedConstruction and developmentLand and 106,312 107,342 97,343 92,706 92,332 developmentConstruction 126,011 91,100 66,878 48,115 43,121 Residential real estateConventional 411,103 425,520 368,008 371,225 378,540 Jumbo 65,851 74,185 73,836 76,360 64,944 Home equity 77,684 81,588 82,991 88,929 75,170 Consumer 34,083 35,269 35,905 35,781 36,611 Other 9,680 11,080 13,302 13,053 12,961 Total loans, net of 2,452,071 2,412,153 2,251,804 2,219,707 2,007,269 unearned feesLess allowance for 34,042 32,246 29,354 27,166 24,608 credit lossesLoans, net $ 2,418,029 $ 2,379,907 $ 2,222,450 $ 2,192,541 $ 1,982,661

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF) Deposit Composition (unaudited) Dollars in 3/31/2021 12/31/2020 9/30/2020 6/30/2020 3/31/2020 thousandsCore deposits Non-interest $ 505,264 $ 440,819 $ 420,070 $ 443,190 $ 337,446 bearing checkingInterest 988,204 934,185 867,442 830,258 648,214 bearing checkingSavings 656,514 621,168 598,564 561,029 457,010 Time 456,431 460,443 414,542 422,286 384,062 depositsTotal core 2,606,413 2,456,615 2,300,618 2,256,763 1,826,732 deposits Brokered time 39,125 55,454 64,120 90,279 111,156 depositsOther non-core 79,472 83,582 87,153 104,727 107,026 time depositsTotal deposits $ 2,725,010 $ 2,595,651 $ 2,451,891 $ 2,451,769 $ 2,044,914

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) Asset Quality Information (unaudited) For the Quarter EndedDollars in thousands 3/31/2021 12/31/2020 9/30/2020 6/30/2020 3/31/2020 Gross loan charge-offs $ 354 $ 434 $ 1,259 $ 218 $ 698 Gross loan recoveries (165 ) (195 ) (245 ) (269 ) (197 ) Net loan charge-offs/ $ 189 $ 239 $ 1,014 $ (51 ) $ 501 (recoveries) Net loan charge-offs to 0.03 % 0.04 % 0.18 % -0.01 % 0.10 % average loans (annualized) Allowance for loan credit $ 34,042 $ 32,246 $ 29,354 $ 27,166 $ 24,608 losses Allowance for loan credit losses as a percentage of period end loans 1.39 % 1.34 % 1.30 % 1.22 % 1.23 % Allowance for credit losses on unfunded loan $ 3,705 $ 4,190 $ 3,525 $ 3,477 $ 2,984 commitments Nonperforming assets: Nonperforming loans Commercial $ 848 $ 525 $ 553 $ 754 $ 560 Commercial 17,137 14,237 4,313 5,822 5,644 real estate Residential construction and 626 235 2 14 11 development Residential 6,667 5,264 5,104 5,873 4,343 real estate Consumer 54 74 31 29 65 Other - - - 35 100 Total nonperforming loans 25,332 20,335 10,003 12,527 10,723 Foreclosed properties Commercial 2,281 2,581 2,500 1,774 1,866 real estate Commercial construction and 3,884 4,154 4,154 4,511 4,511 development Residential construction and 7,129 7,791 10,330 10,645 10,774 development Residential 624 1,062 847 1,024 1,136 real estate Total foreclosed properties 13,918 15,588 17,831 17,954 18,287 Other repossessed - - - - 49 assets Total nonperforming assets $ 39,250 $ 35,923 $ 27,834 $ 30,481 $ 29,059 Nonperforming loans to 1.03 % 0.84 % 0.44 % 0.56 % 0.53 % period end loans Nonperforming assets to 1.21 % 1.16 % 0.94 % 1.07 % 1.16 % period end assets Troubled debt restructurings Performing $ 20,462 $ 21,375 $ 22,232 $ 22,117 $ 22,966 Nonperforming 3,828 3,127 2,988 3,003 2,831 Total troubled debt $ 24,290 $ 24,502 $ 25,220 $ 25,120 $ 25,797 restructurings

Loans Past Due 30-89 Days (unaudited) For the Quarter EndedDollars in thousands 3/31/ 12/31/2020 9/30/2020 6/30/2020 3/31/2020 2021 Commercial $ 335 $ 1 $ 147 $ 196 $ 160 Commercial real 508 274 1,740 1,231 2,106 estate Construction and 330 47 422 8 53 development Residential real 2,146 4,405 4,464 2,763 5,178 estate Consumer 96 233 160 164 222 Other 3 5 2 3 7 Total $ 3,418 $ 4,965 $ 6,935 $ 4,365 $ 7,726

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)Average Balance Sheet, Interest Earnings & Expenses and Average RatesQ1 2021 vs Q4 2020 vs Q1 2020 (unaudited) Q1 2021 Q4 2020 Q1 2020 Average Earnings Yield / Average Earnings Yield / Average Earnings Yield / / / /Dollars in thousands Balances Expense Rate Balances Expense Rate Balances Expense Rate ASSETS Interest earning assetsLoans, net of unearned interest (1)Taxable $ 2,355,705 $ 27,419 4.72 % $ 2,292,797 $ 27,774 4.82 % $ 1,935,473 $ 25,089 5.21 %Tax-exempt (2) 12,679 151 4.83 % 13,062 156 4.75 % 14,873 185 5.00 %Securities Taxable 266,289 1,295 1.97 % 258,594 1,341 2.06 % 258,889 1,757 2.73 %Tax-exempt (2) 144,880 1,091 3.05 % 147,979 1,122 3.02 % 70,239 699 4.00 %Interest bearing deposits other banksand 166,531 67 0.16 % 87,151 51 0.23 % 35,648 98 1.11 %Federal funds soldTotal interest earning 2,946,084 30,023 4.13 % 2,799,583 30,444 4.33 % 2,315,122 27,828 4.83 %assets Noninterest earning assetsCash & due from 17,961 16,846 14,422 banksPremises & 53,317 52,688 46,151 equipmentOther assets 167,343 157,436 120,846 Allowance for (32,706 ) (30,778 ) (20,452 ) credit lossesTotal assets $ 3,151,999 $ 2,995,775 $ 2,476,089 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Interest bearing liabilitiesInterest bearing demand $ 960,190 $ 394 0.17 % $ 895,325 $ 357 0.16 % $ 643,955 $ 1,081 0.68 %depositsSavings deposits 642,241 645 0.41 % 607,481 716 0.47 % 449,021 1,337 1.20 %Time deposits 583,723 1,457 1.01 % 566,917 1,883 1.32 % 615,102 2,933 1.92 %Short-term 140,146 469 1.36 % 140,243 467 1.32 % 119,607 630 2.12 %borrowingsLong-term borrowings andsubordinated 49,664 545 4.45 % 49,637 547 4.38 % 20,304 219 4.34 %debenturesTotal interest bearing 2,375,964 3,510 0.60 % 2,259,603 3,970 0.70 % 1,847,989 6,200 1.35 %liabilities Noninterest bearing liabilitiesDemand deposits 451,957 426,441 339,340 Other liabilities 38,393 34,558 28,400 Total 2,866,314 2,720,602 2,215,729 liabilities Shareholders' equity 285,685 275,173 260,360 Total liabilities andshareholders' $ 3,151,999 $ 2,995,775 $ 2,476,089 equity NET INTEREST EARNINGS $ 26,513 $ 26,474 $ 21,628 NET INTEREST MARGIN 3.65 % 3.76 % 3.76 % (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 $260,000,$268,000, and $185,000 for Q1 2021,

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