Summit Financial (SMMF) 8-K Summit Financial Group Reports 2011 Fourth Quarter & Full Year Results

Exhibit 99

FOR RELEASE 4:00 PM ET, January 30, 2012

Contact:                      Robert S. Tissue, Sr. Vice President & CFO

Telephone:                 (304) 530-0552

Email:                           rtissue@summitfgi.com

SUMMIT FINANCIAL GROUP REPORTS 2011 FOURTH QUARTER & FULL YEAR RESULTS

Q4 2011 Diluted EPS $0.16 compared to $0.11 in Q4 2010; Full-year 2011 Diluted EPS $0.49 compared to ($0.31) in 2010

MOOREFIELD, WV – January 30, 2012 (GLOBE NEWSWIRE) – Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ: SMMF) today reported fourth quarter 2011 net income applicable to common shares of $1,331,000, or $0.16 per diluted share, compared to $836,000, or $0.11 per diluted share, for the fourth quarter of 2010.

Excluding from fourth quarter 2011 nonrecurring items (on a pre-tax basis) consisting of realized securities gains of $542,000, charges for other-than-temporary impairment (“OTTI”) of securities of $401,000 and write-downs of foreclosed properties of $882,000, pro forma fourth quarter 2011 earnings were approximately $1.8 million, or $0.21 per diluted share.  Excluding from fourth quarter 2010 nonrecurring realized securities gains of $463,000, OTTI of securities of $850,000, and write-downs of foreclosed properties of $1,206,000, pro forma earnings of $1,914,000 would have resulted, or $0.24 per diluted share.

For  the full-year 2011, Summit recorded net income applicable to common shares of $3.70 million, or $0.49 per diluted share, compared with a net loss applicable to common shares of $2.27 million, or ($0.31) per diluted share, for 2010.

Excluding from the full-year 2011 nonrecurring items (on a pre-tax basis) of realized securities gains of $4.01 million, OTTI charges of $2.65 million and write-downs of foreclosed properties of $6.65 million, and from the full-year 2010 realized securities gains of $2.05 million, OTTI charges of $988,000, and write-downs of foreclosed properties of $3.40 million, pro forma earnings for 2011 were approximately $7.04 million, or $0.89 per diluted share, compared to a pro forma net loss of $502,000, or ($0.02) per diluted share, for 2010.

Highlights for Q4 2011 include:

·   Achieved third consecutive quarter of positive quarterly earnings.

·   Nonperforming assets increased principally as result of a single large loan relationship having been placed on nonaccrual status.

·   Net loan charge-offs and provision for loan losses remained stable.

·   Recorded charges of $882,000 and $401,000, respectively, to write-down foreclosed properties and to recognize OTTI of securities, which were partially offset by $542,000 in realized securities gains.

·   Net interest margin declined 5 basis points quarter over quarter reflecting increase in nonperforming loans.

·   Noninterest expenses remained well-controlled.

·   Issued 12,000 shares of Series 2011 8% Noncumulative Convertible Preferred Stock. Summit’s leverage capital ratio is at its highest level in five years and its total risk-based capital ratio is at highest level in eleven years.

H. Charles Maddy III, President and Chief Executive Officer of Summit, commented, “We are very pleased by our continuing improved earnings performance; but at the same time, we are equally disappointed by the recent rise in our nonperforming loans. We remain focused on reducing our portfolio of problem assets, and we continue to make progress in this regard, although not at the pace we would desire. Progress in regard to dispositions of foreclosed properties remains difficult as the return of our real estate markets to more normal levels continues to be frustratingly slow”.

Results from Operations

Total revenue for full-year 2011, consisting of net interest income and noninterest income, was $45.4 million compared to $47.9 million for the full-year 2010. For the quarter ended December 31, 2011, total revenue was $11.7 million compared to $11.3 million for the same period in 2010.

Total revenue excluding nonrecurring items (as enumerated above) was $12.4 million for fourth quarter 2011 compared to $12.9 million in the prior-year quarter, a decrease of 4.0 percent.  For the full-year 2011, total revenue excluding nonrecurring items was $50.7 million versus $50.2 million for the same period in 2010.

For the fourth quarter of 2011, net interest income was $9.7 million, a decrease of 7.4 percent from the $10.4 million reported in the prior-year fourth quarter and a decrease of 2.6 percent from the $9.9 million reported in the linked quarter. The net interest margin for fourth quarter 2011 was 3.03 percent compared to 3.15 percent for the year-ago quarter, and 3.08 percent for the linked quarter.

Noninterest income, consisting primarily of insurance commissions from Summit's insurance agency subsidiary and service fee income from community banking activities, for fourth quarter 2011 was $1.99 million compared to $871,000 for the comparable period of 2010. Excluding nonrecurring items (as enumerated above), noninterest income was $2.73 million for fourth quarter 2011, up $266,000 or 10.8 percent from the $2.46 million reported for fourth quarter 2010.

The provision for loan losses was $2.0 million for the fourth quarter of 2011 compared to $2.0 million and $3.0 million for the linked and year-ago quarters, respectively.

Noninterest expense continues to be well-controlled. Total noninterest expense increased less than 1% compared to the prior-year fourth quarter, remaining unchanged at $7.8 million for the quarter. Moreover, noninterest expense for full-year 2011 was $1.2 million or 3.8 percent, less than during 2010. Cost-saving initiatives continue in place and their impact remains beneficial.

Balance Sheet

At December 31, 2011, total assets were $1.45 billion, a decrease of $28.3 million, or 1.9 percent since December 31, 2010. Total loans, net of unearned fees, were $965.5 million at December 31, 2011, down $29.8 million, or 3.0 percent, from the $995.3 million reported at year-end 2010.

All loan categories have declined since year-end 2010, except for commercial real estate (“CRE”), the largest component of Summit’s loan portfolio, which increased $11.2 million, or 2.7 percent. The second largest component of Summit’s loan portfolio, residential real estate, declined $17.5 million, or 5.0 percent, while construction and development (“C&D”) loans declined $16.8 million, or 14.9 percent and commercial (“C&I”) loans declined $2.7 million, or 2.6 percent.

During 2011, retail checking and savings deposits grew $54.0 million, or 13.4 percent, to $455.9 million. The increase in these deposits provided Summit with an opportunity to further reduce brokered deposits and relatively higher-cost long-term borrowings by $61.1 million and $33.9 million, respectively, or 26.5 percent and 9.9 percent, respectively, since year-end 2010.

Asset Quality

As of December 31, 2011, nonperforming assets (“NPAs”), consisting of nonperforming loans, foreclosed properties, and repossessed assets, were $116.6 million, or 8.04 percent of assets. This compares to $99.9 million, or 6.82 percent of assets at the linked quarter, and $92.2 million, or 6.24 percent of assets, at year-end 2010. The 16.8 percent increase in fourth quarter 2011 NPAs compared to the linked quarter was the result of $16.2 million additions in nonperforming loans principally as the result of a single loan relationship totaling $12.6 million being placed on nonaccrual during the quarter.

Fourth quarter 2011 net loan charge-offs were $2.2 million, or 0.91 percent of average loans annualized; year-to-date 2011, Summit’s net loan charge-offs were $9.5 million, while adding $10.0 million to the allowance for loan losses. The allowance for loan losses stood at $17.7 million, or 1.80 percent of total loans at December 30, 2011, compared to 1.70 percent at year-end 2010.

Capital Adequacy

 Shareholders’ equity, which includes net proceeds totaling $5.8 million relating to Summit’s recent issuance of 12,000 shares of Series 2011 8% Noncumulative Convertible Preferred Stock, was $102.6 million as of December 30, 2011 compared to $89.8 million December 31, 2010.

Summit's depository institution, Summit Community Bank, Inc. (the “Bank”), remains well in excess of regulatory requirements for a "well capitalized" institution at December 31, 2011. The Bank’s total risk-based capital ratio improved to 13.6 percent at December 31, 2011 compared to 13.4 percent at September 30, 2011, while its Tier 1 leverage capital ratio improved to 8.9 from the 8.7 percent reported at September 30, 2011. Total common shares outstanding as of December 31, 2011 were 7,425,472.

About the Company

Summit Financial Group, Inc. is a $1.45 billion financial holding company headquartered in Moorefield, West Virginia. Summit provides community banking services primarily in the Eastern Panhandle and South Central regions of West Virginia and the Northern and Shenandoah Valley regions of Virginia, through its bank subsidiary, Summit Community Bank, Inc., which operates fifteen banking locations. Summit also operates Summit Insurance Services, LLC in Moorefield, West Virginia and Leesburg, 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 economies.  We undertake no obligation to revise these statements following the date of this press release.

NON-GAAP FINANCIAL MEASURES

This press release contains financial information determined by methods other than in accordance with generally accepted accounting principles in the United States of America ("GAAP").  Specifically, Summit adjusted GAAP performance measures to exclude the effects of realized and unrealized securities gains and losses, and write-downs of foreclosed properties to estimated fair value included in its Statements of Income.  Management deems these items to be unusual in nature and believes presentations of financial measures excluding the impact of these items provide useful supplemental information that is important for a proper understanding of the operating results of Summit's core business. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary -- Q4 2011 vs Q4 2010
	For the Quarter Ended						Percent
Dollars in thousands	12/31/2011			12/31/2010			Change
Condensed Statements of Income
Interest income
Loans, including fees	$	14,362		$	16,064			-10.6	%
Securities		2,711			3,191			-15.0	%
Other		13			11			18.2	%
Total interest income		17,086			19,266			-11.3	%
Interest expense
Deposits		4,302			5,000			-14.0	%
Borrowings		3,123			3,829			-18.4	%
Total interest expense		7,425			8,829			-15.9	%
Net interest income		9,661			10,437			-7.4	%
Provision for loan losses		1,999			3,000			-33.4	%
Net interest income after provision
for loan losses		7,662			7,437			3.0	%
Noninterest income
Insurance commissions		1,003			1,086			-7.6	%
Service fee income		790			741			6.6	%
Realized securities gains		542			463			17.1	%
Other-than-temporary impairment of securities		(401	)		(850	)		-52.8	%
Write-downs of foreclosed properties		(882	)		(1,206	)		-26.9	%
Other income		937			637			47.1	%
Total noninterest income		1,989			871			128.4	%
Noninterest expense
Salaries and employee benefits		3,846			3,839			0.2	%
Net occupancy expense		472			480			-1.7	%
Equipment expense		593			574			3.3	%
Professional fees		501			256			95.7	%
FDIC premiums		564			705			-20.0	%
Foreclosed properties expense		441			430			2.6	%
Other expenses		1,417			1,478			-4.1	%
Total noninterest expense		7,834			7,762			0.9	%
Income before income taxes		1,817			546			232.8	%
Income taxes		337			(364	)		192.6	%
Net income		1,480			910			62.6	%
Preferred stock dividends		149			74			101.4	%
Net income applicable to common shares	$	1,331		$	836			59.2	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary -- Q4 2011 vs Q4 2010
	For the Quarter Ended						Percent
	12/31/2011			12/31/2010			Change
Per Share Data
Earnings per common share
Basic	$	0.18		$	0.11			63.6	%
Diluted	$	0.16		$	0.11			45.5	%
Average shares outstanding
Basic		7,425,472			7,425,472			0.0	%
Diluted		9,044,976			7,425,822			21.8	%
Performance Ratios
Return on average equity (A)		6.40	%		4.17	%		53.5	%
Return on average assets		0.41	%		0.25	%		64.0	%
Net interest margin		3.03	%		3.15	%		-3.8	%
Efficiency ratio (B)		60.10	%		58.05	%		3.5	%

NOTE (A) – Net income divided by total shareholders’ equity less preferred equity.

NOTE (B) – Computed on a tax equivalent basis excluding nonrecurring income and expense items and amortization of intangibles.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Annual Performance Summary -- 2011 vs 2010
	For the Years Ended						Percent
Dollars in thousands	12/31/2011			12/31/2010			Change
Condensed Statements of Income
Interest income
Loans, including fees	$	59,176		$	65,957			-10.3	%
Securities		11,799			13,684			-13.8	%
Other		72			31			132.3	%
Total interest income		71,047			79,672			-10.8	%
Interest expense
Deposits		18,273			21,036			-13.1	%
Borrowings		12,930			18,484			-30.0	%
Total interest expense		31,203			39,520			-21.0	%
Net interest income		39,844			40,152			-0.8	%
Provision for loan losses		10,000			21,350			-53.2	%
Net interest income after provision
for loan losses		29,844			18,802			58.7	%
Noninterest income
Insurance commissions		4,460			4,744			-6.0	%
Service fee income		2,944			3,039			-3.1	%
Realized securities gains		4,006			2,051			95.3	%
Other-than-temporary impairment of securities		(2,646	)		(988	)		167.8	%
Write-downs of foreclosed properties		(6,651	)		(3,401	)		95.6	%
Other income		3,437			2,294			49.8	%
Total noninterest income		5,550			7,739			-28.3	%
Noninterest expense
Salaries and employee benefits		15,833			15,650			1.2	%
Net occupancy expense		1,935			2,010			-3.7	%
Equipment expense		2,342			2,457			-4.7	%
Professional fees		1,155			1,015			13.8	%
FDIC premiums		2,423			2,870			-15.6	%
Foreclosed properties expense		1,676			1,577			6.3	%
Other expenses		4,921			5,892			-16.5	%
Total noninterest expense		30,285			31,471			-3.8	%
Income (loss) before income taxes		5,109			(4,930	)		203.6	%
Income taxes		1,035			(2,955	)		135.0	%
Net income (loss)		4,074			(1,975	)		306.3	%
Preferred stock dividends		371			297			24.9	%
Net income (loss) applicable to common shares	$	3,703		$	(2,272	)		263.0	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Annual Month Performance Summary -- 2011 vs 2010
	For the Years Ended						Percent
	12/31/2011			12/31/2010			Change
Per Share Data
Earnings per common share
Basic	$	0.50			(0.31	)	NM
Diluted	$	0.49			(0.31	)	NM
Average shares outstanding
Basic		7,425,472			7,425,472			0.0	%
Diluted		8,338,199			7,425,472			12.3	%
Performance Ratios
Return on average equity (A)		4.55	%		-2.60	%		-275.0	%
Return on average assets		0.28	%		-0.15	%		-286.7	%
Net interest margin		3.08	%		2.96	%		4.1	%
Efficiency ratio (B)		58.54	%		60.03	%		-2.5	%

NOTE (A) – Net income divided by total shareholders’ equity less preferred equity.

NOTE (B) – 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	12/31/2011			9/30/2011			6/30/2011			3/31/2011			12/31/2010
Condensed Statements of Income
Interest income
Loans, including fees	$	14,362		$	14,717		$	14,956		$	15,140		$	16,064
Securities		2,711			2,920			3,125			3,043			3,191
Other		13			15			28			17			11
Total interest income		17,086			17,652			18,109			18,200			19,266
Interest expense
Deposits		4,302			4,561			4,667			4,743			5,000
Borrowings		3,123			3,170			3,282			3,355			3,829
Total interest expense		7,425			7,731			7,949			8,098			8,829
Net interest income		9,661			9,921			10,160			10,102			10,437
Provision for loan losses		1,999			2,001			3,000			3,000			3,000
Net interest income after provision
for loan losses		7,662			7,920			7,160			7,102			7,437
Noninterest income
Insurance commissions		1,003			1,073			1,142			1,242			1,086
Service fee income		790			776			758			621			741
Realized securities gains		542			1,517			318			1,628			463
Other-than-temporary impairment of securities		(401	)		(484	)		(533	)		(1,228	)		(850	)
Write-downs of foreclosed properties		(882	)		(1,637	)		(689	)		(3,443	)		(1,206	)
Other income		937			942			859			699			637
Total noninterest income		1,989			2,187			1,855			(481	)		871
Noninterest expense
Salaries and employee benefits		3,846			3,959			4,055			3,973			3,839
Net occupancy expense		472			473			481			509			480
Equipment expense		593			589			581			580			574
Professional fees		501			265			193			196			256
FDIC premiums		564			580			586			693			705
Foreclosed properties expense		441			389			412			434			430
Other expenses		1,417			1,318			1,464			722			1,478
Total noninterest expense		7,834			7,573			7,772			7,107			7,762
Income (loss) before income taxes		1,817			2,534			1,243			(486	)		546
Income taxes		337			598			338			(238	)		(364	)
Net income (loss)		1,480			1,936			905			(248	)		910
Preferred stock dividends		149			74			74			74			74
Net income (loss) applicable to common shares	$	1,331		$	1,862		$	831		$	(322	)	$	836

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Five Quarter Performance Summary
	For the Quarter Ended
	12/31/2011			9/30/2011			6/30/2011			3/31/2011			12/31/2010
Per Share Data
Earnings per common share
Basic	$	0.18		$	0.25		$	0.11		$	(0.04	)	$	0.11
Diluted	$	0.16		$	0.24		$	0.11		$	(0.04	)	$	0.11
Average shares outstanding
Basic		7,425,472			7,425,472			7,425,472			7,425,472			7,425,472
Diluted		9,044,976			8,110,070			7,425,472			7,425,472			7,425,822
Performance Ratios
Return on average equity (A)		6.40	%		8.54	%		4.12	%		-1.14	%		4.17	%
Return on average assets		0.41	%		0.53	%		0.24	%		-0.07	%		0.25	%
Net interest margin		3.03	%		3.08	%		3.09	%		3.11	%		3.15	%
Efficiency ratio - (B)		60.10	%		57.29	%		58.42	%		58.38	%		58.05	%

NOTE (A) – Net income divided by total shareholders’ equity less preferred equity.

NOTE (B) – Computed on a tax equivalent basis excluding nonrecurring income and expense items and amortization of intangibles.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Selected Balance Sheet Data
	For the Quarter Ended
Dollars in thousands, except per share amounts	12/31/2011			9/30/2011			6/30/2011			3/31/2011			12/31/2010
Assets
Cash and due from banks	$	4,398		$	3,596		$	4,515		$	4,263		$	4,652
Interest bearing deposits other banks		28,294			39,103			24,658			46,448			45,696
Securities		286,599			292,442			295,806			293,240			271,730
Loans, net		965,516			964,349			971,127			979,387			995,319
Property held for sale		63,938			63,335			66,188			66,961			70,235
Premises and equipment, net		22,084			22,334			22,587			22,784			23,092
Intangible assets		8,651			8,739			8,826			8,914			9,002
Cash surrender value of life insurance policies		29,284			29,034			28,762			13,589			13,458
Other assets		41,357			41,652			45,517			46,609			45,286
Total assets	$	1,450,121		$	1,464,584		$	1,467,986		$	1,482,195		$	1,478,470
Liabilities and Shareholders' Equity
Retail deposits	$	847,285		$	861,639		$	850,312		$	844,914		$	806,652
Brokered time deposits		169,215			185,670			195,782			217,205			230,287
Short-term borrowings		15,956			955			2,047			1,879			1,582
Long-term borrowings and
subordinated debentures		306,643			308,420			319,020			319,905			340,498
Other liabilities		8,456			8,976			8,966			8,964			9,630
Shareholders' equity		102,566			98,924			91,859			89,328			89,821
Total liabilities and shareholders' equity	$	1,450,121		$	1,464,584		$	1,467,986		$	1,482,195		$	1,478,470
Book value per common share (A)	$	10.68		$	10.96		$	11.34		$	11.03		$	11.01
Tangible book value per common share (A)	$	9.78		$	9.99		$	10.25		$	9.93		$	9.90
Tangible equity / Tangible assets		6.5	%		6.2	%		5.7	%		5.5	%		5.5	%

NOTE     NOTE (A) – Assumes conversion of convertible preferred stock

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Regulatory Capital Ratios
	12/31/2011			9/30/2011			6/30/2011			3/31/2011			12/31/2010
Summit Financial Group, Inc.
Total Risk Based Capital		12.9	%		12.3	%		11.9	%		11.7	%		11.8	%
Tier 1 Risk Based Capital		10.4	%		9.7	%		9.3	%		9.1	%		9.1	%
Tier 1 Leverage Ratio		7.5	%		6.9	%		6.7	%		6.6	%		6.9	%
Summit Community Bank, Inc.
Total Risk Based Capital		13.6	%		13.4	%		12.8	%		12.6	%		12.6	%
Tier 1 Risk Based Capital		12.4	%		12.1	%		11.5	%		11.3	%		11.4	%
Tier 1 Leverage Ratio		8.9	%		8.7	%		8.3	%		8.3	%		8.5	%

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Loan Composition
Dollars in thousands	12/31/2011		9/30/2011		6/30/2011		3/31/2011		12/31/2010
Commercial	$	99,024	$	94,801	$	96,796	$	96,843	$	101,674
Commercial real estate
Owner occupied		158,754		166,813		169,935		171,791		175,885
Non-owner occupied		270,226		253,538		248,930		247,153		241,936
Construction and development
Land and development		93,035		94,023		94,464		93,675		99,085
Construction		2,936		9,445		12,223		13,879		13,691
Residential real estate
Non-jumbo		221,733		224,499		228,205		233,308		239,290
Jumbo		61,535		62,255		60,817		61,878		61,339
Home equity		50,898		51,025		50,884		50,499		50,987
Consumer		22,325		22,988		23,773		22,968		24,145
Other		2,762		2,911		3,116		4,326		4,511
Total loans, net of unearned fees		983,228		982,298		989,143		996,320		1,012,543
Less allowance for loan losses		17,712		17,949		18,016		16,933		17,224
Loans, net	$	965,516	$	964,349	$	971,127	$	979,387	$	995,319

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Retail Deposit Composition
Dollars in thousands	12/31/2011		9/30/2011		6/30/2011		3/31/2011		12/31/2010
Non interest bearing checking	$	88,655	$	85,406	$	85,964	$	86,735	$	74,604
Interest bearing checking		158,483		163,840		150,004		153,283		150,291
Savings		208,809		208,030		212,745		212,502		177,053
Time deposits		391,338		404,363		401,599		392,394		404,704
Total retail deposits	$	847,285	$	861,639	$	850,312	$	844,914	$	806,652

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Asset Quality Information
	For the Quarter Ended
Dollars in thousands	12/31/2011			9/30/2011			6/30/2011			3/31/2011			12/31/2010
Gross loan charge-offs	$	2,368		$	2,157		$	2,022		$	3,396		$	5,135
Gross loan recoveries		(133	)		(89	)		(104	)		(105	)		(490	)
Net loan charge-offs	$	2,235		$	2,068		$	1,918		$	3,291		$	4,645
Net loan charge-offs to average loans (annualized)		0.91	%		0.84	%		0.76	%		1.31	%		1.76	%
Allowance for loan losses	$	17,712		$	17,949		$	18,016		$	16,933		$	17,224
Allowance for loan losses as a percentage
of period end loans		1.80	%		1.82	%		1.82	%		1.70	%		1.70	%
Nonperforming assets:
Nonperforming loans
Commercial	$	3,259		$	3,473		$	2,212		$	2,186		$	1,318
Commercial real estate		7,163			8,398			8,093			5,284			2,686
Commercial construction and development		1,052			-			-			131			-
Residential construction and development		22,634			17,506			19,222			8,428			10,048
Residential real estate		18,187			6,818			9,237			6,343			7,517
Consumer		145			87			130			206			142
Total nonperforming loans		52,440			36,282			38,894			22,578			21,711
Foreclosed properties
Commercial	$	-		$	597		$	597		$	597		$	597
Commercial real estate		15,721			14,256			14,179			13,738			14,745
Commercial construction and development		17,101			16,960			16,886			16,918			17,021
Residential construction and development		27,877			27,804			30,512			32,002			34,377
Residential real estate		3,239			3,718			4,014			3,706			3,495
Total foreclosed properties		63,938			63,335			66,188			66,961			70,235
Other repossessed assets		263			262			264			262			289
Total nonperforming assets	$	116,641		$	99,879		$	105,346		$	89,801		$	92,235
Nonperforming loans to period end loans		5.33	%		3.69	%		3.93	%		2.26	%		2.14	%
Nonperforming assets to period end assets		8.04	%		6.82	%		7.18	%		6.06	%		6.24	%

Loans Past Due 30-89 Days
	For the Quarter Ended
In thousands	12/31/2011		9/30/2011		6/30/2011		3/31/2011		12/31/2010
Commercial	$	533	$	255	$	1,572	$	910	$	664
Commercial real estate		5,746		2,797		2,756		2,515		4,523
Construction and development		1,756		1,251		163		1,947		3,156
Residential real estate		6,633		4,779		6,603		6,561		19,164
Consumer		466		308		415		494		551
Total	$	15,134	$	9,390	$	11,509	$	12,427	$	28,058

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q4 2011 vs Q4 2010
	Q4 2011			Q4 2010
	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	$985,496	$14,287	5.75%	$1,017,035	$15,992	6.24%
Tax-exempt	6,115	114	7.40%	5,336	109	8.10%
Securities
Taxable	225,089	1,817	3.20%	262,488	2,768	4.18%
Tax-exempt	86,389	1,353	6.21%	37,880	639	6.69%
Interest bearing deposits other banks
and Federal funds sold	25,926	13	0.20%	23,355	11	0.19%
Total interest earning assets	1,329,015	17,584	5.25%	1,346,094	19,519	5.75%
Noninterest earning assets
Cash & due from banks	4,229			4,227
Premises & equipment	22,274			23,288
Other assets	121,215			115,930
Allowance for loan losses	(18,211)			(19,176)
Total assets	$1,458,522			$1,470,363
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$156,751	$94	0.24%	$151,552	$119	0.31%
Savings deposits	208,772	427	0.81%	171,806	440	1.02%
Time deposits	573,798	3,781	2.61%	619,572	4,441	2.84%
Short-term borrowings	11,879	6	0.20%	1,847	1	0.21%
Long-term borrowings and
subordinated debentures	307,937	3,117	4.02%	345,245	3,828	4.40%
Total interest bearing liabilities	1,259,137	7,425	2.34%	1,290,022	8,829	2.72%
Noninterest bearing liabilities
Demand deposits	89,640			78,844
Other liabilities	8,958			10,768
Total liabilities	1,357,735			1,379,634
Shareholders' equity - preferred	8,315			3,519
Shareholders' equity - common	92,472			87,210
Total liabilities and
shareholders' equity	$1,458,522			$1,470,363
NET INTEREST EARNINGS		$10,159			$10,690
NET INTEREST MARGIN			3.03%			3.15%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
YTD 2011 vs YTD 2010
	YTD 2011			YTD 2010
	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	$987,315	$58,911	5.97%	$1,082,537	$65,481	6.05%
Tax-exempt	5,105	402	7.87%	5,965	476	7.98%
Securities
Taxable	252,901	9,106	3.60%	253,529	12,265	4.84%
Tax-exempt	63,894	4,080	6.39%	40,048	2,670	6.67%
Interest bearing deposits other banks
and Federal funds sold	33,690	72	0.21%	16,373	31	0.19%
Total interest earning assets	1,342,905	72,571	5.40%	1,398,452	80,923	5.79%
Noninterest earning assets
Cash & due from banks	4,022			4,267
Premises & equipment	22,620			23,742
Other assets	118,408			104,907
Allowance for loan losses	(18,161)			(19,226)
Total assets	$1,469,794			$1,512,142
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$152,552	$391	0.26%	$147,513	$583	0.40%
Savings deposits	207,226	1,899	0.92%	188,233	2,323	1.23%
Time deposits	601,925	15,983	2.66%	605,663	18,131	2.99%
Short-term borrowings	4,238	8	0.19%	16,172	80	0.49%
Long-term borrowings and
subordinated debentures	315,900	12,921	4.09%	380,235	18,403	4.84%
	1,281,841	31,202	2.43%	1,337,816	39,520	2.95%
Noninterest bearing liabilities
Demand deposits	85,247			73,971
Other liabilities	8,474			9,597
Total liabilities	1,375,562			1,421,384
Shareholders' equity - preferred	4,738			3,519
Shareholders' equity - common	89,494			87,239
Total liabilities and
shareholders' equity	$1,469,794			$1,512,142
NET INTEREST EARNINGS		$41,369			$41,403
NET INTEREST MARGIN			3.08%			2.96%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures
	For the Quarter Ended						For the Years Ended
Dollars in thousands	12/31/2011			12/31/2010			12/31/2011			12/31/2010
Net income applicable to common shares - excluding
realized securities gains, other-than-temporary
impairment of securities and write-downs of
foreclosed properties	$	1,798		$	1,914		$	7,036		$	(502	)
Realized securities gains		542			463			4,006			2,051
Applicable income tax effect		(201	)		(171	)		(1,482	)		(759	)
Other-than-temporary impairment of securities		(401	)		(850	)		(2,646	)		(988	)
Applicable income tax effect		148			315			979			366
Write-downs foreclosed properties		(882	)		(1,206	)		(6,651	)		(3,401	)
Applicable income tax effect		326			446			2,461			1,258
		(467	)		(1,004	)		(3,333	)		(1,473	)
GAAP net income applicable to common shares	$	1,331		$	910		$	3,703		$	(1,975	)
Diluted earnings per common share - excluding realized
securities gains, other-than-temporary impairment
of securities, and write-downs of foreclosed
	$	0.21		$	0.24		$	0.89		$	(0.02	)
Realized securities gains		0.06			0.06			0.48			0.28
Applicable income tax effect		(0.02	)		(0.02	)		(0.18	)		(0.10	)
Other-than-temporary impairment of securities		(0.04	)		(0.11	)		(0.32	)		(0.13	)
Applicable income tax effect		0.01			0.04			0.12			0.05
Write-downs of foreclosed properties		(0.10	)		(0.16	)		(0.80	)		(0.46	)
Applicable income tax effect		0.04			0.06			0.30			0.17
		(0.05	)		(0.13	)		(0.40	)		(0.19	)
GAAP diluted earnings per common share	$	0.16		$	0.11		$	0.49		$	(0.21	)
Total revenue - excluding realized securities gains,
other-than-temporary impairment of securities and
write-downs of foreclosed properties	$	12,391		$	12,901		$	50,685		$	50,228
Realized securities gains		542			463			4,006			2,051
Other-than-temporary impairment of securities		(401	)		(850	)		(2,646	)		(988	)
Write-downs of foreclosed properties		(882	)		(1,206	)		(6,651	)		(3,401	)
		(741	)		(1,593	)		(5,291	)		(2,338	)
GAAP total revenue	$	11,650		$	11,308		$	45,394		$	47,890
Total noninterest income - excluding realized securities
gains, other-than-temporary impairment of securities
and write-downs of foreclosed properties	$	2,730		$	2,464		$	10,840		$	9,559
Realized securities gains		542			463			4,006			2,051
Other-than-temporary impairment of securities		(401	)		(850	)		(2,645	)		(988	)
Write-downs of foreclosed properties		(882	)		(1,206	)		(6,651	)		(3,401	)
		(741	)		(1,593	)		(5,290	)		(2,338	)
GAAP total noninterest income	$	1,989		$	871		$	5,550		$	7,221