Summit Financial (SMMF) 8-K Summit Financial Group Reports Second Quarter 2006 Earnings

Exhibit 99

FOR RELEASE 6:00 AM EDT, FRIDAY, JULY 21, 2006

Contact:	Robert S. Tissue, Sr. Vice President & CFO
Telephone:	(304) 530-0552
Email:	rtissue@SummitFGI.com

SUMMIT FINANCIAL GROUP REPORTS SECOND QUARTER 2006 EARNINGS

MOOREFIELD, W.Va.--(BUSINESS WIRE)--July 21, 2006--Summit Financial Group, Inc. (NASDAQ: SMMF) today reported second quarter 2006 net income of $2.6 million, a decline of 15.5 percent from the $3.1 million reported for the second quarter of 2005. Diluted earnings per share were $0.37 compared with $0.43 for the prior-year quarter, down 14.0 percent. For the second quarter of 2006, the returns on average shareholders' equity and average assets were 13.53 percent and 0.91 percent, respectively, compared with prior-year period ratios of 18.21 percent and 1.34 percent. Results reflect continued strong loan growth from community banking operations, offset by a competitive market for deposits and a significant decline in mortgage originations.

For the six months ended June 30, 2006, Summit reported net income of $5.6 million, an increase of 1.4 percent from the $5.5 million reported for the first six months of 2005. Diluted earnings per share were $0.78 compared with $0.77 for the prior-year period, up 1.3 percent. Returns on average shareholders' equity and average assets for the first half of 2006 were 14.53 percent and 0.98 percent, respectively, compared with 2005 half-year ratios of 16.41 percent and 1.21 percent.

H. Charles Maddy, III, President and Chief Executive Officer, commented, “As we recently announced, a sharp decline in mortgage origination revenue lowered earnings for the second quarter. We have taken steps to realign related expenses, and we believe that mortgage origination volume may improve as the year progresses. We continue to pursue the many high-quality lending opportunities we see in our community banks, where asset quality remains exceptional. It is our intent to capitalize on our community banking strengths for the benefit of our shareholders, while we evaluate our strategic options for mortgage banking.”

SECOND QUARTER 2006 CONSOLIDATED RESULTS

Total revenue for the second quarter of 2006, consisting of net interest income plus non-interest income, was $15.9 million, an increase of 0.4 percent over the $15.8 million reported for the second quarter of 2005. Net interest income for the quarter increased 16.1 percent above the prior-year second quarter, to $8.8 million, reflecting 25.3 percent growth in average earning assets, partially offset by a 29 basis point drop in the net interest margin to 3.32 percent. Compared with the first quarter, the net interest margin declined 7 basis points.

Non-interest income for the second quarter of 2005 was $7.1 million compared with $8.2 million for the prior-year period, a decrease of 14.1 percent, reflecting a 16.4 percent decline in mortgage origination revenue from the Company's mortgage banking unit, Summit Mortgage, which is discussed below. Service fee income increased to $726,000 from $651,000 in last year’s second quarter, an increase of 11.5 percent.

Non-interest expense was well-controlled. For the second quarter of 2006, non-interest expense was $11.6 million, a 6.4 percent increase over the $10.9 million reported for the second quarter of 2005. Mr. Maddy added, “We are working diligently to downsize our expenses base to reflect the decline in revenue this quarter. The 10.0 percent improvement in salaries and benefits is a step in that direction.” The efficiency ratio was 70.69 percent for the second quarter of 2006 compared with 66.98 percent for the prior-year period. (The efficiency ratio for the Company's Community Banking Segment, shown below, is a more accurate indicator of its performance compared with other community banks.)

Asset quality has been consistent and strong throughout a period of high loan growth. Nonperforming assets were $2.0 million or 0.17 percent of assets at June 30, 2006, down from $2.3 million or 0.20 percent of assets for the first quarter of 2006, and $2.2 million or 0.23 percent at June 30, 2005. Net charge-offs for the second quarter of 2006 were $171,000, equivalent to 0.08 percent of average loans on an annualized basis, compared with $62,000 and 0.03 percent of loans for the preceding quarter, and $44,000 or 0.03 percent for the year-ago quarter. At period-end, loan loss reserves were 0.77 percent of loans. Mr. Maddy stated, “We have a strong credit culture at our organization, with decision-making for larger or more complex loans centralized at our headquarters. This helps up to sustain the rigorous lending standards that define our organization’s credit culture.”

Assets at June 30, 2006 were $1.18 billion, an increase of $233.2 million, or 24.6 percent over the last twelve months. Portfolio loans, net of unearned income, were $873.5 million at June 30, 2006, up $208.0 million or 31.3 percent year over year, and $73.6 million or 9.2 percent since year-end 2005. Commercial real estate and construction/development loans accounted for the largest increase, up $30.5 million or 11.4 percent and $40.8 million or 28.9 percent, respectively, since December 31, 2005. Together, these two categories comprised 54.7 percent of the loan portfolio, with residential mortgages accounting for and additional 33.0 percent of the total.

Deposits at June 30, 2006 were $761.6 million, an increase of $196.4 million, or 34.8 percent above prior-year second quarter levels. Mr. Maddy commented, “As reported throughout the industry, the market for low-cost deposits is increasingly competitive, and we are no exception. To the extent possible, we have expanded our deposit-gathering network of banking offices into communities with the strongest demographics in the country, and we’ve developed attractive deposit products to earn their business.” Of the $570.7 million in retail accounts, interest-bearing transaction accounts demonstrated the strongest growth, up $68.7 million or 47.1 percent from year-ago levels. Over the same time frame, brokered deposits increased $113.6 million.

Shareholders' equity at June 30, 2006 was $76.6 million, an increase of 9.6 percent over the last twelve months. Common shares outstanding totaled 7,135,120 at quarter-end.

OPERATING SEGMENT RESULTS

Community Banking Financial Performance

Net income for the second quarter of 2006 increased 18.0 percent over the prior-year period, to $3.0 million. Total revenue increased 17.2 percent to $10.0 million, while non-interest expense increased 17.8 percent to $5.2 million. The Company’s efficiency ratio, excluding mortgage banking, was 54.33 percent for the second quarter of 2006 compared with 54.15 percent for the prior-year second quarter.

Mortgage Banking Financial Performance

For the second quarter of 2006, the net loss from mortgage banking activities was $8,000 compared with net income of $755,000 for the second quarter of 2005, a swing of $763,000. Mortgage banking revenue generated from loan sales were $5.9 million, down 16.4 percent from the $7.1 million reported in the prior-year period, reflecting a 14.9 percent decrease in loan sales to $69.3 million. Revenue per loan sold decreased 0.8 percent, to $4,559 while the average loan size increased 1.1 percent to $53,100.

Loan originations in the second quarter of 2006 were $67.1 million, a decline of 8.0 percent from the linked quarter and 19.7 percent from the prior-year second quarter. Non-interest expense, primarily associated with loan originations, remained stable at $6.0 million, compared to $6.1 million incurred in the prior-year period. Expenses per loan originated increased 27.4 percent in first quarter 2006 compared to first quarter 2005. 

Mr. Maddy commented, “Although we cannot be sure, we believe that several factors have contributed to this business segment’s poor performance, including changes in the legal environment within the industry, increased competition in the overall market for the types of mortgage products offered by Summit Mortgage, and the payment of legal expenses arising from legal compliance reviews and litigation defense.”

In addition, Summit Mortgage suspended its direct mailings during the second quarter of 2006, to residents of Indiana, Illinois and Wisconsin, one of its strongest performing markets. Mailings were also briefly suspended in all other states, from late May until early June, 2006. Suspension of these mailings enabled Summit Mortgage to assess several recent federal court decisions concerning the Fair Credit Reporting Act (FCRA), a federal law which prescribes the legal requirements its prescreened offers of credit must meet, and two lawsuits which were filed against the company. Management believes, based on advice from legal counsel, that its mailings fully complied with all applicable legal requirements, including those of the FCRA. Summit Mortgage has also developed a new uniform mailer that it believes complies with the evolving standards in all jurisdictions where it does business. While initial response to the revised mailer was poor, recent indications are that its response rate has improved significantly following further modification.

ABOUT THE COMPANY

Summit Financial Group, Inc., a financial holding company with total assets of $1.2 billion, operates fifteen banking locations through its two wholly-owned community banks: Summit Community Bank, headquartered in Moorefield, West Virginia; and Shenandoah Valley National Bank in Winchester, Virginia. Summit also operates Summit Mortgage, a residential mortgage loan originator located in Chesapeake, Virginia and Summit Insurance Services, LLC in Moorefield, West Virginia.

FORWARD-LOOKING STATEMENTS

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

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

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary -- Q2 2006 vs Q2 2005
	For the Quarter Ended						Percent
Dollars in thousands, except per share amounts		6/30/2006			6/30/2005		Change
Condensed Statements of Income
Interest income
Loans, including fees	$	16,787		$	11,205		49.8	%
Securities		2,787			2,291		21.6	%
Other		13			28		-53.6	%
Total interest income		19,587			13,524		44.8	%
Interest expense
Deposits		6,408			2,926		119.0	%
Borrowings		4,348			2,994		45.2	%
Total interest expense		10,756			5,920		81.7	%
Net interest income		8,831			7,604		16.1	%
Provision for loan losses		480			425		12.9	%
Net interest income after provision
for loan losses		8,351			7,179		16.3	%
Noninterest income
Insurance commissions		247			235		5.1	%
Service fee income		726			651		11.5	%
Mortgage origination revenue		5,945			7,113		-16.4	%
Securities gains (losses)		-			5		-100.0	%
Other income		136			211		-35.5	%
Total noninterest income		7,054			8,215		-14.1	%
Noninterest expense
Salaries and employee benefits		4,855			5,394		-10.0	%
Net occupancy expense		570			463		23.1	%
Equipment expense		575			483		19.0	%
Professional fees		489			242		102.1	%
Postage expense		1,750			1,458		20.0	%
Advertising		1,314			1,222		7.5	%
Other expenses		2,018			1,613		25.1	%
Total noninterest expense		11,571			10,875		6.4	%
Income before income taxes		3,834			4,519		-15.2	%
Income taxes		1,200			1,403		-14.5	%
Net income	$	2,634		$	3,116		-15.5	%
Per Share Data
Basic earnings	$	0.37		$	0.44		-15.9	%
Diluted earnings	$	0.37		$	0.43		-14.0	%
Average shares outstanding
Basic		7,135,107			7,081,044		0.8	%
Diluted		7,193,407			7,205,377		-0.2	%
Performance Ratios
Return on average equity		13.53	%		18.21	%	-25.7	%
Return on average assets		0.91	%		1.34	%	-32.1	%
Net yield on earning assets - taxable equivalent		3.32	%		3.61	%	-8.0	%
Efficiency ratio consolidated(A)		70.69	%		66.98	%	5.5	%
Efficiency ratio excluding mortgage banking (A)		54.33	%		54.15	%	0.3	%

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

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Six Month Performance Summary -- 2006 vs 2005
	For the Six Months Ended						Percent
Dollars in thousands, except per share amounts	6/30/2006			6/30/2005			Change
Condensed Statements of Income
Interest income
Loans, including fees	$	32,279		$	21,215			52.2	%
Securities		5,433			4,549			19.4	%
Other		37			53			-30.2	%
Total interest income		37,749			25,817			46.2	%
Interest expense
Deposits		11,561			5,443			112.4	%
Borrowings		8,726			5,615			55.4	%
Total interest expense		20,287			11,058			83.5	%
Net interest income		17,462			14,759			18.3	%
Provision for loan losses		875			755			15.9	%
Net interest income after provision
for loan losses		16,587			14,004			18.4	%
Noninterest income
Insurance commissions		477			383			24.5	%
Service fee income		1,356			1,198			13.2	%
Mortgage origination revenue		12,529			12,969			-3.4	%
Securities gains (losses)		-			5			-100.0	%
Other income		279			327			-14.7	%
Total noninterest income		14,641			14,882			-1.6	%
Noninterest expense
Salaries and employee benefits		10,013			9,936			0.8	%
Net occupancy expense		1,141			892			27.9	%
Equipment expense		1,095			976			12.2	%
Professional fees		774			469			65.0	%
Postage expense		3,541			3,025			17.1	%
Advertising		2,653			2,547			4.2	%
Other expenses		3,872			3,085			25.5	%
Total noninterest expense		23,089			20,930			10.3	%
Income before income taxes		8,139			7,956			2.3	%
Income taxes		2,534			2,429			4.3	%
Net income	$	5,605		$	5,527			1.4	%
Per Share Data
Basic earnings	$	0.79		$	0.78			1.3	%
Diluted earnings	$	0.78		$	0.77			1.3	%
Average shares outstanding
Basic		7,131,611			7,060,529			1.0	%
Diluted		7,193,199			7,206,181			-0.2	%
Performance Ratios
Return on average equity		14.53	%		16.41	%		-11.5	%
Return on average assets		0.98	%		1.21	%		-19.0	%
Net yield on earning assets - taxable equivalent		3.35	%		3.60	%		-6.9	%
Efficiency ratio consolidated(A)		69.92	%		68.51	%		2.1	%
Efficiency ratio excluding mortgage banking (A)		54.05	%		53.55	%		0.9	%

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

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Five Quarter Performance Summary
	For the Quarter Ended
Dollars in thousands, except per share amounts	6/30/2006			3/31/2006			12/31/2005			9/30/2005			6/30/2005
Condensed Statements of Income
Interest income
Loans, including fees	$	16,787		$	15,492		$	14,260		$	12,527		$	11,205
Securities		2,787			2,647			2,368			2,283			2,291
Other		13			24			30			27			28
Total interest income		19,587			18,163			16,658			14,837			13,524
Interest expense
Deposits		6,408			5,153			4,450			3,509			2,926
Borrowings		4,348			4,379			3,971			3,518			2,994
Total interest expense		10,756			9,532			8,421			7,027			5,920
Net interest income		8,831			8,631			8,237			7,810			7,604
Provision for loan losses		480			395			300			424			425
Net interest income after provision
for loan losses		8,351			8,236			7,937			7,386			7,179
Noninterest income
Insurance commissions		247			230			247			222			235
Service fee income		726			631			680			711			651
Mortgage origination revenue		5,945			6,584			6,098			7,304			7,113
Securities gains (losses)		-			-			(1,434	)		39			5
Other income		136			142			(65	)		189			211
Total noninterest income		7,054			7,587			5,526			8,465			8,215
Noninterest expense
Salaries and employee benefits		4,855			5,158			4,944			5,435			5,394
Net occupancy expense		570			571			510			479			463
Equipment expense		575			520			470			465			483
Professional fees		489			285			271			230			242
Postage expense		1,750			1,791			1,387			1,451			1,458
Advertising		1,314			1,339			1,168			1,164			1,222
Other expenses		2,018			1,854			1,689			1,654			1,613
Total noninterest expense		11,571			11,518			10,439			10,878			10,875
Income before income taxes		3,834			4,305			3,024			4,973			4,519
Income taxes		1,200			1,334			582			1,700			1,403
Net income	$	2,634		$	2,971		$	2,442		$	3,273		$	3,116
Per Share Data
Basic earnings	$	0.37		$	0.42		$	0.34		$	0.46		$	0.44
Diluted earnings	$	0.37		$	0.41		$	0.34		$	0.45		$	0.43
Average shares outstanding
Basic		7,135,107			7,128,076			7,125,994			7,125,483			7,081,044
Diluted		7,193,407			7,192,924			7,198,068			7,211,331			7,205,377
Performance Ratios
Return on average equity		13.53	%		15.60	%		13.15	%		18.24	%		18.21	%
Return on average assets		0.91	%		1.05	%		0.92	%		1.33	%		1.34	%
Net interest margin - taxable equivalent		3.32	%		3.39	%		3.39	%		3.47	%		3.61	%
Efficiency ratio consolidated (A)		70.69	%		69.16	%		65.50	%		65.40	%		66.98	%
Efficiency ratio excluding mortgage banking (A)		54.33	%		53.76	%		50.73	%		53.75	%		54.15	%

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

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Segment Information
For the Quarter Ended June 30, 2006
	Community			Mortgage			Parent
Dollars in thousands	Banking			Banking			and Other			Eliminations			Total
Condensed Statements of Income
Interest income	$	19,399		$	412		$	11		$	(235	)	$	19,587
Interest expense		10,347			234			410			(235	)		10,756
Net interest income		9,052			178			(399	)		-			8,831
Provision for loan losses		330			150			-			-			480
Net interest income after provision
for loan losses		8,722			28			(399	)		-			8,351
Noninterest income		923			5,945			1,651			(1,465	)		7,054
Noninterest expense		5,153			5,974			1,909			(1,465	)		11,571
Income before income taxes		4,492			(1	)		(657	)		-			3,834
Income taxes		1,462			7			(269	)		-			1,200
Net income	$	3,030		$	(8	)	$	(388	)	$	-		$	2,634
Intersegment revenue (expense)	$	(1,148	)	$	(309	)	$	1,457		$	-		$	-
Average assets	$	1,150,170		$	17,998		$	100,416		$	(106,829	)	$	1,161,755

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Segment Information
For the Quarter Ended June 30, 2005
	Community			Mortgage			Parent
Dollars in thousands	Banking			Banking			and Other			Eliminations			Total
Condensed Statements of Income
Interest income	$	13,328		$	485		$	6		$	(295	)	$	13,524
Interest expense		5,725			294			196			(295	)		5,920
Net interest income		7,603			191			(190	)		-			7,604
Provision for loan losses		345			80			-			-			425
Net interest income after provision
for loan losses		7,258			111			(190	)		-			7,179
Noninterest income		905			7,113			1,380			(1,183	)		8,215
Noninterest expense		4,374			6,055			1,629			(1,183	)		10,875
Income before income taxes		3,789			1,169			(439	)		-			4,519
Income taxes		1,221			414			(232	)		-			1,403
Net income	$	2,568		$	755		$	(207	)	$	-		$	3,116
Intersegment revenue (expense)	$	(820	)	$	(355	)	$	1,175		$	-		$	-
Average assets	$	921,770		$	23,838		$	82,103		$	(95,937	)	$	931,774

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Segment Information
For the Six Months Ended June 30, 2006
	Community			Mortgage			Parent
Dollars in thousands	Banking			Banking			and Other			Eliminations			Total
Condensed Statements of Income
Interest income	$	37,298		$	974		$	23		$	(546	)	$	37,749
Interest expense		19,509			545			779			(546	)		20,287
Net interest income		17,789			429			(756	)		-			17,462
Provision for loan losses		655			220			-			-			875
Net interest income after provision
for loan losses		17,134			209			(756	)		-			16,587
Noninterest income		1,733			12,529			3,342			(2,963	)		14,641
Noninterest expense		10,145			12,206			3,701			(2,963	)		23,089
Income before income taxes		8,722			532			(1,115	)		-			8,139
Income taxes		2,776			208			(450	)		-			2,534
Net income	$	5,946		$	324		$	(665	)	$	-		$	5,605
Intersegment revenue (expense)	$	(2,251	)	$	(695	)	$	2,946		$	-		$	-
Average assets	$	1,133,212		$	20,286		$	99,289		$	(108,322	)	$	1,144,465

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Segment Information
For the Six Months Ended June 30, 2005
	Community			Mortgage			Parent
Dollars in thousands	Banking			Banking			and Other			Eliminations			Total
Condensed Statements of Income
Interest income	$	25,532		$	788		$	12		$	(515	)	$	25,817
Interest expense		10,695			513			365			(515	)		11,058
Net interest income		14,837			275			(353	)		-			14,759
Provision for loan losses		675			80			-			-			755
Net interest income after provision
for loan losses		14,162			195			(353	)		-			14,004
Noninterest income		1,593			12,969			2,679			(2,359	)		14,882
Noninterest expense		8,571			11,652			3,066			(2,359	)		20,930
Income before income taxes		7,184			1,512			(740	)		-			7,956
Income taxes		2,250			530			(351	)		-			2,429
Net income	$	4,934		$	982		$	(389	)	$	-		$	5,527
Intersegment revenue (expense)	$	(1,726	)	$	(618	)	$	2,344		$	-		$	-
Average assets	$	902,753		$	21,625		$	80,699		$	(92,887	)	$	912,190

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Selected Balance Sheet Data
	For the Quarter Ended
Dollars in thousands, except per share amounts	6/30/2006		3/31/2006		12/31/2005		9/30/2005		6/30/2005
Assets	$	1,179,648	$	1,137,692	$	1,109,532	$	1,029,103	$	946,487
Securities		238,382		233,805		223,772		215,757		209,561
Loans held for sale, net		9,702		12,343		16,585		12,695		16,994
Loans, net		866,680		825,022		793,767		729,431		659,792
Intangible assets		3,272		3,310		3,348		3,385		3,423
Retail deposits		570,731		560,551		545,104		521,503		487,885
Brokered time deposits		190,832		170,185		128,797		107,416		77,282
Short-term borrowings		164,185		136,483		182,028		139,681		127,974
Long-term borrowings and
subordinated debentures		167,168		183,136		170,501		179,383		176,796
Shareholders' equity		76,559		75,816		73,803		72,429		69,838
Book value per share	$	10.73	$	10.63	$	10.36	$	10.16	$	9.80

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Loan Composition
Dollars in thousands	6/30/2006		3/31/2006		12/31/2005		9/30/2005		6/30/2005
Commercial	$	64,342	$	66,564	$	63,206	$	60,723	$	59,067
Commercial real estate		296,680		275,896		266,228		*		*
Construction and development		182,000		165,026		141,207		*		*
Residential real estate		288,991		282,013		285,597		*		*
Consumer		37,040		37,357		36,863		37,431		36,993
Other		6,188		6,382		8,598		8,824		9,233
Total loans		875,241		833,238		801,699		736,992		666,948
Less unearned fees and interest		1,767		1,731		1,780		1,640		1,459
Total loans net of unearned fees and interest		873,474		831,507		799,919		735,352		665,489
Less allowance for loan losses		6,794		6,485		6,152		5,921		5,697
Loans, net	$	866,680	$	825,022	$	793,767	$	729,431	$	659,792

* - Due to reclassification of real estate loans to include construction and development category, real estate loan balances prior to 12/31/05 conforming to the new classifications is not available.

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Retail Deposit Composition
Dollars in thousands	6/30/2006		3/31/2006		12/31/2005		9/30/2005		6/30/2005
Non interest bearing checking	$	66,071	$	62,860	$	62,631	$	69,346	$	63,207
Interest bearing checking		214,279		214,572		200,638		169,893		145,626
Savings		38,737		39,474		44,681		45,868		47,407
Time deposits		251,644		243,645		237,154		236,396		231,645
Total retail deposits	$	570,731	$	560,551	$	545,104	$	521,503	$	487,885

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Mortgage Banking Segment Loan Activity
	For the Quarter Ended
Dollars in thousands	6/30/2006		3/31/2006		12/31/2005		9/30/2005		6/30/2005
Loans originated
Amount	$	67,130	$	72,967	$	78,297	$	83,860	$	83,616
Number		1,222		1,386		1,443		1,567		1,578
Loans sold
Amount	$	69,315	$	76,375	$	73,903	$	87,071	$	81,422
Number		1,304		1,421		1,376		1,566		1,549

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Asset Quality Information
	For the Quarter Ended
Dollars in thousands	6/30/2006			3/31/2006			12/31/2005			9/30/2005			6/30/2005
Net loan charge-off's	$	171		$	62		$	70		$	200		$	44
Net loan charge-off's to average loans (annualized)		0.08	%		0.03	%		0.04	%		0.11	%		0.03	%
Allowance for loan losses	$	6,794		$	6,485		$	6,152		$	5,921		$	5,697
Allowance for loan losses as a percentage
of period end loans		0.77	%		0.77	%		0.75	%		0.79	%		0.83	%
Nonperforming assets:
Nonperforming loans	$	1,593		$	1,972		$	1,382		$	1,017		$	911
Foreclosed properties and
other repossessed assets		373			346			395			862			949
Nonaccrual securities		-			-			-			-			326
Total	$	1,966		$	2,318		$	1,777		$	1,879		$	2,186
Nonperforming loans to period end loans		0.18	%		0.23	%		0.17	%		0.14	%		0.13	%
Nonperforming assets to period end assets		0.17	%		0.20	%		0.16	%		0.18	%		0.23	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q2 2006 vs Q2 2005
	Q2 2006								Q2 2005
	Average			Earnings /		Yield /			Average			Earnings /		Yield /
Dollars in thousands	Balances			Expense		Rate			Balances			Expense		Rate
ASSETS
Interest earning assets
Loans, net of unearned interest
Taxable	$	858,645		$	16,685		7.79	%	$	659,150		$	11,096		6.75	%
Tax-exempt		8,240			155		7.54	%		8,976			164		7.33	%
Securities
Taxable		190,214			2,250		4.74	%		161,831			1,749		4.33	%
Tax-exempt		45,890			801		7.00	%		48,326			811		6.73	%
Interest bearing deposits other banks
and Federal funds sold		986			14		5.70	%		2,846			27		3.81	%
Total interest earning assets		1,103,975			19,905		7.23	%		881,129			13,847		6.30	%
Noninterest earning assets
Cash & due from banks		14,059								16,058
Premises & equipment		23,586								20,686
Other assets		26,846								19,412
Allowance for loan losses		(6,711	)							(5,511	)
Total assets	$	1,161,755							$	931,774
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	214,908		$	1,823		3.40	%	$	141,902		$	600		1.70	%
Savings deposits		37,381			74		0.79	%		49,191			79		0.64	%
Time deposits		430,360			4,511		4.20	%		305,538			2,247		2.95	%
Short-term borrowings		144,502			1,831		5.08	%		135,016			1,055		3.13	%
Long-term borrowings and
subordinated debentures		179,913			2,518		5.61	%		165,157			1,939		4.71	%
		1,007,064			10,757		4.28	%		796,804			5,920		2.98	%
Noninterest bearing liabilities
Demand deposits		66,496								59,073
Other liabilities		10,298								7,451
Total liabilities		1,083,858								863,328
Shareholders' equity		77,897								68,446
Total liabilities and
shareholders' equity	$	1,161,755							$	931,774
NET INTEREST EARNINGS				$	9,148							$	7,927
NET INTEREST YIELD ON EARNING ASSETS							3.32	%							3.61	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
YTD 2006 vs YTD 2005
	For the Six Months Ended June 30,								For the Six Months Ended June 30,
	2006								2005
	Average			Earnings /		Yield /			Average			Earnings /		Yield /
Dollars in thousands	Balances			Expense		Rate			Balances			Expense		Rate
ASSETS
Interest earning assets
Loans, net of unearned interest
Taxable	$	844,093		$	32,077		7.66	%	$	641,631		$	20,998		6.60	%
Tax-exempt		8,242			305		7.46	%		9,041			328		7.32	%
Securities
Taxable		188,414			4,385		4.69	%		162,072			3,478		4.33	%
Tax-exempt		44,988			1,568		7.03	%		48,102			1,604		6.72	%
Interest bearing deposits other banks
and Federal funds sold		1,629			37		4.58	%		2,788			53		3.83	%
Total interest earning assets		1,087,366			38,372		7.12	%		863,634			26,461		6.18	%
Noninterest earning assets
Cash & due from banks		14,259								15,294
Premises & equipment		23,475								20,714
Other assets		25,890								17,883
Allowance for loan losses		(6,525	)							(5,335	)
Total assets	$	1,144,465							$	912,190
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	209,565		$	3,366		3.24	%	$	134,987		$	1,025		1.53	%
Savings deposits		40,209			147		0.74	%		49,954			158		0.64	%
Time deposits		402,422			8,048		4.03	%		302,046			4,260		2.84	%
Short-term borrowings		158,365			3,795		4.83	%		126,006			1,809		2.90	%
Long-term borrowings and
subordinated debentures		181,971			4,932		5.47	%		167,814			3,806		4.57	%
		992,532			20,288		4.12	%		780,807			11,058		2.86	%
Noninterest bearing liabilities
Demand deposits		64,906								57,610
Other liabilities		9,850								6,393
Total liabilities		1,067,288								844,810
Shareholders' equity		77,177								67,380
Total liabilities and
shareholders' equity	$	1,144,465							$	912,190
NET INTEREST EARNINGS				$	18,084							$	15,403
NET INTEREST YIELD ON EARNING ASSETS							3.35	%							3.60	%