GlobeNewswire Inc | Jan 27, 2022 06:00AM EST

January 27, 2022

MOOREFIELD, W.Va., Jan. 27, 2022 (GLOBE NEWSWIRE) -- Summit Financial Group, Inc. (Company or Summit) (NASDAQ: SMMF) today reported continued strong financial results for the fourth quarter of 2021, including growth in earnings, net interest income, revenue, and commercial and total loans to new record levels, while maintaining sustained asset quality strength and expense discipline.

The Company, which serves commercial and individual clients across West Virginia, the Washington metropolitan area, Virginia and Kentucky through Summit Community Bank, Inc., grew fourth quarter 2021 net income applicable to common shares to $12.4 million, or $0.95 per diluted share. Earnings increased 2.8 percent from $12.0 million, or $0.92 per diluted share, in the third quarter of 2021 and 20.5 percent from $10.3 million, or $0.79 per share, in the fourth quarter of 2020. For the year ended December 31, 2021, Summit grew earnings by 44.1 percent to $45.1 million, or $3.47 per share, from $31.3 million, or $2.41 per share in 2020.

We believe we have some of the best bankers in the markets we serve, which has been key to our ability to accelerate organic loan growth through the fourth quarter and position us well with significant commercial new business pipelines heading into 2022, said H. Charles Maddy, III, President and Chief Executive Officer. We also continued to manage the balance sheet to maximize profitability while maintaining our low operating expense advantage relative to peers.

Highlights for Q4 2021

-- Total loans, excluding mortgage warehouse lines of credit and Paycheck Protection Program (PPP) lending, increased 6.4 percent, or 25.7 percent annualized, during the quarter and 20.9 percent during the year. -- Commercial loans excluding PPP lending increased 8.6 percent (34.4 percent annualized) during the quarter and 34.3 percent during 2021. -- Net interest income increased 2.8 percent from the linked quarter and 10.0 percent from the year-ago period, primarily due to loan growth and lower funding costs. -- Net interest margin (NIM) increased 2 basis points to 3.49 percent from the linked quarter, as yield on interest earning assets increased 3 basis points while the cost of funds increased 1 basis point. Summit remains strategically well positioned for a rising rate environment. -- Revenue from net interest income and noninterest income, excluding gains and losses on debt securities and equity investments, grew 6.2 percent from the linked quarter and 11.7 percent from the year-ago quarter. -- Incurred $1.5 million provision for credit losses in the quarter compared to none in the linked quarter and $3.0 million in the year-ago quarter; period-end allowance for loan credit losses equaled $32.3 million, or 1.17 percent of total loans and 254.4 percent of nonperforming loans. -- Grew pre-tax, pre-provision earnings 10.5 percent from the linked quarter and 9.6 percent from the year-ago quarter. -- Achieved an efficiency ratio of 49.04 percent and annualized non-interest expense of 2.02 percent of average assets. -- Reduced property held for sale by 20.8 percent during the quarter and 36.8 percent from December 31, 2020. -- Reduced nonperforming assets (NPAs) to 0.63 percent of total assets, excluding restructured assets, down 4 basis points during the quarter and 53 basis points from December 31, 2020. -- Issued $75 million of growth capital through the private placement of 3.25% Fixed-to-Floating Rate Subordinated Notes due 2031.

Results from Operations

Net interest income grew to $28.8 million in the fourth quarter of 2021, an increase of 2.8 percent from the linked quarter and 10.0 percent from the prior-year fourth quarter. NIM for fourth quarter of 2021 was 3.49 percent compared to 3.47 percent for the linked quarter and 3.76 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 3.45 percent for the fourth quarter of 2021, 3.41 percent for the linked quarter and 3.70 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 fourth quarter 2021 was $6.0 million compared to $4.6 million for the linked quarter and $5.8 million for the comparable period of 2020. The Company recorded realized securities losses on debt securities of $109,000 and $68,000 in the fourth quarter and linked quarter of 2021, respectively, and gains of $912,000 in the year-ago quarter. In addition, we recognized a gain on equity investments of $202,000 in Q4 2021.

Mortgage origination revenue was $1.4 million in the fourth quarter of 2021, including an $879,000 increase in the fair value of mortgage servicing rights, compared to $742,000 for the linked quarter and $1.2 million for the year-ago period, including a positive $284,000 mortgage servicing rights fair value adjustment. Year-to-date, mortgage origination revenue grew to $4.0 million, increasing 42.9 percent from 2020.

Excluding gains and losses on debt securities and equity investments and mortgage servicing rights fair value adjustments, noninterest income was $5.0 million in fourth quarter 2021 compared to $4.6 million in the linked quarter and $4.6 million in the year-ago quarter.

Revenue from net interest income and noninterest income, excluding gains and losses on debt securities and equity investments and mortgage servicing rights fair value adjustments, grew to $33.8 million, up 3.5 percent from $32.7 million in the linked quarter and 9.8 percent from $30.8 million in the year-ago quarter. Revenue, excluding gains and losses on debt securities and equity investments and mortgage servicing rights fair value adjustments, for the full year 2021, grew to $128.6 million, up 15.0 percent from 2020 and outpacing the 10.3 percent noninterest expense increase.

Total noninterest expense increased to $17.9 million in the fourth quarter of 2021, up 3.3 percent from $17.3 million in the linked quarter and 8.0 percent from $16.6 million for the prior-year fourth quarter, reflecting acquisition-related expenses primarily from Summits recently completed branch acquisitions, as well as ongoing operating costs for its December 2020 purchase of Kentuckys WinFirst Bank.

Salary and benefit expenses of $9.0 million in the fourth quarter of 2021 increased from $8.7 million in the linked quarter, while acquisitions closed in December 2020 and July 2021 contributed to an increase from $8.3 million in the year-ago period.

Additionally, other significant factors contributing to the changes in total noninterest expense in the fourth quarter of 2021 were: equipment expense of $1.9 million compared to $1.9 million for the linked quarter and $1.5 million for the year-ago period, foreclosed properties expense of $403,000 compared to $370,000 in the linked quarter and $676,000 in the year-ago period, as well as other expenses of $3.3 million compared to $2.7 million for the linked quarter and $3.1 million in the year-ago period. The changes in these other expenses include:

-- Fraud and robbery losses of $190,000 during Q4 2021 compared to $36,000 and $86,000 in the linked and year-ago quarters, respectively; -- Virginia franchise tax of $228,000 during Q4 2021 compared to $137,000 and $95,000 in the linked and year-ago quarters, respectively; -- Debit card processing expenses of $340,000 during Q4 2021 compared to $343,000 and $259,000 in the linked and year-ago quarters, respectively; and -- Internet banking expenses of $322,000 during Q4 2021 compared to $306,000 and $279,000 in the linked and year-ago quarters, respectively.

Summits efficiency ratio was 49.04 percent in the fourth quarter of 2021 compared to 49.53 percent in the linked quarter and 48.93 percent for the year-ago period. Non-interest expense was 2.02 percent of average assets in the fourth quarter of 2021, compared to 2.01 percent during the linked quarter and 2.22 percent in the year-ago period.

Balance Sheet

At December 31, 2021, total assets were $3.58 billion, an increase of $67.8 million, or 1.9 percent, during the fourth quarter and $470.3 million, or 15.1 percent since December 31, 2020.

Total loans net of unearned fees grew to $2.76 billion on December 31, 2021, increasing 8.1 percent during the fourth quarter and 14.5 percent year-to-date. Excluding PPP and mortgage warehouse lending, total loans grew to $2.52 billion on December 31, 2021, increasing 6.4 percent during the fourth quarter and 20.9 percent year-to-date.

Total commercial loans, including commercial and industrial (C&I) and commercial real estate (CRE) and excluding PPP lending, grew to $1.7 billion on December 31, 2021, increasing 8.6 percent during the fourth quarter and 34.3 percent year-to-date. Residential real estate and consumer lending totaled $567.9 million on December 31, 2021, down 0.5 percent during the fourth quarter and 7.7 percent year-to-date.

PPP balances paid down to $12.8 million on December 31, 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, were $227.9 million on December 31, 2021 compared to a peak of $252.5 million on June 30, 2020.

As Summit deployed excess liquidity to enhance profitability and fund continued loan growth, it lowered total deposits to $2.94 billion on December 31, 2021, down 0.4 percent during the fourth quarter. Total deposits grew 13.4 percent year-to-date. Core deposits decreased to $2.85 billion on December 31, 2021 compared to the linked quarter, decreasing 0.4 percent during the fourth quarter and grew 15.9 percent year-to-date.

Total shareholders equity was $327.5 million as of December 31, 2021 compared to $323.3 million at September 30, 2021 and $281.6 million at December 31, 2020. During the fourth quarter of 2021, Summit raised $75 million of growth capital through the private placement of 3.25% Fixed-to-Floating Rate Subordinated Notes due 2031.

Tangible book value per common share increased to $19.54 as of December 31, 2021 compared to $18.83 at September 30, 2021 and $17.50 at December 31, 2020. Summit had 12,743,125 outstanding common shares at the end of the fourth quarter of 2021 compared to 12,976,693 at the end of the linked quarter and 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 fourth quarter of 2021, 248,244 shares of Summits common stock were repurchased under the Plan at an average price of $26.95 per share.

Asset Quality

Net loan charge-offs (NCOs) were $193,000, or 0.03 percent of average loans annualized, in the fourth quarter of 2021. NCOs of $370,000 represented 0.06 percent of average loans annualized in the linked quarter, and $239,000 or 0.04 percent of average loans annualized for fourth quarter 2020.

Summit recorded $1.5 million provision for credit losses in the fourth quarter of 2021, reflecting reserve build to support our substantial growth in both loans and unfunded loan commitments, partially offset by reserve reductions due to improving forecasted economic factors. The provision for credit losses was zero and $3.0 million for the linked and year-ago quarters, respectively.

Summits allowance for loan credit losses and allowance for credit losses on unfunded loan commitments were $32.3 million and $7.28 million, respectively, as of December 31, 2021, compared to $32.4 million and $5.86 million, respectively, at the end of the linked quarter. The allowance for loan credit losses declined just slightly in Q4 2021 as the impact of improving forecasted economic factors served to offset fully the additional provisions for credit losses resulting from the significant volumes of new loans. The allowance for credit losses on unfunded loan commitments increased $1.42 million during the most recent quarter, principally as result of the recent strong volumes of construction loan commitments having a higher historical loss ratio than do our other loans as a whole.

The allowance for loan credit losses stood at 1.17 percent of total loans at year-end 2021 compared to1.27 percent at September 30, 2021 and 1.34 percent at December 31, 2020.

As of December 31, 2021, NPAs consisting of nonperforming loans, foreclosed properties and repossessed assets, totaled $22.6 million, or 0.63 percent of assets, compared to $23.6 million, or 0.67 percent of assets at the linked quarter-end and $35.9 million, or 1.16 percent of assets at the end 2020. During January 2022, we closed on the sale of a foreclosed residential land development project carried on the balance sheet at $2.00 million in property held for sale at year-end 2021 and realized a gain of $201,000 as a result of the sale.

About the Company

Summit Financial Group, Inc. is the $3.58 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 45 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) Q4 2021 vs Q4 2020 For the Quarter Ended PercentDollars in thousands 12/31/2021 12/31/ Change 2020Statements of Income Interest income Loans, including fees $ 28,979 $ 27,897 3.9 % Securities 2,763 2,228 24.0 % Other 75 51 47.1 % Total interest income 31,817 30,176 5.4 % Interest expense Deposits 1,718 2,956 -41.9 % Borrowings 1,267 1,014 25.0 % Total interest expense 2,985 3,970 -24.8 % Net interest income 28,832 26,206 10.0 % Provision for credit losses 1,500 3,000 n/m Net interest income after provision for credit losses 27,332 23,206 17.8 % Noninterest income Trust and wealth management fees 847 626 35.3 % Mortgage origination revenue 1,361 1,163 17.0 % Service charges on deposit accounts 1,501 1,305 15.0 % Bank card revenue 1,528 1,237 23.5 % Gains on equity investments 202 - n/a Realized gains/(losses) on debt securities, (109 ) 912 -112.0 % net Bank owned life insurance and annuity 293 233 25.8 % income Other income 330 301 9.6 % Total noninterest income 5,953 5,777 3.0 % Noninterest expense Salaries and employee benefits 8,977 8,250 8.8 % Net occupancy expense 1,265 1,046 20.9 % Equipment expense 1,902 1,502 26.6 % Professional fees 438 370 18.4 % Advertising and public relations 216 207 4.3 % Amortization of intangibles 387 409 -5.4 % FDIC premiums 330 261 26.4 % Bank card expense 703 573 22.7 % Foreclosed properties expense, net 403 676 -40.4 % Acquisition-related expense 57 218 -73.9 % Other expenses 3,250 3,094 5.0 % Total noninterest expense 17,928 16,606 8.0 % Income before income taxes 15,357 12,377 24.1 % Income taxes 2,777 2,126 30.6 % Net income 12,580 10,251 22.7 % Preferred stock dividends 225 - n/a Net income applicable to common shares $ 12,355 $ 10,251 20.5 %

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) Quarterly Performance Summary (unaudited)Q4 2021 vs Q4 2020 For the Quarter Ended Percent 12/31/2021 12/31/2020 ChangePer Share Data Earnings per common share Basic $ 0.96 $ 0.79 21.5 % Diluted $ 0.95 $ 0.79 20.3 % Cash dividends per common share $ 0.18 $ 0.17 5.9 % Common stock dividend payout ratio 18.3% 21.5% -15.1 % Average common shares outstanding Basic 12,916,555 12,932,768 -0.1 % Diluted 12,976,181 12,980,041 -0.0 % Common shares outstanding at 12,743,125 12,942,004 -1.5 % period end Performance Ratios Return on average equity 15.48% 14.90% 3.9 % Return on average tangible equity 19.72% 18.70% 5.5 % (C) Return on average tangible common 20.91% 18.70% 11.8 % equity (D) Return on average assets 1.42% 1.37% 3.6 % Net interest margin (A) 3.49% 3.76% -7.2 % Efficiency ratio (B) 49.04% 48.93% 0.2 %

NOTES

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

(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.

(C) Return on average tangible equity = (Net income Amortization of intangibles [after-tax]) / (Average shareholders equity Average intangible assets).

(D) Return on average tangible common equity = (Net income Amortization of intangibles [after-tax]) / (Average common shareholders equity Average intangible assets).

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) Annual Performance Summary (unaudited) 2021 vs 2020 For the Year Ended PercentDollars in thousands 12/31/2021 12/31/2020 ChangeStatements of Income Interest income Loans, including fees $ 112,630 $ 105,564 6.7 % Securities 9,470 9,173 3.2 % Other 316 266 18.8 % Total interest income 122,416 115,003 6.4 % Interest expense Deposits 8,182 16,044 -49.0 % Borrowings 4,302 3,477 23.7 % Total interest expense 12,484 19,521 -36.0 % Net interest income 109,932 95,482 15.1 % Provision for credit losses 4,000 14,500 n/m Net interest income after provision for credit losses 105,932 80,982 30.8 % Noninterest income Trust and wealth management fees 2,886 2,495 15.7 % Mortgage origination revenue 3,999 2,799 42.9 % Service charges on deposit accounts 5,032 4,588 9.7 % Bank card revenue 5,896 4,494 31.2 % Gains on equity investments 202 - n/a Realized gains on debt securities, net 425 3,472 -87.8 % Bank owned life insurance and annuity 1,026 1,567 -34.5 % income Other income 742 668 11.1 % Total noninterest income 20,208 20,083 0.6 % Noninterest expense Salaries and employee benefits 34,386 32,211 6.8 % Net occupancy expense 4,824 3,963 21.7 % Equipment expense 6,990 5,765 21.2 % Professional fees 1,578 1,538 2.6 % Advertising and public relations 697 596 16.9 % Amortization of intangibles 1,563 1,659 -5.8 % FDIC premiums 1,449 856 69.3 % Bank card expense 2,668 2,225 19.9 % Foreclosed properties expense, net 1,745 2,490 -29.9 % Acquisition-related expense 1,224 1,671 -26.8 % Other expenses 11,615 9,337 24.4 % Total noninterest expense 68,739 62,311 10.3 % Income before income taxes 57,401 38,754 48.1 % Income taxes 11,663 7,428 57.0 % Net income 45,738 31,326 46.0 % Preferred stock dividends 589 - n/a Net income applicable to common shares $ 45,149 $ 31,326 44.1 %



SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) Annual Performance Summary (unaudited)2021 vs 2020 For the Year Ended Percent 12/31/2021 12/31/20020 ChangePer Share Data Earnings per common share Basic $ 3.49 $ 2.42 44.2 % Diluted $ 3.47 $ 2.41 44.0 % Cash dividends per common share $ 0.70 $ 0.68 2.9 % Common stock dividend payout ratio 19.9% 28.2% -29.6 % Average common shares outstanding Basic 12,943,883 12,935,430 0.1 % Diluted 13,003,428 12,975,385 0.2 % Common shares outstanding at 12,743,125 12,942,004 -1.5 % period end Performance Ratios Return on average equity 14.76% 11.80% 25.1 % Return on average tangible equity 18.71% 14.73% 27.0 % (C) Return on average tangible common 19.51% 14.73% 32.5 % equity (D) Return on average assets 1.36% 1.13% 20.4 % Net interest margin (A) 3.54% 3.71% -4.6 % Efficiency ratio (B) 49.22% 50.00% -1.6 %

NOTES

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

(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.

(C) Return on average tangible equity = (Net income Amortization of intangibles [after-tax]) / (Average shareholders equity Average intangible assets).

(D) Return on average tangible common equity = (Net income Amortization of intangibles [after-tax]) / (Average common shareholders equity Average intangible assets).

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)Five QuarterPerformance Summary (unaudited) For the Quarter EndedDollars in thousands 12/31/2021 9/30/2021 6/30/2021 3/31/2021 12/31/ 2020Statements of Income Interest income Loans, including $ 28,979 $ 28,416 $ 27,697 $ 27,538 $ 27,897 fees Securities 2,763 2,348 2,202 2,157 2,228 Other 75 118 56 67 51 Total interest 31,817 30,882 29,955 29,762 30,176 income Interest expense Deposits 1,718 1,832 2,136 2,496 2,956 Borrowings 1,267 1,013 1,008 1,014 1,014 Total interest 2,985 2,845 3,144 3,510 3,970 expense Net interest income 28,832 28,037 26,811 26,252 26,206 Provision for 1,500 - 1,000 1,500 3,000 credit losses Net interest income after provision for credit losses 27,332 28,037 25,811 24,752 23,206 Noninterest income Trust and wealth 847 718 683 638 626 management fees Mortgage 1,361 742 898 998 1,163 origination revenue Service charges on 1,501 1,338 1,093 1,100 1,305 deposit accounts Bank card revenue 1,528 1,509 1,519 1,341 1,237 Gains on equity 202 - - - - investments Realized gains/ (losses) on debt (109 ) (68 ) 127 476 912 securities, net Bank owned life insurance and 293 160 275 298 233 annuity income Other income 330 168 120 123 301 Total noninterest 5,953 4,567 4,715 4,974 5,777 income Noninterest expense Salaries and 8,977 8,745 8,230 8,435 8,250 employee benefits Net occupancy 1,265 1,254 1,131 1,174 1,046 expense Equipment expense 1,902 1,908 1,598 1,581 1,502 Professional fees 438 374 428 338 370 Advertising and 216 254 138 90 207 public relations Amortization of 387 390 382 405 409 intangibles FDIC premiums 330 354 488 277 261 Bank card expense 703 705 685 573 573 Foreclosed properties expense, 403 370 746 227 676 net Acquisition-related 57 273 454 440 218 expenses Other expenses 3,250 2,716 2,756 2,893 3,094 Total noninterest 17,928 17,343 17,036 16,433 16,606 expense Income before 15,357 15,261 13,490 13,293 12,377 income taxes Income tax expense 2,777 3,023 2,930 2,933 2,126 Net income 12,580 12,238 10,560 10,360 10,251 Preferred stock 225 225 139 - - dividends Net income applicable to $ 12,355 $ 12,013 $ 10,421 $ 10,360 $ 10,251 common shares

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)Five QuarterPerformance Summary(unaudited) For the Quarter Ended 12/31/2021 9/30/2021 6/30/2021 3/31/2021 12/31/2020Per Share Data Earnings per common share Basic $ 0.96 $ 0.93 $ 0.80 $ 0.80 $ 0.79 Diluted $ 0.95 $ 0.92 $ 0.80 $ 0.80 $ 0.79 Cash dividends per $ 0.18 $ 0.18 $ 0.17 $ 0.17 $ 0.17 common share Common stock dividend 18.5% 19.1% 21.2% 20.6% 21.5% payout ratio Average common shares outstanding Basic 12,916,555 12,964,575 12,952,357 12,942,099 12,932,768 Diluted 12,976,181 13,018,672 13,013,714 13,002,062 12,980,041 Common shares outstanding 12,743,125 12,976,693 12,963,057 12,950,714 12,942,004 at period end Performance Ratios Return on average 15.48% 15.30% 13.67% 14.51% 14.90% equity Return on average 19.72% 19.51% 17.03% 18.49% 18.70% tangible equity (C) Return on average tangible 20.91% 20.71% 17.59% 18.49% 18.70% common equity (D) Return on average 1.42% 1.42% 1.29% 1.31% 1.37% assets Net interest 3.49% 3.47% 3.55% 3.65% 3.76% margin (A) Efficiency 49.04% 49.53% 48.82% 49.50% 48.93% ratio (B)

NOTES

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

(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.

(C) Return on average tangible equity = (Net income Amortization of intangibles [after-tax]) / (Average shareholders equity Average intangible assets).

(D) Return on average tangible common equity = (Net income Amortization of intangibles [after-tax]) / (Average common shareholders equity Average intangible assets).

SUMMIT FINANCIALGROUP, INC. (NASDAQ: SMMF)Selected BalanceSheet Data (unaudited)Dollars inthousands, 12/31/2021 9/30/2021 6/30/2021 3/31/2021 12/31/2020except per shareamountsAssets Cash and due $ 21,006 $ 21,247 $ 18,707 $ 20,732 $ 19,522 from banks Interest bearing 57,452 189,862 176,282 155,865 80,265 deposits other banks Debt securities, 401,103 424,741 345,742 311,384 286,127 available for sale Debt securities, 98,060 98,528 98,995 99,457 99,914 held to maturity Equity 20,202 - - - - investments Other 11,304 10,649 10,661 10,776 14,185 investments Loans, net 2,729,093 2,521,704 2,395,885 2,418,029 2,379,907 Property held 9,858 12,450 13,170 13,918 15,588 for sale Premises and equipment, 56,371 56,818 53,104 53,289 52,537 net Goodwill and other 63,590 63,977 53,858 54,239 55,123 intangible assets Cash surrender value of life 60,613 60,241 60,087 59,740 59,438 insurance policies and annuities Other assets 48,067 48,734 46,042 50,706 43,778 Total assets $ 3,576,719 $ 3,508,951 $ 3,272,533 $ 3,248,135 $ 3,106,384 Liabilities andShareholders' Equity Deposits $ 2,943,089 $ 2,955,940 $ 2,729,205 $ 2,725,010 $ 2,595,651 Short-term 140,146 140,146 140,146 140,145 140,146 borrowings Long-term borrowings and subordinated 123,159 49,739 49,710 49,681 49,652 debentures Other 42,852 39,837 38,265 39,854 39,355 liabilities Shareholders' equity - 14,920 14,920 14,920 - - preferred Shareholders' equity - 312,553 308,369 300,287 293,445 281,580 common Total liabilities and $ 3,576,719 $ 3,508,951 $ 3,272,533 $ 3,248,135 $ 3,106,384 shareholders' equity Book value per common $ 24.53 $ 23.76 $ 23.16 $ 22.66 $ 21.76 share Tangible book value per $ 19.54 $ 18.83 $ 19.01 $ 18.47 $ 17.50 common share (A) Tangible common equity 7.1% 7.1% 7.7% 7.5% 7.4% to tangible assets (B)

NOTES(A) Tangible book value per share = (Common shareholders equity Intangible assets) / Common shares outstanding.(B) Tangible common equity to tangible assets = (Common shareholders equity Intangible assets) / (Total assets Intangible assets).

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF) Regulatory Capital Ratios (unaudited) 12/31/ 9/30/ 6/30/ 3/31/ 12/31/ 2021 2021 2021 2021 2020Summit Financial Group, Inc. CET1 Risk-based Capital 8.4 % 9.0 % 9.6 % 9.3 % 9.3 % Tier 1 Risk-based Capital 9.5 % 10.2 % 10.9 % 10.1 % 10.0 % Total Risk-based Capital 13.8 % 12.1 % 13.0 % 12.1 % 12.1 % Tier 1 Leverage 8.3 % 8.4 % 8.9 % 8.5 % 8.6 % Summit Community Bank, Inc. CET1 Risk-based Capital 11.9 % 11.2 % 11.9 % 11.1 % 11.1 % Tier 1 Risk-based Capital 11.9 % 11.2 % 11.9 % 11.1 % 11.1 % Total Risk-based Capital 12.8 % 12.1 % 12.9 % 12.0 % 12.0 % Tier 1 Leverage 10.4 % 9.2 % 9.7 % 9.3 % 9.5 %

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF) LoanComposition (unaudited) Dollars in 12/31/2021 9/30/2021 6/30/2021 3/31/2021 12/31/2020 thousands Commercial $ 365,301 $ 317,855 $ 326,468 $ 348,022 $ 306,885 Mortgagewarehouse 227,869 161,628 105,288 187,995 251,810 linesCommercial real estateOwner 484,708 439,202 392,164 358,200 351,860 occupiedNon-owner 866,031 835,071 784,415 735,594 685,565 occupiedConstructionand developmentLand and 100,805 99,718 102,670 106,312 107,342 developmentConstruction 146,038 127,432 140,788 126,011 91,100 Residential real estateConventional 384,794 394,889 398,239 411,103 425,519 Jumbo 79,108 71,977 71,694 65,851 74,185 Home equity 72,112 71,496 72,956 77,684 81,588 Consumer 31,923 32,284 32,732 32,924 33,906 Other 2,702 2,558 2,356 2,375 2,393 Total loans,net of 2,761,391 2,554,110 2,429,770 2,452,071 2,412,153 unearned feesLessallowance for 32,298 32,406 33,885 34,042 32,246 credit lossesLoans, net $ 2,729,093 $ 2,521,704 $ 2,395,885 $ 2,418,029 $ 2,379,907 Unfunded loan $ 688,493 $ 627,461 $ 535,587 $ 556,910 $ 534,256 commitments

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF) Deposit Composition (unaudited) Dollarsin 12/31/2021 9/30/2021 6/30/2021 3/31/2021 12/31/2020 thousandsCore depositsNon-interestbearing $ 568,986 $ 575,542 $ 503,097 $ 505,264 $ 440,819 checkingInterestbearing 1,127,298 1,121,028 1,005,725 988,204 934,185 checkingSavings 698,156 693,686 677,000 656,514 621,168 Time 451,713 467,024 441,139 456,431 460,443 depositsTotal core 2,846,153 2,857,280 2,626,961 2,606,413 2,456,615 deposits Brokeredtime 14,677 14,671 23,521 39,125 55,454 depositsOthernon-core 82,259 83,989 78,723 79,472 83,582 timedepositsTotal $ 2,943,089 $ 2,955,940 $ 2,729,205 $ 2,725,010 $ 2,595,651 deposits

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)Asset QualityInformation (unaudited) For the Quarter EndedDollars in 12/31/2021 9/30/2021 6/30/2021 3/31/2021 12/31/2020thousands Gross loan $ 282 $ 528 $ 343 $ 354 $ 434 charge-offs Gross loan (89 ) (158 ) (141 ) (165 ) (195 ) recoveries Net loan $ 193 $ 370 $ 202 $ 189 $ 239 charge-offs Net loan charge-offs to 0.03% 0.06% 0.03% 0.03% 0.04% average loans (annualized) Allowance for loan credit $ 32,298 $ 32,406 $ 33,885 $ 34,042 $ 32,246 losses Allowance for loan credit losses as a percentage of period end 1.17% 1.27% 1.39% 1.39% 1.34% loans Allowance for credit losses on unfunded loan commitments $ 7,275 $ 5,860 $ 4,660 $ 3,705 $ 4,190 ("ULC") Allowance for credit losses on ULC as a percentage of 1.06% 0.93% 0.87% 0.67% 0.78% peiod end ULC Nonperforming assets: Nonperforming loans Commercial $ 740 $ 459 $ 968 $ 848 $ 525 Commercial 4,603 4,643 14,430 17,137 14,237 real estate Residential construction 1,560 448 621 626 235 and development Residential 5,772 5,514 6,800 6,667 5,264 real estate Consumer 21 48 38 54 74 Other - - - - - Total nonperforming 12,696 11,112 22,857 25,332 20,335 loans Foreclosed properties Commercial 1,389 2,192 2,281 2,281 2,581 real estate Commercial construction 2,332 2,925 3,146 3,884 4,154 and development Residential construction 5,561 6,712 6,859 7,129 7,791 and development Residential 576 621 884 624 1,062 real estate Total foreclosed 9,858 12,450 13,170 13,918 15,588 properties Other repossessed - - - - - assets Total nonperforming $ 22,554 $ 23,562 $ 36,027 $ 39,250 $ 35,923 assets Nonperforming loans to 0.46% 0.44% 0.94% 1.03% 0.84% period end loans Nonperforming assets to 0.63% 0.67% 1.10% 1.21% 1.16% period end assets Troubled debt restructurings Performing $ 18,887 $ 20,535 $ 20,799 $ 20,462 $ 21,375 Nonperforming 2,039 1,141 1,235 3,828 3,127 Total troubled debt $ 20,926 $ 21,676 $ 22,034 $ 24,290 $ 24,502 restructurings

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)Loans Past Due 30-89 Days (unaudited) Dollars in thousands 12/31/2021 9/30/2021 6/30/2021 3/31/2021 12/31/ 2020 Commercial $ 751 $ 304 $ 414 $ 335 $ 1 Commercial real 683 281 733 508 274 estate Construction and 45 1,215 1,911 330 47 development Residential real 3,552 2,643 3,594 2,146 4,405 estate Consumer 190 193 404 96 233 Other 22 1 - 3 5 Total $ 5,243 $ 4,637 $ 7,056 $ 3,418 $ 4,965

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)Average Balance Sheet, Interest Earnings & Expenses and Average RatesQ4 2021 vs Q3 2021 vs Q4 2020 (unaudited) Q4 2021 Q3 2021 Q4 2020 Average Earnings / Yield Average Earnings / Yield Average Earnings / Yield / / /Dollars in Balances Expense Rate Balances Expense Rate Balances Expense Ratethousands ASSETS Interestearning assetsLoans, net of unearned interest (1)Taxable $ 2,640,975 $ 28,916 4.34 % $ 2,495,880 $ 28,340 4.50 % $ 2,292,797 $ 27,774 4.82 %Tax-exempt 6,888 81 4.67 % 7,871 96 4.84 % 13,062 156 4.75 %(2)Securities Taxable 349,541 1,806 2.05 % 315,082 1,432 1.80 % 258,594 1,341 2.06 %Tax-exempt 177,757 1,212 2.71 % 166,285 1,159 2.77 % 147,979 1,122 3.02 %(2)Interest bearing deposits other banksand Federal 132,471 75 0.22 % 248,315 118 0.19 % 87,151 51 0.23 %funds soldTotalinterest 3,307,632 32,090 3.85 % 3,233,433 31,145 3.82 % 2,799,583 30,444 4.33 %earningassets Noninterestearning assetsCash & due 21,037 20,077 16,846 from banksPremises & 56,566 55,908 52,688 equipmentOther assets 190,445 175,975 157,436 Allowance for (32,691 ) (33,911 ) (30,778 ) credit lossesTotal assets $ 3,542,989 $ 3,451,482 $ 2,995,775 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Interestbearing liabilitiesInterest bearingdemand 1,128,637 319 0.11 % $ 1,092,392 $ 325 0.12 % $ 895,325 $ 357 0.16 %depositsSavings 692,893 590 0.34 % 691,411 602 0.35 % 607,481 716 0.47 %depositsTime deposits 560,140 809 0.57 % 571,445 905 0.63 % 566,917 1,883 1.32 %Short-term 140,146 365 1.03 % 140,146 470 1.33 % 140,243 467 1.32 %borrowingsLong-termborrowings andsubordinated 86,509 902 4.14 % 49,724 543 4.33 % 49,637 547 4.38 %debenturesTotalinterest 2,608,325 2,985 0.45 % 2,545,118 2,845 0.44 % 2,259,603 3,970 0.70 %bearingliabilities Noninterestbearing liabilitiesDemand 568,764 547,627 426,441 depositsOther 40,905 38,789 34,558 liabilitiesTotal 3,217,994 3,131,534 2,720,602 liabilities Shareholders'equity - 14,920 14,920 - preferredShareholders'equity - 310,075 305,028 275,173 commonTotalliabilities andshareholders' $ 3,542,989 $ 3,451,482 $ 2,995,775 equity NET INTEREST $ 29,105 $ 28,300 $ 26,474 EARNINGS NET INTEREST 3.49 % 3.47 % 3.76 %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 tax equivalent adjustment resulted in an increase in interest income of$273,000, $263,000, and $268,000 for Q4 2021,Q3 2021 and Q4 2020.

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 $ 2,487,885 $ 112,269 4.51 % $ 2,150,294 $ 104,986 4.88 % Tax-exempt 9,681 458 4.73 % 15,352 732 4.77 % (2)Securities Taxable 301,446 5,883 1.95 % 256,893 5,996 2.33 % Tax-exempt 159,266 4,541 2.85 % 122,386 4,020 3.28 % (2)Interest bearing deposits other banksand Federal 175,615 315 0.18 % 56,399 266 0.47 % funds soldTotalinterest 3,133,893 123,466 3.94 % 2,601,324 116,000 4.46 % earningassets Noninterestearning assetsCash & due 19,582 16,139 from banksPremises & 54,762 50,418 equipmentOther assets 178,535 143,284 Allowance for (33,491 ) (26,915 ) loan lossesTotal assets $ 3,353,281 $ 2,784,250 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Interestbearing liabilitiesInterest bearingdemand $ 1,044,817 $ 1,408 0.13 % $ 789,064 $ 2,187 0.28 % depositsSavings 673,259 2,471 0.37 % 539,625 4,178 0.77 % depositsTime deposits 569,420 4,302 0.76 % 598,085 9,679 1.62 % Short-term 140,146 1,768 1.26 % 130,411 2,330 1.79 % borrowingsLong-termborrowings andsubordinated 58,974 2,535 4.30 % 28,396 1,147 4.04 % debentures 2,486,616 12,484 0.50 % 2,085,581 19,521 0.94 % Noninterestbearing liabilitiesDemand 518,311 401,502 depositsOther 38,545 31,712 liabilitiesTotal 3,043,472 2,518,795 liabilities Shareholders'equity - 10,327 - preferredShareholders'equity - 299,482 265,455 commonTotalliabilities andshareholders' $ 3,353,281 $ 2,784,250 equity NET INTEREST $ 110,982 $ 96,479 EARNINGS NET INTEREST 3.54 % 3.71 % 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 $1,050,000 and $997,000 for theYTD 2021 and YTD 2020 periods, respectively.

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