GlobeNewswire Inc | Jul 29, 2021 06:00AM EDT

July 29, 2021

MOOREFIELD, W.Va., July 29, 2021 (GLOBE NEWSWIRE) -- Summit Financial Group, Inc. (Company or Summit) (NASDAQ: SMMF) today reported financial results for the second quarter of 2021, including continued strong earnings on growth in loans and total revenue, as well as lower credit costs.

Second quarter 2021 net income applicable to common shares totaled $10.4 million, or $0.80 per diluted share. Net income applicable to common shares were $10.4 million or $0.80 per diluted share in the first quarter of 2021 and $6.9 million or $0.54 per diluted share in the second quarter of 2020. For the six months ended June 30, 2021, Summit recorded net income applicable to common shares of $20.8 million, or $1.60 per diluted share, compared with $11.5 million, or $0.88 per diluted share, for the comparable 2020 six-month period, representing an increase of 81.4 percent or 81.8 percent per diluted share.

Summits performance in the second quarter and first half of this year gives us even greater confidence in our loan growth goals for 2021 and beyond, said H. Charles Maddy, III, President and Chief Executive Officer. We expect to continue benefitting from production and pipelines that reflect our success in growing commercial relationships in our existing markets, particularly in the D.C., Northern Virginia, Charleston and Huntington, West Virginia regions, complemented by recent acquisitions. We intend to continue creating significant organic growth opportunities, while leveraging Summits operational efficiencies and core deposits in strong legacy locations, as well as our high-performing bankers in every community we serve.

Highlights for Q2 2021

-- Total loans, excluding mortgage warehouse lines of credit and PPP loans, increased 3.7 percent (14.8 percent annualized) during the quarter, 9.6 percent (19.2 percent annualized) year-to-date and 22.0 percent since June 30, 2020. -- Net interest income increased 2.1 percent compared to the linked quarter, and increased 16.2 percent from the year-ago period, primarily due to loan growth and lower funding costs. -- Net interest margin (NIM) decreased 10 basis points to 3.55 percent from the linked quarter, as yield on interest earning assets decreased 16 basis points while the cost of deposits and other funding declined 8 basis points. -- Recorded an efficiency ratio of 49.09 percent and maintained non-interest expense at 2.09 percent of average assets. -- Provision for credit losses declined to $1.0 million. Allowance for loan credit losses at period end equaled $33.9 million, or 1.39 percent of total loans and 148.2 percent of nonperforming loans. -- Announced the acquisition of substantially all of MVB Banks Southern West Virginia community banking operations including four full-service branches and two drive-up locations in and around the states largest cities of Charleston and Huntington, approximately $163.1 million in deposits, and $53.9 million in loans, with an accretive transaction that closed earlier this month. -- Raised $15.0 million in growth capital through a previously disclosed private placement of 6% Fixed-Rate Non-Cumulative Perpetual Preferred Stock to provide flexibility for executing our strategic plan.

Results from Operations

Net interest income grew to $26.8 million in the second quarter of 2021, an increase of 2.1 percent from the linked quarter and 16.2 percent from the prior-year second quarter. NIM for second quarter 2021 was 3.55 percent compared to 3.65 percent for the linked quarter and 3.68 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 3.50 percent for the second quarter of 2021, 3.60 percent for the linked quarter and 3.61 percent for the year-ago period.

Noninterest income, consisting primarily of service fee income from community banking activities and trust and wealth management fees, for second quarter 2021 was $4.7 million compared to $5.0 million for the linked quarter and $3.6 million for the comparable period of 2020. The Company recorded securities gains of $127,000 in the second quarter of 2021 and $476,000 in the linked quarter. Excluding securities gains, noninterest income was $4.6 million for second quarter 2021 and $4.5 million for the linked quarter. Mortgage origination revenue was $898,000 in the second quarter of 2021 compared to $998,000 for the linked quarter and $641,000 for the year-ago period, due to higher volumes of secondary market loans driven primarily by historically low interest rates.

Revenue from net interest income and noninterest income, excluding securities gains, grew to $31.4 million, up 2.1 percent from $30.8 million in the linked quarter and 17.8 percent from $26.7 million in the year-ago quarter. Revenue, excluding securities gains, for the first half of 2021, grew to $62.1 million, up 20.5 percent from the first half of 2020 and outpacing the 10.8 percent noninterest expense increase recorded for the comparable six-month periods.

Total noninterest expense increased to $17.0 million in the second quarter of 2021, up 3.7 percent from $16.4 million in the linked quarter and 12.1 percent from $15.2 million for the prior-year second quarter, reflecting acquisition-related expenses primarily from Summits recently completed Southern West Virginia branch acquisition, as well as ongoing operating costs for its April 2020 branch acquisitions in West Virginias Eastern Panhandle and its December 2020 purchase of Kentuckys WinFirst Bank.

Salary and benefit expenses of $8.2 million in the second quarter of 2021 declined from $8.4 million in the linked quarter, while acquisitions closed in April and December 2020 contributed to an increase from $7.7 million in the year-ago period. Additionally, other significant factors contributing to the changes in total noninterest expense in the second quarter of 2021 were: FDIC assessments of $488,000 compared to $277,000 for the linked quarter and $110,000 for the year-ago period, as well as foreclosed properties expense of $746,000 compared to $227,000 in the linked quarter and $240,000 in the year-ago period. Summits efficiency ratio improved to 49.09 percent in the second quarter of 2021 from 49.79 percent in the linked quarter and 51.97 percent for the year-ago period. Non-interest expense was 2.09 percent of average assets in the second quarter of 2021, unchanged from the linked quarter and improved from 2.23 percent in the year-ago period.

Balance Sheet

At June 30, 2021, total assets were $3.27 billion, an increase of $166.1 million, or 5.3 percent since December 31, 2020.

Total loans net of unearned fees and excluding PPP and mortgage warehouse lending grew to $2.28 billion on June 30, 2021, increasing 3.7 percent during the second quarter, 9.6 percent year-to-date and 22.0 percent since June 30, 2020.

Total commercial loans, including commercial and industrial (C&I) and commercial real estate (CRE) and excluding PPP lending, grew to $1.5 billion on June 30, 2021, increasing 5.9 percent during the second quarter, 15.3 percent year-to-date and 26.4 percent since June 30, 2020. Residential real estate and consumer lending totaled $576.8 million on June 30, 2021, down 2.0 percent during the second quarter and 6.4 percent year-to-date, while increasing 0.8 percent from June 30, 2020.

PPP balances paid down to $40.4 million on June 30, 2021 from a peak of $98.5 million on September 30, 2020. Mortgage warehouse lines of credit, sourced solely from a participation arrangement with a large regional bank, have paid down to $105.3 million on June 30, 2021 from a peak of $252.5 million on June 30, 2020.

Total deposits grew to $2.73 billion on June 30, 2021, increasing 0.2 percent during the second quarter, 5.1 percent year-to-date and 11.3 percent since June 30, 2020. Core deposits grew to $2.63 billion on June 30, 2021, increasing 0.8 percent during the second quarter, 6.9 percent year-to-date and 16.4 percent June 30, 2020.

Total shareholders equity was $315.2 million as of June 30, 2021 compared to $281.6 million at December 31, 2020. During the second quarter of 2021, Summit raised $15.0 million in growth capital through a previously disclosed private placement of 6% Fixed-Rate Non-Cumulative Perpetual Preferred Stock.

Tangible book value per common share increased to $19.01 as of June 30, 2021 compared to $17.50 at December 31, 2020 and $16.63 at June 30, 2020. Summit had 12,963,057 outstanding common shares at the end of the second quarter of 2021 compared to 12,942,004 at year end 2020.

As announced in the first quarter of 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 the second quarter of 2021, no shares of our common stock were repurchased under the Plan.

Asset Quality

Net loan charge-offs (NCOs) were $202,000, or 0.03 percent of average loans annualized, in the second quarter of 2021. NCOs of $189,000 represented 0.03 percent of average loan annualized in the linked quarter, and the Company recorded net recoveries of $51,000 in the year-ago period.

Summits provision for credit losses was $1.0 million in the second quarter of 2021, while its allowance for loan credit losses was $33.9 million, representing 1.39 percent of total loans and 148.2 percent of nonperforming loans, as of June 30, 2021. The provision for credit losses was $1.5 million and $3.0 million for the linked and year-ago quarters, respectively. The allowance for loan credit losses stood at $34.0 million or 1.39 percent of total loans on March 31, 2021 and $27.2 million or 1.22 percent at June 30, 2020.

As of June 30, 2021, nonperforming assets (NPAs), consisting of nonperforming loans, foreclosed properties and repossessed assets, totaled $36.0 million, or 1.10 percent of assets, compared to NPAs of $39.3 million, or 1.21 percent of assets at the linked quarter-end and $30.5 million, or 1.07 percent of assets at the end of second quarter 2020. A loan relationship totaling $9.5 million impacted by the COVID-19 pandemic and on nonaccrual at June 30, 2021 was restored to full accrual status in July 2021.

The aggregate balances of loans the Company has modified as result of the COVID-19 pandemic continued to decline to $8.7 million or 0.4 percent of total loans on June 30, 2021, down from $33.9 million, or 1.4 percent on March 31, 2021, as summarized in the following table.

Loan Balances Modified Due to COVID-19 as of 6/30/2021 Loans LoansDollars in Total Loan Modified to Modified to Total Percentagethousands Balance as of 6/ Interest Payment Loans of Loans 30/2021 Only Deferral Modified Modified PaymentsHospitality $ 116,745 $ 866 $ - $ 866 0.7 %IndustryNon-OwnerOccupied Retail 143,931 7,223 - 7,223 5.0 %StoresOwner-Occupied 141,703 - - - 0.0 %Retail StoresRestaurants 11,895 - - - 0.0 %Oil & Gas 17,158 - - - 0.0 %IndustryOther Commercial 1,315,074 581 - 581 0.0 %LoansTotal Commercial 1,746,506 8,670 - 8,670 0.5 %LoansResidential 1-4 279,970 - - - 0.0 %Family PersonalResidential 1-4 189,963 - - - 0.0 %Family RentalsHome Equity Loans 72,956 - - - 0.0 %Total Residential 542,889 - - - 0.0 %Real Estate LoansConsumer Loans 32,731 - - - 0.0 %Mortgage 105,288 - - - 0.0 %Warehouse LoansCredit Cards and 2,356 - - - 0.0 %OverdraftsTotal Loans $ 2,429,770 $ 8,670 $ - $ 8,670 0.4 %

About the Company

Summit Financial Group, Inc. is the $3.27 billion financial holding company for Summit Community Bank, Inc. Its talented bankers serve commercial and individual clients throughout West Virginia, the Washington, D.C. metropolitan area, Virginia, and Kentucky. Summits focus on in-market commercial lending and providing other business banking services in dynamic markets is designed to leverage its highly efficient operations and core deposits in strong legacy locations. Residential and consumer lending, trust and wealth management, and other retail financial services are offered through convenient digital and mobile banking platforms, including MySummit.bank, and 46 full-service branch locations. More information on Summit Financial Group, Inc. (NASDAQ: SMMF), headquartered in West Virginias Eastern Panhandle in Moorefield, is available at SummitFGI.com.

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) Q2 2021 vs Q2 2020 For the Quarter Ended PercentDollars in thousands 6/30/2021 6/30/2020 ChangeStatements of Income Interest income Loans, including fees $ 27,697 $ 25,624 8.1 % Securities 2,202 2,253 -2.3 % Other 56 60 -6.7 % Total interest income 29,955 27,937 7.2 % Interest expense Deposits 2,136 4,186 -49.0 % Borrowings 1,008 685 47.2 % Total interest expense 3,144 4,871 -35.5 % Net interest income 26,811 23,066 16.2 % Provision for credit losses 1,000 3,000 n/m Net interest income after provision for credit losses 25,811 20,066 28.6 % Noninterest income Trust and wealth management fees 683 582 17.4 % Mortgage origination revenue 898 641 40.1 % Service charges on deposit accounts 1,093 882 23.9 % Bank card revenue 1,519 1,087 39.7 % Realized securities gains 127 - n/a Bank owned life insurance and annuity income 275 275 0.0 % Other income 120 131 -8.4 % Total noninterest income 4,715 3,598 31.0 % Noninterest expense Salaries and employee benefits 8,230 7,655 7.5 % Net occupancy expense 1,131 977 15.8 % Equipment expense 1,598 1,360 17.5 % Professional fees 428 417 2.6 % Advertising and public relations 138 93 48.4 % Amortization of intangibles 382 410 -6.8 % FDIC premiums 488 110 343.6 % Bank card expense 685 560 22.3 % Foreclosed properties expense, net of losses 746 240 210.8 % Acquisition-related expense 454 637 -28.7 % Other expenses 2,756 2,738 0.7 % Total noninterest expense 17,036 15,197 12.1 % Income before income taxes 13,490 8,467 59.3 % Income taxes 2,930 1,518 93.0 % Net income 10,560 6,949 52.0 % Preferred stock dividends 139 - n/a Net income applicable to common shares $ 10,421 $ 6,949 50.0 %

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) Quarterly Performance Summary (unaudited) Q2 2021 vs Q2 2020 For the Quarter Ended Percent 6/30/2021 6/30/2020 ChangePer Share Data Earnings per common share Basic $ 0.80 $ 0.54 48.1 % Diluted $ 0.80 $ 0.54 48.1 % Cash dividends per common share $ 0.17 $ 0.17 0.0 % Common stock dividend payout ratio 21.2 % 31.7 % -33.1 % Average common shares outstanding Basic 12,952,357 12,911,979 0.3 % Diluted 13,013,714 12,943,804 0.5 % Common shares outstanding at period 12,963,057 12,922,045 0.3 % end Performance Ratios Return on average equity 13.67 % 10.75 % 27.2 % Return on average tangible equity 17.03 % 13.57 % 25.5 % Return on average tangible common 17.59 % 13.57 % 29.6 % equity Return on average assets 1.29 % 1.02 % 26.5 % Net interest margin (A) 3.55 % 3.68 % -3.5 % Efficiency ratio (B) 49.09 % 51.97 % -5.5 %

NOTE (A) Presented on a tax-equivalent basis assuming a federal tax rate of 21%.

NOTE (B) Computed on a tax equivalent basis excluding acquisition-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) Six Month Performance Summary (unaudited) 2021 vs 2020 For the Six Months Ended PercentDollars in thousands 6/30/2021 6/30/2020 ChangeStatements of Income Interest income Loans, including fees $ 55,234 $ 50,859 8.6 % Securities 4,359 4,563 -4.5 % Other 123 158 -22.2 % Total interest income 59,716 55,580 7.4 % Interest expense Deposits 4,632 9,537 -51.4 % Borrowings 2,022 1,534 31.8 % Total interest expense 6,654 11,071 -39.9 % Net interest income 53,062 44,509 19.2 % Provision for credit losses 2,500 8,250 n/m Net interest income after provision for credit losses 50,562 36,259 39.4 % Noninterest income Trust and wealth management fees 1,321 1,247 5.9 % Mortgage origination revenue 1,896 855 121.8 % Service charges on deposit accounts 2,193 2,145 2.2 % Bank card revenue 2,860 2,020 41.6 % Realized securities gains 602 1,038 -42.0 % Bank owned life insurance and annuity 573 539 6.3 % income Other income 244 255 -4.3 % Total noninterest income 9,689 8,099 19.6 % Noninterest expense Salaries and employee benefits 16,665 15,160 9.9 % Net occupancy expense 2,305 1,860 23.9 % Equipment expense 3,180 2,789 14.0 % Professional fees 766 804 -4.7 % Advertising and public relations 228 244 -6.6 % Amortization of intangibles 787 839 -6.2 % FDIC premiums 765 275 178.2 % Bank card expense 1,259 1,063 18.4 % Foreclosed properties expense, net of 972 1,207 -19.5 % losses Acquisition-related expense 893 1,425 -37.3 % Other expenses 5,649 4,529 24.7 % Total noninterest expense 33,469 30,195 10.8 % Income before income taxes 26,782 14,163 89.1 % Income taxes 5,863 2,708 116.5 % Net income 20,919 11,455 82.6 % Preferred stock dividends 139 - n/a Net income applicable to common shares $ 20,780 $ 11,455 81.4 %

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) Six Month Performance Summary (unaudited)2021 vs 2020 For the Six Months Ended Percent 6/30/2021 6/30/2020 ChangePer Share Data Earnings per common share Basic $ 1.61 $ 0.89 80.9 % Diluted $ 1.60 $ 0.88 81.8 % Cash dividends per common share $ 0.34 $ 0.34 0.0 % Common stock dividend payout ratio 21.3 % 38.6 % -44.9 % Average common shares outstanding Basic 12,947,228 12,940,590 0.1 % Diluted 13,007,889 12,983,146 0.2 % Common shares outstanding at period 12,963,057 12,922,045 0.3 % end Performance Ratios Return on average equity 14.09 % 8.83 % 59.6 % Return on average tangible equity 17.75 % 10.99 % 61.5 % Return on average tangible common 18.06 % 10.99 % 64.3 % equity Return on average assets 1.30 % 0.78 % 66.7 % Net interest margin (A) 3.60 % 3.72 % -3.2 % Efficiency ratio (B) 49.44 % 51.70 % -4.4 %

NOTE (A) Presented on a tax-equivalent basis assuming a federal tax rate of 21%.

NOTE (B) Computed on a tax equivalent basis excluding acquisition-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 thousands 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020Statements of Income Interest income Loans, including $ 27,697 $ 27,538 $ 27,897 $ 26,807 $ 25,624 fees Securities 2,202 2,157 2,228 2,382 2,253 Other 56 67 51 57 60 Total interest 29,955 29,762 30,176 29,246 27,937 income Interest expense Deposits 2,136 2,496 2,956 3,552 4,186 Borrowings 1,008 1,014 1,014 928 685 Total interest 3,144 3,510 3,970 4,480 4,871 expense Net interest income 26,811 26,252 26,206 24,766 23,066 Provision for 1,000 1,500 3,000 3,250 3,000 credit losses Net interest income after provision for credit losses 25,811 24,752 23,206 21,516 20,066 Noninterest income Trust and wealth 683 638 626 622 582 management fees Mortgage 898 998 1,163 780 641 origination revenue Service charges on 1,093 1,100 1,305 1,138 882 deposit accounts Bank card revenue 1,519 1,341 1,237 1,237 1,087 Realized securities 127 476 912 1,522 - gains Bank owned life insurance and 275 298 233 795 275 annuity income Other income 120 123 301 113 131 Total noninterest 4,715 4,974 5,777 6,207 3,598 income Noninterest expense Salaries and 8,230 8,435 8,250 7,869 7,655 employee benefits Net occupancy 1,131 1,174 1,046 1,057 977 expense Equipment expense 1,598 1,581 1,502 1,474 1,360 Professional fees 428 338 370 364 417 Advertising and 138 90 207 145 93 public relations Amortization of 382 405 409 412 410 intangibles FDIC premiums 488 277 261 320 110 Bank card expense 685 573 573 589 560 Foreclosed properties expense, 746 227 676 607 240 net Acquisition-related 454 440 218 28 637 expenses Other expenses 2,756 2,893 3,094 2,644 2,738 Total noninterest 17,036 16,433 16,606 15,509 15,197 expense Income before 13,490 13,293 12,377 12,214 8,467 income taxes Income tax expense 2,930 2,933 2,126 2,594 1,518 Net 10,560 10,360 10,251 9,620 6,949 income Preferred stock 139 - - - - dividends Net income applicable to $ 10,421 $ 10,360 $ 10,251 $ 9,620 $ 6,949 common shares

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)Five QuarterPerformance Summary(unaudited) For the Quarter Ended 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 Per Share Data Earnings per common share Basic $ 0.80 $ 0.80 $ 0.79 $ 0.74 $ 0.54 Diluted $ 0.80 $ 0.80 $ 0.79 $ 0.74 $ 0.54 Cash dividends $ 0.17 $ 0.17 $ 0.17 $ 0.17 $ 0.17 per common share Common stock dividend 21.2 % 20.6 % 21.5 % 22.9 % 31.7 % payout ratio Average common shares outstanding Basic 12,952,357 12,942,099 12,932,768 12,922,158 12,911,979 Diluted 13,013,714 13,002,062 12,980,041 12,949,584 12,943,804 Common shares outstanding 12,963,057 12,950,714 12,942,004 12,932,415 12,922,045 at period end Performance Ratios Return on average 13.67 % 14.51 % 14.90 % 14.38 % 10.75 % equity Return on average 17.03 % 18.49 % 18.70 % 18.12 % 13.57 % tangible equity Return on average tangible 17.59 % 18.49 % 18.70 % 18.12 % 13.57 % common equity Return on average 1.29 % 1.31 % 1.37 % 1.31 % 1.02 % assets Net interest 3.55 % 3.65 % 3.76 % 3.64 % 3.68 % margin (A) Efficiency 49.09 % 49.79 % 49.38 % 48.95 % 51.97 % 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 acquisition-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, 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020except per shareamounts Assets Cash and due $ 18,707 $ 20,732 $ 19,522 $ 16,257 $ 16,572 from banks Interest bearing 176,282 155,865 80,265 92,729 26,218 deposits other banks Debt securities, 345,742 311,384 286,127 297,989 322,539 available for sale Debt securities, 98,995 99,457 99,914 91,600 80,497 held to maturity Loans, net 2,395,885 2,418,029 2,379,907 2,222,450 2,192,541 Property held 13,170 13,918 15,588 17,831 17,954 for sale Premises and equipment, 53,104 53,289 52,537 52,880 51,847 net Goodwill and other 53,858 54,239 55,123 48,101 48,513 intangible assets Cash surrender value of life 60,087 59,740 59,438 57,029 55,315 insurance policies and annuities Other assets 56,703 61,482 57,963 49,996 49,355 Total assets $ 3,272,533 $ 3,248,135 $ 3,106,384 $ 2,946,862 $ 2,861,351 Liabilities andShareholders' Equity Deposits $ 2,729,205 $ 2,725,010 $ 2,595,651 $ 2,451,891 $ 2,451,769 Short-term 140,146 140,145 140,146 140,145 90,945 borrowings Long-term borrowings and subordinated 49,710 49,681 49,652 50,292 20,297 debentures Other 38,265 39,854 39,355 32,571 34,909 liabilities Shareholders' equity - 14,920 - - - - preferred Shareholders' equity - 300,287 293,445 281,580 271,963 263,431 common Total liabilities and $ 3,272,533 $ 3,248,135 $ 3,106,384 $ 2,946,862 $ 2,861,351 shareholders' equity Book value per common $ 23.16 $ 22.66 $ 21.76 $ 21.03 $ 20.39 share Tangible book value per $ 19.01 $ 18.47 $ 17.50 $ 17.31 $ 16.63 common share Tangible common equity 7.7 % 7.5 % 7.4 % 7.7 % 7.6 % to tangible assets

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF) Regulatory Capital Ratios (unaudited) 6/30/ 3/31/ 12/31/ 9/30/ 6/30/ 2021 2021 2020 2020 2020Summit Financial Group, Inc. CET1 Risk-based Capital 9.6% 9.3% 9.3% 9.9% 9.7% Tier 1 Risk-based Capital 10.9% 10.1% 10.0% 10.7% 10.5% Total Risk-based Capital 13.0% 12.1% 12.1% 12.9% 11.3% Tier 1 Leverage 8.9% 8.5% 8.6% 8.7% 9.0% Summit Community Bank, Inc. CET1 Risk-based Capital 11.9% 11.1% 11.1% 11.8% 10.5% Tier 1 Risk-based Capital 11.9% 11.1% 11.1% 11.8% 10.5% Total Risk-based Capital 12.9% 12.0% 12.0% 12.7% 11.4% Tier 1 Leverage 9.7% 9.3% 9.5% 9.6% 9.0%

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF) LoanComposition (unaudited) Dollars in 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 thousands Commercial $ 326,468 $ 348,022 $ 306,885 $ 350,985 $ 323,788 Mortgagewarehouse 105,288 187,995 251,810 243,730 252,472 linesCommercial real estateOwner 392,164 358,200 351,860 312,502 336,143 occupiedNon-owner 784,415 735,594 685,565 618,624 593,167 occupiedConstructionand developmentLand and 102,670 106,312 107,342 97,343 92,706 developmentConstruction 140,788 126,011 91,100 66,878 48,116 Residential real estateConventional 398,239 411,103 425,519 368,009 371,225 Jumbo 71,694 65,851 74,185 73,836 76,360 Home equity 72,956 77,684 81,588 82,991 88,929 Consumer 32,732 32,924 33,906 34,655 34,640 Other 2,356 2,375 2,393 2,251 2,161 Total loans,net of 2,429,770 2,452,071 2,412,153 2,251,804 2,219,707 unearned feesLessallowance for 33,885 34,042 32,246 29,354 27,166 credit lossesLoans, net $ 2,395,885 $ 2,418,029 $ 2,379,907 $ 2,222,450 $ 2,192,541

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)Deposit Composition (unaudited) Dollarsin 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 thousandsCore depositsNon-interestbearing $ 503,097 $ 505,264 $ 440,819 $ 420,070 $ 443,190 checkingInterestbearing 1,005,725 988,204 934,185 867,442 830,258 checkingSavings 677,000 656,514 621,168 598,564 561,029 Time 441,139 456,431 460,443 414,542 422,286 depositsTotal core 2,626,961 2,606,413 2,456,615 2,300,618 2,256,763 deposits Brokeredtime 23,521 39,125 55,454 64,120 90,279 depositsOthernon-core 78,723 79,472 83,582 87,153 104,727 timedepositsTotal $ 2,729,205 $ 2,725,010 $ 2,595,651 $ 2,451,891 $ 2,451,769 deposits

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)Asset QualityInformation (unaudited) For the Quarter EndedDollars in 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020thousands Gross loan $ 343 $ 354 $ 434 $ 1,259 $ 218 charge-offs Gross loan (141 ) (165 ) (195 ) (245 ) (269 ) recoveries Net loan charge-offs/ $ 202 $ 189 $ 239 $ 1,014 $ (51 ) (recoveries) Net loan charge-offs to 0.03 % 0.03 % 0.04 % 0.18 % -0.01 % average loans (annualized) Allowance for loan credit $ 33,885 $ 34,042 $ 32,246 $ 29,354 $ 27,166 losses Allowance for loan credit losses as a percentage of period end 1.39 % 1.39 % 1.34 % 1.30 % 1.22 % loans Allowance for credit losses on unfunded loan $ 4,660 $ 3,705 $ 4,190 $ 3,525 $ 3,477 commitments Nonperforming assets: Nonperforming loans Commercial $ 968 $ 848 $ 525 $ 553 $ 754 Commercial 14,430 17,137 14,237 4,313 5,822 real estate Residential construction 621 626 235 2 14 and development Residential 6,800 6,667 5,264 5,104 5,873 real estate Consumer 38 54 74 31 29 Other - - - - 35 Total nonperforming 22,857 25,332 20,335 10,003 12,527 loans Foreclosed properties Commercial 2,281 2,281 2,581 2,500 1,774 real estate Commercial construction 3,146 3,884 4,154 4,154 4,511 and development Residential construction 6,859 7,129 7,791 10,330 10,645 and development Residential 884 624 1,062 847 1,024 real estate Total foreclosed 13,170 13,918 15,588 17,831 17,954 properties Other repossessed - - - - - assets Total nonperforming $ 36,027 $ 39,250 $ 35,923 $ 27,834 $ 30,481 assets Nonperforming loans to 0.94 % 1.03 % 0.84 % 0.44 % 0.56 % period end loans Nonperforming assets to 1.10 % 1.21 % 1.16 % 0.94 % 1.07 % period end assets Troubled debt restructurings Performing $ 20,799 $ 20,462 $ 21,375 $ 22,232 $ 22,117 Nonperforming 1,235 3,828 3,127 2,988 3,003 Total troubled debt $ 22,034 $ 24,290 $ 24,502 $ 25,220 $ 25,120 restructurings

Loans Past Due 30-89 Days (unaudited) For the Quarter EndedDollars in thousands 6/30/ 3/31/2021 12/31/2020 9/30/2020 6/30/2020 2021 Commercial $ 414 $ 335 $ 1 $ 147 $ 196 Commercial real 733 508 274 1,740 1,231 estate Construction and 1,911 330 47 422 8 development Residential real 3,594 2,146 4,405 4,464 2,763 estate Consumer 404 96 233 160 164 Other - 3 5 2 3 Total $ 7,056 $ 3,418 $ 4,965 $ 6,935 $ 4,365

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)Average Balance Sheet, Interest Earnings & Expenses and Average RatesQ2 2021 vs Q1 2021 vs Q2 2020 (unaudited) Q2 2021 Q1 2021 Q2 2020 Average Earnings Yield / Average Earnings Yield / Average Earnings Yield / / / /Dollars in Balances Expense Rate Balances Expense Rate Balances Expense Rate thousands ASSETS Interestearning assetsLoans, net of unearned interest (1)Taxable $ 2,455,757 $ 27,593 4.51 % $ 2,355,705 $ 27,419 4.72 % $ 2,118,158 $ 25,466 4.84 % Tax-exempt 11,370 132 4.66 % 12,679 151 4.83 % 17,244 200 4.66 % (2)Securities Taxable 285,092 1,351 1.90 % 266,289 1,295 1.97 % 248,792 1,453 2.35 % Tax-exempt 147,703 1,078 2.93 % 144,880 1,091 3.05 % 120,385 1,012 3.38 % (2)Interest bearing deposits other banks and Federal 154,677 56 0.15 % 166,531 67 0.16 % 41,776 60 0.58 % funds soldTotalinterest 3,054,599 30,210 3.97 % 2,946,084 30,023 4.13 % 2,546,355 28,191 4.45 % earningassets Noninterestearning assetsCash & due 19,095 17,961 16,672 from banksPremises & 53,210 53,317 50,457 equipmentOther assets 170,470 167,343 140,355 Allowance for (34,674 ) (32,706 ) (25,799 ) credit lossesTotal assets $ 3,262,700 $ 3,151,999 $ 2,728,040 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Interestbearing liabilitiesInterest bearingdemand $ 995,673 $ 371 0.15 % $ 960,190 $ 394 0.17 % $ 764,852 $ 369 0.19 % depositsSavings 665,735 634 0.38 % 642,241 645 0.41 % 512,634 1,200 0.94 % depositsTime deposits 562,605 1,131 0.81 % 583,723 1,457 1.01 % 625,717 2,617 1.68 % Short-term 140,146 464 1.33 % 140,146 469 1.36 % 95,744 499 2.10 % borrowingsLong-termborrowings andsubordinated 49,694 544 4.39 % 49,664 545 4.45 % 20,299 186 3.69 % debenturesTotalinterest 2,413,853 3,144 0.52 % 2,375,964 3,510 0.60 % 2,019,246 4,871 0.97 % bearingliabilities Noninterestbearing liabilitiesDemand 503,116 451,957 417,992 depositsOther 36,842 38,393 32,238 liabilitiesTotal 2,953,811 2,866,314 2,469,476 liabilities Shareholders'equity - 11,254 - - preferredShareholders'equity - 297,635 285,685 258,564 commonTotalliabilities andshareholders' $ 3,262,700 $ 3,151,999 $ 2,728,040 equity NET INTEREST $ 27,066 $ 26,513 $ 23,320 EARNINGS NET INTEREST 3.55 % 3.65 % 3.68 % 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 adjusted assuming a Federal tax rate of 21% for all periods presented.The tax equivalent adjustment resulted in an increase in interest income of $255,000, $261,000, and $254,000 for Q2 2021,Q1 2021 and Q2 2020, respectively.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)Average Balance Sheet, Interest Earnings & Expenses and Average RatesYTD 2021 vsYTD 2020 (unaudited) YTD 2021 YTD 2020 Average Earnings Yield / Average Earnings Yield / / /Dollars in Balances Expense Rate Balances Expense Rate thousands ASSETS Interestearning assetsLoans, net ofunearned interest (1)Taxable $ 2,406,007 $ 55,012 4.61 % $ 2,026,814 $ 50,555 5.02 % Tax-exempt 12,021 281 4.71 % 16,059 385 4.82 % (2)Securities Taxable 275,742 2,646 1.94 % 253,840 3,211 2.54 % Tax-exempt 146,300 2,168 2.99 % 95,313 1,710 3.61 % (2)Interest bearing deposits other banksand Federal 160,592 123 0.15 % 38,712 159 0.83 % funds soldTotalinterest 3,000,662 60,230 4.05 % 2,430,738 56,020 4.63 % earningassets Noninterestearning assetsCash & due 18,592 15,548 from banksPremises & 53,263 48,303 equipmentOther assets 168,510 130,604 Allowance for (33,696 ) (24,342 ) loan lossesTotal assets $ 3,207,331 $ 2,600,851 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Interestbearing liabilitiesInterest bearingdemand $ 978,029 $ 765 0.16 % $ 704,404 $ 1,449 0.41 % depositsSavings 654,053 1,279 0.39 % 480,827 2,537 1.06 % depositsTime deposits 573,107 2,588 0.91 % 620,409 5,550 1.80 % Short-term 140,146 933 1.34 % 107,675 1,129 2.11 % borrowingsLong-termborrowings andsubordinated 49,679 1,089 4.42 % 20,301 405 4.01 % debentures 2,395,014 6,654 0.56 % 1,933,616 11,070 1.15 % Noninterestbearing liabilitiesDemand 477,766 378,667 depositsOther 37,614 29,106 liabilitiesTotal 2,910,394 2,341,389 liabilities Shareholders'equity - 5,658 - preferredShareholders'equity - 291,279 259,462 commonTotalliabilities andshareholders' $ 3,207,331 $ 2,600,851 equity NET INTEREST $ 53,576 $ 44,950 EARNINGS NET INTEREST 3.60 % 3.72 % 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 adjusted assuming a Federal tax rate of 21%.The tax equivalent adjustment resulted in an increase in interest income of $514,000 and $440,000 for theYTD 2021 and YTD 2020 periods, respectively.