Confidential Subordinated Debt Offering November 2021
Confidential Disclaimer The inf ormation contained in this confidential presentation is a summary and it is not complete. It has been prepared f or use only in connection with the priv ate placement (the “Placement”) of securities (the “Securities”) of Summit Financial Group, Inc. (the “Company”). The Securities have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and are being of f ered in a priv ate placement exempt from registration under the Securities Act and other applicable securities laws and may not be re-offered or re-sold absent registration or an applicable exemption f rom the registration requirements. The Securities are not a deposit or an account that is insured by the Federal D eposit Insurance Corporation (“FDIC”) or any other government agency. Neither this conf idential presentation nor any of the information contained herein may be reproduced or distributed, directly or indirectly, to any other person and is provided conditioned upon, and subject to, an agreement regarding conf identiality between the Company and the original recipient hereof. This confidential presentation is provided for informational purposes only and is being f urnished on a conf idential basis to a limited number of institutional accredited investors and qualif ied institutional buyers solely for the purpose of enabling them to determine whether they wish to proceed with f urther inv estigation of the Company and the Placement. As it is a summary, such information is not intended to and does not contain all the information that you will require to f orm the basis of any investment decision. The inf ormation contained herein speaks as of the date hereof. Neither the delivery of this information nor any eventual sale of the Securities shall, under any circumstances, imply that the information contained herein is correct as of any future date or that there has been no change in the Company ’s business affairs described herein af ter the date hereof . Nothing contained herein is, or should be relied upon as, a promise or representation as to f uture performance. Neither the Company nor any of its affiliates undertakes any obligation to update or rev ise this presentation. The Company anticipates providing you with the opportunity to ask questions, receive answers, obtain additional information and complete your own due diligence rev iew concerning the Company and the Placement prior to entering into any agreement to purchase the Securities. By accepting deliv ery of the information contained herein, you agree to undertake and rely upon y our own independent inv estigation and analysis and consult with y our own attorneys, accountants, and other prof essional advisors regarding the Company and the merits and risks of an inv estment in the Securities, including all related legal, inv estment, tax, and other matters. None of the Company , any representative of the Company, or any other person shall have any liability for any information included herein or otherwise made av ailable in connection with the Placement, except for liabilities expressly assumed by the Company in the def initive purchase agreement and the related docum entation for the purchase of the Securities. The inf ormation contained herein does not constitute an offer to sell or a solicitation of an offer to purchase the Securities described herein nor shall there be any sale of such Securities in any state or jurisdiction in which such an of f er or solicitation is not permitted or would be unlawf ul. Any such offer or sale may be m ade only by a purchase agreement and the inf ormation contained herein will be superseded in its entirety by such purchase agreement. Each investor must comply with all legal requirements in each juris diction in which it purchases, offers, or sells the Securities, and must obtain any consent, approval, or permission required by it in connection with the Securities or the Placement. The Company does not make any representation or warranty regarding, and has no responsibility f or, the legality of an investment in the Securities under any investment, securities, or similar laws. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION (“SEC”), THE FDIC, OR ANY OTHER GOVERNMENT AGENCY, NOR HAS THE SEC, THE FDIC, OR ANY OTHER GOVERNMENT AGENCY PASSED ON THE ADEQUACY OR ACCURACY OF THIS PRESENTATION. AN Y REPRESENTATION TO THE CONTRARY IS UNLAWFUL. Certain of the inf ormation contained in this confidential presentation may be derived from information obtained from industry sources. The Company believes that such information is accurate and that the sources f rom which it was obtained are reliable. The Company cannot guarantee the accuracy of such information, however, and has not independently verified such information. 2
Confidential Forward-Looking Statements This presentation contains information that constitutes 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. The information contained in this report should be read in conjunction with Summit Financial Group, Inc.’s (“Summit” or “Company”) Annual Report on Form 10-K for the year ended December 31, 2020 and documents sub sequently filed by Summit with the Securities and Exchange Commission (“SEC”), which are available at the SEC’s website, www.sec.gov, or at Summit’s website, www.summitfgi.com. For purposes of this presentation, the terms "Summit", "Company", "we", "our" and "us" refer collectively to Summit Financial Group, Inc. and its subsidiaries, including Summit Community Bank, unlessthe context requiresotherwise. 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 abil ity to repay loans; and changes in the national and local economies. We undertake no obligation to revise these statements following the date of this presentation. Non-GAAP Measures This presentation includes financial information determined by methods other than in accordance with generally accepted accounting principles (“GAAP”). This financial information includes certain operating performance measures, which exclude merger-related and other charges that are not considered part of recurring operations. Such measures include: Core Return on Average Assets, Core Return on Average Equity, Core Return on Average Tangible Common Stockholder’sEquity and Core Pre-Provision Operating Profit Earnings. Management has included these non-GAAP measures because it believes these measures may provide useful supplemental information for evaluating the Company’s underlying performance trends. Further, management uses these measures in managing and evaluating the Company’s business and intends to refer to them in discussions about our operations and performance. Operating performance measures should be viewed in addition to, and not as an alternative to or substitute for, measures determined in accordance with GAAP, and are not necessarily comparable to non-GAAP measures that may be presented by other companies. To the extent applicable, reconciliations of these non-GAAP measures to the most directly comparable GAAP measures can be found in the ‘Non-GAAP Reconciliation Tables’ included at p. 41-43 of thispresentation. 3 Christiansburg, VA branch Forward-Looking Statements & Non-GAAP Measures
Confidential Terms of Proposed Subordinated Debt Offering 4 Issuer Name Security Type Amount Security Rating Issuance Type Offering Structure Term No Call Period Use of Proceeds Placement Agent Summit Financial Group, Inc. (NASDAQGS: SMMF) Subordinated Notes due 2031 $75 million A- by Egan-Jones Regulation D Private Placement with Registration Rights Fixed-to-Floating Rate (fixed during first five years) 10 Years 5 Years General corporate purposes, which may include common stock repurchases, organic growth and strategic initiatives, such as acquisitions
Confidential Company Overview 5
Confidential Executive Years with Summit Years in Industry Biography H. Charles Maddy III President Chief Executive Officer 33 33 • Mr. H. Charles Maddy III is the President and Chief Executive Officer of the Company and has served in this capacity since 1994 • Joined Summit’s predecessor, South Branch Valley National Bank, in 1988 as Controller and was elevated to President and Chief Executive Officer of South Branch in 1992 Robert S. Tissue Executive Vice President Chief Financial Officer 23 23 • Mr. Robert S. Tissue has been Executive Vice President and Chief Financial Officer of the Company since 1998 • Before joining Summit, Mr. Tissue served as Manager at Arnett Carbis Toothman LLP from 1985 to 1996 Scott C. Jennings Executive Vice President Chief Operating Officer 35 36 • Mr. Scott C. Jennings has served as Senior Vice President and Chief Operating Officer of the Company since 2000 • Previously, Mr. Jennings was Vice President of Loan Administration for South Branch Valley National Bank Patrick N. Frye Executive Vice President Chief of Credit Administration 21 36 • Mr. Patrick N. Frye serves as Chief of Credit Administration at the Company and has been its Executive Vice President since 2003 • Previously, Mr. Frye served as Chief Financial Officer of Potomac Valley Bank Brad E. Ritchie President Summit Community Bank 13 27 • Mr. Brad E. Ritchie joined the Company in 2008and has served as President of Summit Community Bank, the banking subsidiary of the Company, since 2012 • Before joining Summit, Mr. Ritchie served as Market President at United Bank, Inc. 6 Executive Management Team
Confidential High-Performing Producers and Bankers in Every Community We Serve Hire the best and brightest, hold them accountable and reward them for results Emphasize community banking Emphasize asset quality Emphasize efficiency Emphasize profitability Pursue M&A or producer hires to enhance presence in existing Metro DC and Lexington, KY markets 7 Q3 2021 SMMF Assets/FTE (MRQ) $7.78M Loans/FTE (MRQ) $5.67M Deposits/FTE (MRQ) $6.55M Core Revenue1/FTE (LTM) $279K Compensation/FTE (LTM) $74.6K (1) See pages 41-43 for non-GAAP reconciliation
Confidential Key Investment Highlights Note: Data at or for the three months ended September 30, 2021 annualized 8 Low Cost of Deposits MRQ = 0.31% Experienced Board and Senior Management Team with Substantial Insider Ownership Insider Ownership = 12% Fundamental Focus on Cost Control that Delivers Positive Operating Leverage: MRQ Efficiency Ratio = 49.53% MRQ Noninterest Expense/Avg Assets = 2.01% MRQ ROAA = 1.42% MRQ ROATCE = 20.71% MRQ Net Interest Margin = 3.47% Diversified earnings stream with wealth and mortgage businesses Focused on Driving Profitability: Ample Regulatory Capital Leverage Ratio = 8.4% Total Risk-Based Ratio = 12.1% Conservative Underwriting, Clean Credit Quality and Strong Reserves NPAs/Assets = 0.67% Reserves/Gross Loans HFI = 1.27% Low Net Charge-Offs Growth Achieved Organically and through Disciplined Acquisitions
Confidential Dynamic Markets and Strong Legacy Locations 9 Creating significant growth opportunities in dynamic markets Leveraging efficient operations and core deposits in strong legacy locations Empowering high-performing producers and bankers in every community we serve SMMF (45) VA WV KY NYC Philadelphia Baltimore D.C. Reston Moorefield HQ Charleston Pittsburgh Columbus Louisville Lexington Dulles Airport
Confidential Our Markets Source: S&P Global Market Intelligence; deposit data as of 6/30/2021 (1) Metrics pertain to counties in which Summit has branches Major Employers 10 West Virginia Virginia Kentucky Eastern Panhandle Southern Region North Central Northern Southwest Shenandoah Valley North East Summit Deposits in Market ($000) $1,024,938 $961,400 $212,709 $146,692 $54,991 $398,777 $104,130 Number of Summit Branches 8 17 4 3 3 8 2 2021 Population1 (000) 211,612 518,003 190,738 1,649,740 128,054 204,342 36,422 2021 Median HH Income1 ($) $59,581 $45,122 $51,005 $126,656 $54,525 $53,274 $59,352 2021 - 2026 Median HH Income Change1 (%) 8.50% 3.67% 6.41% 7.59% 5.66% 6.55% 7.26%
Confidential Q3 2021 Highlights Loan Growth: Up 3.7% from 6/30/2021, 13.6% YTD and 24.0% since 9/30/2020, net of unearned fees and excluding PPP and warehouse lending Commercial Loan Growth: Up 7.2% from 6/30/2021, 23.7% YTD and 32.5% since 9/30/2020, net of unearned fees and excluding PPP Mortgage Growth:Origination revenue was $742K in the quarter and $2.6M YTD, compared to $898K in Q2 2021 , $780K in Q3 2020, and $1.6M in first 9 months 2020 Net Interest Income Growth: Up 4.6% from Q2 2021 and 13.2% from Q3 2020 on loan growth and lower funding costs Well Managed Expenses: Efficiency ratio of 49.73% and lowered non-interest expense to 2.01% of average assets Allowance Build: Recorded no provision expense in the quarter and $2.5M provision for 9 months ended 9/30/2021 EPS of $0.92: Including $0.03 for new preferred dividend and after-tax merger related expense, compared to $0.80 in Q2 2021 and $0.74 in Q3 2020 Branch Deal: Completed the acquisition of four branches and two drive-ups in southern WV including the state’s largest cities, Charleston and Huntington, with $54M in loans and $163M in deposits 11 Moorefield, WV headquarters
Confidential Track Record of Success as Disciplined Acquiror 12 Source: S&P Global Market Intelligence; values as of transaction close date, except for WinFirst Financial Corp. (1) Represents mid-point of full year EPS accretion range as provided in merger investor presentations Accelerating growth in dynamic markets, building core deposit franchise and enhancing operational efficiency Target Date Closed State Assets ($000) P/TBV (%) EPS Accretion1 (%) TBV Dilution (%) TBV Earnback (Years) Highland County Bankshares, Inc. 10/1/2016 VA $122,486 136% 8.5% (4.8%) 3.4 Years First Century Bankshares, Inc. 4/1/2017 WV $404,757 124% 11.0% (1.1%) 1.1 Years Peoples Bankshares, Inc. 1/1/2019 WV $134,454 106% 2.2% (0.7%) 1.5 Years Cornerstone Financial Services, Inc. 1/1/2020 WV $191,901 156% 2.0% (2.9%) 3.6 Years WinFirst Financial Corp. 12/15/2020 KY $152,000 112% 6.9% (4.2%) 3.9 Years Average $201,120 127% 6.1% (2.7%) 2.7 Years
Confidential Recent Branch Acquisitions and De Novo Openings Source: U.S. Census Bureau 13 BRANCH ACQUISITION: Q2 2020 WV Eastern Panhandle DE NOVO BRANCH: Q3 2020 Christiansburg, VA DE NOVO BRANCH: Q3 2020 Reston, VA Acquired four MVB Bank branches in the economically thriving Eastern Panhandle region’s Berkeley and Jefferson counties in April 2020, with loans of $35 million and deposits of $188 million Opened full-service Christiansburg branch in attractive and growing market near Virginia Tech Opened full-service Reston branch outside DC in Fairfax County, one of the nation’s wealthiest and fastest growing counties, which added critical mass to Summit’s DC Metro presence with long-established Summit branches in Leesburg, VA in Loudoun County, the nation’s wealthiest county, and Warrenton, VA in Fauquier County Staffed with team of seasoned bankers who are contributing meaningfully to Summit’s commercial growth DE NOVO BRANCH: Q1 2020 Morgantown, WV Opened Morgantown branch in the attractive and growing market and home to WVU in state’s North Central Region BRANCH ACQUISITION: Q3 2021 Southern WV Acquired four more MVB branches and two drive-ups in southern WV including the state’s largest cities, Charleston and Huntington, in July 2021, with loans of approximately $54 million and $163 million in deposits Huntington market headed by a former CEO of a very successful in-market community bank merged out of existence Accelerating growth in dynamic markets, building core deposit franchise and enhancing operational efficiency
Confidential Balance Sheet 14
Confidential $1,296 $1,601 $1,635 $1,913 $2,596 $2,956 2016 2017 2018 2019 2020 Q3 2021 Note: Data as of 9/30/2021 15 $1,320 $1,606 $1,695 $1,913 $2,412 $2,554 2016 2017 2018 2019 2020 Q3 2021 Total Gross Loans ($M) and 5YR CAGR (%) Dynamic Markets and Growth $1,759 $2,134 $2,201 $2,403 $3,106 $3,509 2016 2017 2018 2019 2020 Q3 2021 Total Assets ($M) and 5YR CAGR (%) 15.8% 17.2% $155 $202 $220 $248 $282 $323 2016 2017 2018 2019 2020 Q3 2021 Total Equity ($M) and 5YR CAGR (%)Total Deposits ($M) and 5YR CAGR (%) 19.5% 14.4% Commercial Loan Growth (LTM) 32.5% total, ex PPP and Mortgage W/H LOC’s, through 9/30/21 139% Northern VA/DC metro market area, from $152.0M at 9/30/2020 to $363.7M at 9/30/2021
Confidential Diversified Loan Portfolio 16 Land & Land Development 3.9% Construction 5.0% C&I 12.4% CRE - Owner- Occupied 17.2% CRE - Non-Owner Occupied 32.7% Residential Mortgage 18.3% Home Equity Loans 2.8% Consumer & Other 1.4% Mortgage Warehouse Lines 6.3% Total Loan Portfolio – $2.6B Note: Includes $23.8M of PPP Loans; Data as of 9/30/2021 September 30, % of Total ($000s) 2021 Loans Construction and Development Land Development & Land $99,718 3.9% Construction 127,432 5.0% Total Construction and Development $227,150 8.9% Commercial Commercial 317,855 12.4% Commercial Real Estate Owner Occupied CRE - Owner Occupied - Other 143,352 5.6% CRE - Owner Occupied - Professional & Medical 132,500 5.2% CRE - Owner Occupied - Retail 163,350 6.4% Total Commercial Real Estate Owner Occupied $439,202 17.2% Commercial Real Estate Non-Owner Occupied CRE - Non-Owner Occupied - Hotel 121,765 4.8% CRE - Non-Owner Occupied - Mini Storage 56,992 2.2% CRE - Non-Owner Occupied - Multifamily 233,401 9.1% CRE - Non-Owner Occupied - Professional/Medical/Other 268,793 10.5% CRE - Non-Owner Occupied - Retail 154,120 6.0% Total Commercial Real Estate Non-Owner Occupied $835,071 32.7% Residential Real Estate Residential Mortgage - Personal Residence 270,951 10.6% Residential Mortgage - Rental 123,937 4.9% Jumbo Residential Mortgage - Rentals 71,977 2.8% Home Equity Loans 71,496 2.8% Total Residential Real Estate $538,361 21.1% Consumer Consumer 32,285 1.3% Other Credit Cards 1,783 0.1% Overdrafts 775 0.0% Total Other $2,558 0.1% Mortgage Warehouse Loans Mortgage Warehouse Loans 161,628 6.3% Total loans $2,554,110 100.0% Less Allowance for Credit Loss 32,406 Loans, net of allowance $2,521,704 MRQ Yield on Loans: 4.54% Q3 2021 CRE Concentration: 314% Q3 2021 ADC Concentration: 67%
Confidential WV 38% VA 29%Mortgage Warehouse 6% MD 6% KY 5% OH 3% PA 2% NY 3% NC 1% DC 2% Other 5% Enhancing Geographic Diversity of Loan Portfolio Note: Other includes states with less than 1% of total loans Note: Mortgage Warehouse Loans to Large Mortgage Lenders are typically held less than 30 days and are collateralized by loans throughout the United States 17 WV 47% VA 31% Mortgage Warehouse 7% MD/DC 3% OH 3% NY 3% Other 6% $2.55B – September 30, 2021$1.91B – December 31, 2019
Confidential Commercial & Industrial Loan Growth 18 C&I Loans by Industry – $317.9M PPP Loans 7% Secured by CD or Stock 8% Medical & Professional 16% Real Estate Activities 16% Manufacturing 10% Machinery 12% Energy 6% Transportation 4% Agricultural Businesses 5% Investment Activities 3% Retail Business 5% Other 8% $119 $190 $194 $220 $231 $294 2016 2017 2018 2019 2020 Q3 2021 C&I Loans ex PPP ($M) and 5YR CAGR (%) 18.9% Note: Data as of 9/30/2021 Average Loan Size: $223K Amount Classified: $0.8M
Confidential Commercial Real Estate Loan Growth 19 Gas & Oil 3% Manufacturing 6% Farming & Agricultural 6% Religious Organizations 5% Restaurants 3% Professional 21% Medical 12% Car Dealerships 9% Convenience Stores 14%Entertainment Industry 3% Other Retail 9% Automotive Repair Centers 1% Other Service Businesses 8% Owner Occupied CRE – $439.2M Non-Owner Occupied CRE – $835.1M Hospitality 15% Storage 7% Multi-Family 28% Professional 20% Medical 5% Convenience Stores / Pharmacies 3% Mall / Shopping Centers 5% Neighborhood Strip Centers 7% Restaurants 1% Car Dealership 0.2% Entertainment 1% Single Tenant Retail 1% Other Service Businesses 3% Manufacturing 4% $585 $735 $831 $905 $1,037 $1,274 2016 2017 2018 2019 2020 Q3 2021 13.9% CRE Loans ($M) and 5 YR CAGR (%) Note: Data as of 9/30/2021 Average Loan Size: $998K Amount Classified: $9.7M
Confidential 20 COVID: Summary of PPP Loans Originated 845 Loans 403 Loans 1,248 Loans Total Funded $103,209 $41,611 $144,820 Total Forgiven $101,852 $18,189 $120,041 Remaining Balance at 9/30/2021 $1,357 $23,422 $24,779 Round 1 Round 2 Total($000s) MRQ Fees Recognized: $550K Unrecognized Fees Remaining: $990K
Confidential 21 Covid-19 Loan Modifications and Deferrals Loan Modifications as of June 30, 2020 Loan Modifications as of September 30, 2021 ($000s) Total Loan Balance Interest Only Payments Deferrerals Total Loan Modifications % of Total Loans Modified Total Loan Balance Interest Only Payments Deferrerals Total Loan Modifications % of Total Loans Modified Commercial Loans Hospitality Industry $119,204 $55,849 $43,030 $98,879 4.5% $121,765 – – – 0.0% Non-Owner Occupied Retail Stores 109,078 38,354 13,802 52,156 2.3% 154,120 $7,223 – $7,223 0.3% Owner Occupied Retail Stores 119,794 21,956 9,372 31,328 1.4% 163,350 – – – 0.0% Restaurant Industry 8,127 2,392 1,877 4,269 0.2% 12,200 – – – 0.0% Oil & Gas Industry 31,977 914 4,378 5,292 0.2% 18,657 – – – 0.0% All Other Commercial Loans 1,005,740 88,285 34,634 122,919 5.5% 1,349,187 – – – 0.0% Total Commercial Loans $1,393,920 $207,750 $107,093 $314,843 14.2% $1,819,279 $7,223 – $7,223 0.3% Residential Real Estate Loans Residential Mortgage - Personal Residence 267,170 3,933 13,404 17,337 0.8% 270,951 – – – 0.0% Residential Mortgage - Rentals 180,415 20,348 6,032 26,380 1.2% 195,914 – – – 0.0% Home Equity Loans 88,929 – 569 569 0.0% 71,496 – – – 0.0% Total Residential Real Estate Loans $536,514 $24,281 $20,005 $44,286 2.0% $538,361 – – – 0.0% Other Loans Consumer Loans 34,640 595 605 1,200 0.1% 32,285 – – – 0.0% Mortgage Warehouse Loans 252,472 – – – 0.0% 161,627 – – – 0.0% Credit Cards & Overdrafts 2,162 – – – 0.0% 2,558 – – – 0.0% Total Loans $2,219,707 $232,626 $127,703 $360,329 16.2% $2,554,110 $7,223 – $7,223 0.3%
Confidential 22 Strong Asset Quality Metrics Nonaccrual Loans – $11.1M C&I 4% CRE 42% Residential Construction & Development 4.0% Residential Real Estate 50% Consumer 0.4% Foreclosed Properties – $12.5M CRE 18%Commercial Construction & Development 23% Residential Construction & Development 54% Residential Real Estate 5% Nonperforming Assets– $23.6M Commercial 2%Commercial Real Estate 29% Commercial Construction & Development 13% Residential Construction & Dev. 30% Residential Real Estate 26% Consumer 0% Other 0% 2.22% 1.73% 1.66% 1.28% 1.16% 0.67% 2016 2017 2018 2019 2020 Q3 2021 0.02% 0.02% 0.11% 0.08% 0.08% 0.04% 2016 2017 2018 2019 2020 LTM NPAs / Assets1 (%) NCOs / Avg. Loans (%) $14,574 $15,323 $15,025 $11,510 $20,335 $11,112 2016 2017 2018 2019 2020 Q3 2021 NPLs ($000) Note: Data as of 9/30/2021 (1) Nonperforming assets (“NPAs”) consist of nonperforming loans, foreclosed properties and repossessed assets. Excludes performing restructured loans
Confidential $29,354 $32,246 $34,042 $33,885 $32,406 $195 $2,335 $796 $165 $1,985 $141 $45 $91 $158 $434 $354 $343 $528 $1,200 Balance Charge-offs Recoveries Provision WFC PCD Loan Res Balance Charge-offs Recoveries Provision Balance Charge-offs Recoveries Provision Balance MVB PCD Loan Res Charge-offsRecoveries Provision Reclass to Unfunded Balance 1.23% 1.22% 1.30% 1.34% 1.39% 1.27% Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q2 2021 Q3 2021 Credit Risk Management 23 ACLL Roll-forward1 ($000) Note: Adopted CECL on January 1, 2020 (1) As of 9/30/2021 ACLL as % of Total Loans Q3 2020 Q4 2020 Q1 2021 Q3 2021Q2 2021
Confidential Low Cost Deposits 24 Note: Data as of 9/30/2021 Time 15.8% Savings 23.5% Interest Bearing Demand 37.9% Non-interest Bearing 19.5% Brokered time deposits 0.5% CDs > $250k 2.7% Direct CDs Total Deposit Portfolio – $3.0B MRQ Cost of Deposits: 0.31 % MRQ Gross Loans / Total Deposits: 86% MRQ Core Deposits / Total Deposits: 97% Top 10 Depositors / Total Deposits: 7% September 30, % of Total ($000s) 2021 Deposits Core Deposits Non-interest bearing checking 575,542 19.5% Interest bearing checking 1,121,028 37.9% Savings 693,686 23.5% Time deposits 467,024 15.8% Total Core Deposits $2,857,280 96.7% Non-Core Deposits Brokered time deposits 14,671 0.5% CDs > $250k 79,119 2.7% Direct CDs 4,870 0.1% Total Non-Core Deposits $98,660 3.3% Total Deposits $2,955,940 100.0% 0.1%
Confidential Investment Portfolio and Liquidity Sources As of 9/30/2021 % of Total Debt Securities Debt Securities Available-for-Sale (at Est. Fair Value ($000)): U.S. Government and agencies and corporations $38,510 7.36% Residential mortgage-backed securities: Government-sponsored agencies 63,328 12.10% Nongovernment-sponsored entities 19,906 3.80% States and political subdivisions 225,668 43.13% Corporate debt securities 30,837 5.89% Asset-backed securities 46,492 8.89% Debt Securities Held-to-Maturity (at Amortized Cost ($000)): States and political subdivisions 98,528 18.83% Total Debt Securities $523,269 100.0% 25 Investment Portfolio In addition to deposits, Summit has approximately $1.6 billion of readily available funding sources to meet customer needs through the following sources: FHLB Funding – Available borrowing capacity of $893.2 million Highly Liquid Securities – $307.9 million of unpledged AFS securities Federal Reserve – Secured line with $258.7 million available Deposits With Other Banks – $189.9 million of interest bearing deposits Correspondent Bank – $6 million unsecured line of credit Cash at Holding Company: $5.8 million Liquidity Sources
Confidential Profitability 26
Confidential $17,297 $11,915 $28,072 $31,866 $31,326 $43,409 2016 2017 2018 2019 2020 LTM Net Income ($000) 27 Profitable Growth 1.07% 1.18% 1.36% 1.34% 1.11% 1.39% 2016 2017 2018 2019 2020 LTM 12.07% 14.52% 15.91% 14.46% 13.83% 18.94% 2016 2017 2018 2019 2020 LTM Core ROAA1 (%) Core ROATCE1 (%) $26,880 $36,745 $38,148 $38,828 $51,975 $60,905 1.68% 1.83% 1.79% 1.70% 1.87% 1.89% 2016 2017 2018 2019 2020 LTM Core PTPP Earnings1 ($000) and Core PTPP Earnings1 ($000) / Avg. Assets (%) (1) See pages 41-43 for non-GAAP reconciliation
Confidential NonInt Inc. Excl. Non-Recurring Items1 and NonInt Inc. Excl. Non-Recurring Items1 ($000) / Operating. Rev. (%) 28 NonInt Exp. Excl. Non-Recurring Items1 ($000) and Efficiency Ratio (%) Compensation/FTE ($000) and NonInt Exp. Exc. Non-Recurring Items1/av assets (%) Net Interest Inc. ($000) and NIM (%) $49,007 $66,147 $69,797 $77,084 $95,482 $107,306 3.39% 3.67% 3.57% 3.66% 3.71% 3.60% 2016 2017 2018 2019 2020 LTM $10,473 $14,441 $16,800 $15,359 $16,136 $18,586 17.6% 17.9% 19.4% 16.6% 14.5% 14.8% 2016 2017 2018 2019 2020 LTM $34,189 $46,256 $49,729 $54,537 $60,640 $66,033 55.3% 52.4% 53.2% 53.9% 50.2% 50.0% 2016 2017 2018 2019 2020 LTM $79.6 $72.8 $82.0 $82.1 $70.9 $74.6 2.14% 2.31% 2.34% 2.39% 2.18% 2.05% 2016 2017 2018 2019 2020 LTM Growing Revenue and Improving Operating Leverage (1) See pages 41-43 for non-GAAP reconciliation
Confidential Estimated % Change in Net Interest Income Over: 0 – 12 Months 13 – 24 Months Change in Interest Rates Down 100 basis points1 -0.8% -6.9% Up 200 basis points1 -0.2% 2.5% Up 200 basis points2 -0.2% -0.2% 29 Interest rate sensitivity is measured as a percentage change in net interest income given the stated changes in interest rates compared to net interest income with rates unchanged in the same period Note: Data as of 6/30/2021 (1) Assumes a parallel shift in the yield curve over 12 months, with no change thereafter (2) Assumes a parallel shift in the yield curve over 24 months, with no change thereafter Interest Rate Sensitivity
Confidential Capital 30
Confidential 31 Capital Trust Preferred Trust Preferred = $19.6 million We have three statutory business trusts that were formed for the purpose of issuing trust preferred securities The capital securities are held by SFG Capital Trust I, SFG Capital Trust II, and SFG Capital Trust III No missed payments Equity Common Equity = $308.4 million Tangible Common Equity = $244.4 million 6% Fixed-Rate Non-Cumulative Perpetual Preferred Stock = $14.9 million Subordinated Debt Existing Subordinated Debt = $29.5 million (net of issuance costs) Issued $30 million during third quarter of 2020 in a private placement transaction. This debt has a 10 years term and generally, is not prepayable within the first five years. This subordinated debt bears interest at a fixed rate of 5.00% per year, from and including September 22, 2020 to, but excluding, September 30, 2025, payable quarterly in arrears. From and including September 30, 2025 to, but excluding, the maturity date or earlier redemption date, the interest rate will reset quarterly at a variable rate equal to the then current three-month term Secured Overnight Financing Rate (“SOFR”), as published by the Federal Reserve Bank of New York, plus 487 basis points, payable quarterly in arrears.
Confidential 32 Note: Data as of 9/30/2021 Well-Capitalized Position 8.12% 8.26% 8.92% 9.44% 7.42% 7.09% 2016 2017 2018 2019 2020 Q3 2021 Tangible Common Equity / Tangible Assets (“TCE / TA”) (%) 12.60% 12.52% 12.91% 12.70% 12.14% 12.14% 2016 2017 2018 2019 2020 Q3 2021 Total Capital Ratio (%) 9.38% 9.41% 10.10% 10.54% 8.58% 8.44% 2016 2017 2018 2019 2020 Q3 2021 Leverage Ratio (%) 11.77% 11.77% 12.17% 12.05% 10.05% 10.20% 2016 2017 2018 2019 2020 Q3 2021 Tier 1 Ratio (%)
Confidential 33Note: Assumes $75 million of gross proceeds from the subordinated notes (net proceeds of $73.4 million after 2.0% gross sprea d and $100k of offering expenses); Assumes $40 million downstreamed to the Bank and 20% risk weighting on net proceeds; All assumptions are for illustrative purposes only Pro Forma Capital Ratios Consolidated Capital Ratios Bank Level Capital Ratios 8.87% 9.24% 11.17% 12.06% 9.91% 10.29% 12.55% 13.45% TCE / TA Leverage Ratio Tier 1 Ratio Total Capital Ratio 7.09% 8.44% 10.20% 12.14% 6.95% 8.26% 10.14% 14.73% TCE / TA Leverage Ratio Tier 1 Ratio Total Capital Ratio Pro Forma As of 9/30/2021
Confidential 34 Note: Assumes $75 million of gross proceeds from the subordinated notes (net proceeds of $73.4 million after 2.0% gross sprea d and $100k of offering expenses); Assumes 21% tax rate; All assumptions are for illustrative purposes only (1) Assumes $40 million downstreamed to the Bank (2) Interest Expense on New Notes assumes a 3.75% annual coupon Double Leverage & Interest Coverage Ratio Double Leverage As of December 31, Additional Pro Forma ($000) 2018 2019 2020 9/30/2021 Equity 9/30/2021 Investment in Subsidiaries $236,422 $267,132 $327,354 $369,338 $40,000¹ $409,338 Consolidated Equity $219,830 $247,764 $281,580 $323,289 -- $323,289 Double Leverage Ratio 107.5% 107.8% 116.3% 114.2% -- 126.6% Interest Coverage For the Year Ended December 31, YTD Ended Offering Pro Forma ($000) 2018 2019 2020 9/30/2021 Impact YTD 9/30/2021 Total Deposit Interest $17,675 $23,697 $16,044 $6,464 -- $6,464 Other Borrowing Interest Expense 7,937 6,290 3,477 3,035 -- 3,035 Interest Expense on New Notes 2 -- -- -- -- 2,109 2,109 Total Interest Expense $25,612 $29,987 $19,521 $9,499 $2,109 $11,608 Pre-Tax Income $35,096 $39,583 $38,754 $42,043 ($2,109) $39,934 Preferred Stock Dividends -- -- -- $364 -- $364 Pre-Tax Income Interest Coverage Interest Coverage (Including Deposit Expense) 2.4x 2.3x 3.0x 5.2x -- 4.3x Interest Coverage (Excluding Deposit Expense) 5.4x 7.3x 12.1x 12.9x -- 12.3x
Confidential Appendix
Confidential Selected Balance Sheet Data: $ in thousands 2016 2017 2018 2019 2020 9/30/2021 Cash and due from banks $4,262 $9,641 $23,061 $28,137 $19,522 $21,247 Interest-bearing deposits 42,354 42,990 36,479 33,751 80,265 189,862 Securities available-for-sale, at fair value 266,542 328,586 293,147 276,355 286,127 424,741 Securities held-to-maturity, at amortized cost – – – – 99,914 98,528 Other investment securities 12,942 15,071 16,635 12,972 14,185 10,649 Loans held-for-sale 176 0 400 1,319 1,998 1,393 Loans 1,319,536 1,606,309 1,695,052 1,913,499 2,412,153 2,554,110 Allowance for loan losses (11,674) (12,565) (13,047) (13,074) (32,246) (32,406) Net loans 1,307,862 1,593,744 1,682,005 1,900,425 2,379,907 2,521,704 Property held for sale 24,504 21,470 21,432 19,276 15,588 12,450 Premises and equipment, net 23,737 34,209 37,553 44,168 52,537 56,818 Accrued interest and fees receivable 6,167 8,329 8,708 8,439 11,989 10,484 Goodwill and other intangible assets, net 13,652 27,513 25,842 23,022 55,123 63,977 Cash surrender value of life ins. policies/annuities 39,143 41,358 42,386 43,603 59,438 60,241 Other assets 17,306 11,329 12,938 12,025 29,791 36,857 Total assets $1,758,647 $2,134,240 $2,200,586 $2,403,492 $3,106,384 $3,508,951 Noninterest-bearing deposits $149,737 $217,493 $222,120 $260,553 $440,818 $575,542 Interest-bearing deposits 1,145,782 1,383,108 1,412,706 1,652,684 2,154,833 2,380,398 Total deposits 1,295,519 1,600,601 1,634,826 1,913,237 2,595,651 2,955,940 Short-term borrowings 224,461 250,499 309,084 199,345 140,146 140,146 Long-term borrowings 46,670 45,751 735 717 699 684 Subordinated debt – – – – 29,364 29,466 Trust preferred securities 19,589 19,589 19,589 19,589 19,589 19,589 Other Liabilities 17,048 16,295 16,522 22,840 39,355 39,837 Total liabilities 1,603,287 1,932,735 1,980,756 2,155,728 2,824,804 3,185,662 Preferred stock – – – – – 14,920 Common stock 46,757 81,098 80,431 80,084 94,964 95,863 Unallcoated common stock held by ESOP (1,583) (1,152) (939) (714) (472) (286) Retained earnings 113,448 119,827 141,354 165,859 181,643 207,703 Accum. other comprehensive income/(loss) (3,262) 1,732 (1,016) 2,535 5,445 5,089 Total shareholders' equity 155,360 201,505 219,830 247,764 281,580 323,289 Total liabilities and shareholders' equity $1,758,647 $2,134,240 $2,200,586 $2,403,492 $3,106,384 $3,508,951 December 31, 36 Historical Balance Sheet
Confidential 37 Historical Income Statement Selected Income Statement Data: 9 Months Ended $ in thousands 2016 2017 2018 2019 2020 9/30/2021 Loans, including fees $56,980 $74,908 $85,283 $97,115 $105,564 $83,651 Securities 6,938 9,010 9,587 9,361 9,173 6,707 Other 173 609 539 595 266 240 Total interest income 64,091 84,527 95,409 107,071 115,003 90,598 Deposits 8,964 11,210 17,675 23,697 16,044 6,464 Other borrowed funds 6,120 7,170 7,937 6,290 3,477 3,035 Total interest expense 15,084 18,380 25,612 29,987 19,521 9,499 Net interest income 49,007 66,147 69,797 77,084 95,482 81,099 Provision for loan losses 500 1,250 2,250 1,550 14,500 2,500 Net interest income after provision for loan losses 48,507 64,897 67,547 75,534 80,982 78,599 Insurance commissions 4,022 4,005 4,320 1,911 202 144 Trust and wealth management fees 449 1,863 2,653 2,564 2,495 2,039 Mortgage origination revenue 256 547 768 770 2,799 2,638 Service charges on deposits 2,656 4,109 4,631 5,094 4,588 3,530 Bank card revenue 1,869 2,697 3,152 3,536 4,494 4,369 Realized securities gains 1,127 (14) 622 1,938 3,472 534 Bank owned life insurance and annuity income 1,054 1,017 1,022 1,044 1,567 733 Other income 167 203 254 2,346 466 269 Total noninterest income 11,600 14,427 17,422 19,203 20,083 14,256 Salaries and employee benefits 19,573 25,075 27,478 29,066 32,211 25,410 Net occupancy expense 2,098 3,011 3,364 3,417 3,963 3,559 Equipment expense 2,759 3,954 4,411 4,972 5,765 5,088 Professional fees 1,515 1,367 1,607 1,678 1,538 1,140 Advertising and public relations 445 578 654 698 596 482 Amortization of intangibles 247 1,410 1,671 1,701 1,659 1,176 FDIC premiums 875 1,065 830 88 856 1,119 Bank card expense 1,242 1,432 1,475 1,820 2,225 1,964 Foreclosed properties expense, net of losses 166 1,339 1,350 2,498 2,490 1,342 Litigation settlement - 9,900 - - - - Acquisition-related expense 933 1,589 144 617 1,671 1,167 Other expenses 4,949 7,025 6,889 8,599 9,337 8,365 Total noninterest expense 34,802 57,745 49,873 55,154 62,311 50,812 Income before income taxes 25,305 21,579 35,096 39,583 38,754 42,043 Income tax provision 8,008 9,664 7,024 7,717 7,428 8,886 Net income $17,297 $11,915 $28,072 $31,866 $31,326 $33,157 Year Ended December 31,
Confidential Note: Data as of 9/30/2021 38 CD Maturity Schedule Time Period Balance Rate Q4 2021 $80,743,897 0.59% 2021 $80,743,897 0.59% Time Period Balance Rate Q1 2022 $89,356,114 0.82% Q2 2022 $80,457,213 0.82% Q3 2022 $72,988,152 0.80% Q4 2022 $61,292,511 0.64% 2022 $304,093,989 0.78% Time Period Balance Rate Q1 2023 $29,855,723 0.89% Q2 2023 $17,072,060 1.31% Q3 2023 $12,054,918 1.47% Q4 2023 $9,082,151 1.55% 2023 $68,064,852 1.19% Time Period Balance Rate Q1 2024 $8,319,088 1.66% Q2 2024 $4,669,777 1.36% Q3 2024 $6,579,139 1.74% Q4 2024 $3,000,667 1.63% 2024 $22,568,670 1.62%
Confidential Note: Data as of 9/30/2021 39 FHLB Advances ($000s) Loan Date Type Current Balance Rate Maturity Long Term Fixed Rate Advances 4/13/2011 Amortizing-Fixed $684 5.33% 4/13/2026 Short Term Fixed Rate Advances 10/27/2021 Fixed Rate $140,000 0.32% 1/27/2022 Total $140,684 0.34%
Confidential Our Markets Source: S&P Global Market Intelligence; deposit data as of 6/30/2021 40 Virginia County # Offices Deposits in Market ($000) Market Share Median HH Income 2021 ($) Northern VA Loudoun 1 68,304 0.47% 149,148 Fauquier 1 59,963 1.67% 101,866 Fairfax 1 18,425 0.02% 128,955 Southwest VA Wythe 2 53,658 7.26% 51,499 Montgomery 1 1,333 0.05% 57,550 Shenandoah Valley VA Winchester 2 136,495 6.18% 63,393 Harrisonburg 2 95,086 4.86% 49,513 Highland 1 71,715 59.36% 48,935 Bath 1 38,720 46.41% 48,666 Tazewell 1 42,456 3.50% 43,655 Augusta 1 14,305 3.02% 65,479 Kentucky County # Offices Deposits in Market ($000) Market Share Median HH Income 2020 ($) North East KY Clark 2 104,130 12.71% 59,352 West Virginia County # Offices Deposits in Market ($000) Market Share Median HH Income 2021 ($) Eastern Panhandle WV Hardy 2 610,193 75.03% 55,575 Berkeley 3 173,190 9.48% 66,382 Grant 1 164,600 47.72% 45,515 Jefferson 1 34,651 3.22% 87,170 Pendleton 1 42,304 19.80% 43,261 Southern Region WV Mercer 4 215,892 16.25% 40,833 Wyoming 3 203,084 69.08% 43,290 Kanawha 2 262,970 4.10% 44,622 Greenbrier 2 79,990 9.55% 41,482 Summers 1 68,736 42.34% 38,577 Putnam 1 11,977 0.84% 37,670 Cabell 2 95,430 3.09% 40,028 Raleigh 2 23,321 1.53% 43,977 North Central WV Doddridge 1 152,622 66.68% 50,561 Ritchie 1 34,982 14.79% 48,995 Harrison 1 19,722 0.83% 50,008 Monongalia 1 5,383 0.13% 56,438
Confidential Source: Company internal documents; all dollars in thousands 41 Non-GAAP Reconciliations LTM Ended, 9/30/2021 Total Revenue excl. non-recurring items 125,892$ Plus: Realized securities gains/(losses) 1,447 Total Revenue (GAAP) 127,339$ For the Year Ended December 31, LTM Ended, 2016 2017 2018 2019 2020 9/30/2021 Noninterest income excl. non-recurring items 10,473$ 14,441$ 16,800$ 15,359$ 16,136$ 18,586$ Plus: Realized securities gains/(losses) 1,127 (14) 622 1,938 3,472 1,447 Gain on sale of Summit Insurance Services, LLC - - - 1,906 - - One-time annuity income - - - - 476 - Noninterest income (GAAP) 11,600$ 14,427$ 17,422$ 19,203$ 20,084$ 20,033$
Confidential Source: Company internal documents; all dollars in thousands 42 Non-GAAP Reconciliations For the Year Ended December 31, LTM Ended, 2016 2017 2018 2019 2020 9/30/2021 Noninterest expense excl. non-recurring items 34,189$ 46,256$ 49,729$ 54,537$ 60,640$ 66,033$ Plus: Merger expenses 933 1,589 144 617 1,671 1,385 Litigation settlement - 9,900 - - - - Net gain insurance proceeds flood losses (320) - - - - - Noninterest expense (GAAP) 34,802$ 57,745$ 49,873$ 55,154$ 62,311$ 67,418$ For the Year Ended December 31, LTM Ended, 2016 2017 2018 2019 2020 9/30/2021 Core PTPP earnings 26,880$ 36,745$ 38,148$ 38,828$ 51,975$ 60,905$ Plus: Realized securities gains/(losses) 1,127 (14) 622 1,938 3,472 1,447 Gain on sale of Summit Insurance Services, LLC - - - 1,906 - - One-time annuity income - - - - 475 - Less: Interest income tax equivalent adjustment (1,589) (2,413) (1,280) (922) (997) (1,046) Merger expenses (933) (1,589) (144) (617) (1,671) (1,385) Litigation settlement - (9,900) - - - - Net gain insurance proceeds flood losses 320 - - - - - Pre-tax/pre-provision income (GAAP) 25,805$ 22,829$ 37,346$ 41,133$ 53,254$ 59,921$
Confidential Source: Company internal documents; all dollars in thousands 43 Non-GAAP Reconciliations For the Year Ended December 31, LTM Ended, 2016 2017 2018 2019 2020 9/30/2021 Core ROAA 1.07% 1.18% 1.36% 1.34% 1.11% 1.39% Core ROAE 11.41% 12.76% 13.88% 12.92% 11.62% 15.00% Core ROATCE 12.07% 14.52% 15.91% 14.46% 13.83% 18.94% Average assets 1,599,597$ 2,006,340$ 2,129,042$ 2,282,311$ 2,784,250$ 3,215,489$ Average preferred equity -$ -$ -$ -$ -$ 6,544$ Average common equity 150,017 186,262 209,085 237,229 265,455 290,880 Less average intangibles (8,192) (22,566) (26,668) (25,137) (42,455) (55,302) Average tangible common equity 141,825 163,696 182,417 212,092 223,000 235,578 Average tangible equity 141,825 163,696 182,417 212,092 223,000 242,122 Core income 17,123 23,769 29,014 30,660 30,839 44,613 Plus: Realized securities gains 1,127 (14) 622 1,938 3,472 1,447 Applicable income taxes (394) 5 (131) (407) (729) (304) Gain on sale of Summit Insurance Services, LLC - - - 1,906 - - Applicable income taxes - - - (400) - - One-time annuity income - - - - 475 - Applicable income taxes - - - - (100) - Less: Merger expenses (933) (1,589) (144) (617) (1,671) (1,385) Applicable income taxes 327 556 30 130 351 291 Amortization of intangibles (247) (1,410) (1,671) (1,701) (1,659) (1,586) Applicable income taxes 86 494 351 357 348 333 Net gain insurance proceeds flood losses 320 - - - - - Applicable income taxes (112) - - - - - Litigation settlement (9,900) - - - - Applicable income taxes - 3,465 - - - - Impact of enacted income tax rate change - (3,461) - - - - Net income (GAAP) 17,297$ 11,915$ 28,072$ 31,866$ 31,326$ 43,409$ ROAA (GAAP) 1.08% 0.59% 1.32% 1.40% 1.13% 1.35% ROAE (GAAP) 11.53% 6.40% 13.43% 13.43% 11.80% 14.60% ROATCE (GAAP) 12.20% 7.28% 15.39% 15.02% 14.05% 18.43%