SUMMIT FINANCIAL GROUP, INC. - FORM 8-K - EX-99 - EXHIBIT 99

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8-K - 8-K - SUMMIT FINANCIAL GROUP, INC.	form8kearnings4thquarter20.htm

EXHIBIT 99

FOR RELEASE 6:00 AM ET, January 25, 2016

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

Telephone: (304) 530-0552

Email: rtissue@summitfgi.com

SUMMIT FINANCIAL GROUP REPORTS FOURTH QUARTER AND FULL YEAR 2015 RESULTS

Q4 2015 Diluted EPS $0.39 compared to $0.32 for Q4 2014; Full year 2015 Diluted EPS $1.50 compared to $1.17 for 2014

MOOREFIELD, WV - January 25, 2016 (GLOBE NEWSWIRE) - Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ: SMMF) today reported fourth quarter 2015 net income applicable to common shares of $4.15 million, or $0.39 per diluted share, compared to $3.01 million, or $0.32 per diluted share, for the fourth quarter of 2014, representing an increase of 37.8 percent, or 21.9 percent per diluted share. Q4 2015 earnings compared to Q4 2014 were positively impacted by a $782,000 increase in net interest income and a $314,000 gain on sale of foreclosed properties, but were negatively impacted by a $336,000 increase in write-downs of foreclosed properties and a $250,000 provision for loan losses compared to zero for Q4 2014.

Excluding from fourth quarter 2015 (on a pre-tax basis) realized securities gains of $421,000, gains on sales of foreclosed properties of $314,000, write-downs of foreclosed properties of $636,000, Q4 2015 core earnings approximated $4.08 million, or $0.38 per diluted share. Excluding from Q4 2014 (on a pre-tax basis) realized securities gains of $149,000, losses on sales of foreclosed properties of $628,000, a $461,000 fraud loss, and write-downs of foreclosed properties of $300,000, Q4 2014 core earnings approximated $3.79 million, or $0.40 per diluted share. Increased common shares outstanding resulting from common stock issuances during the past year accounted for the $0.02 decline in quarterly year-over-year core diluted earnings per share, despite the increase in earnings.

For the year ended December 31, 2015, Summit recorded net income applicable to common shares of $16.10 million, or $1.50 per diluted share, compared with $10.59 million, or $1.17 per diluted share, for 2014, representing an increase of 52.1%, or 28.2% per diluted share.

Excluding from the full-year 2015 nonrecurring items (on a pre-tax basis) comprised of realized securities gains of $1.44 million, gains on sales of foreclosed properties of $26,000, and write-downs of foreclosed properties of $2.42 million, and from the 2014

full year realized securities gains of $213,000, losses on sale of foreclosed properties of $827,000, a $461,000 fraud loss, and write-downs of foreclosed properties of $3.77 million, core earnings for full-year 2015 were approximately $16.70 million, or $1.56 per diluted share, compared to $13.64 million, or $1.50 per diluted share, for full-year 2014.

Highlights for Q4 2015 include:


•	2015 was the most profitable year in Summit’s history, with net income of $16.10 million, or $1.50 per diluted share.


•	Net interest margin increased 10 basis points compared to the linked quarter, and is 9 basis points higher than Q4 2014.


•	Core revenues increased $255,000, or 1.8 percent (non-annualized) during Q4 2015, and $3.04 million, or 5.7 percent during 2015.


•	Loan portfolio grew $17.2 million, or 1.6 percent (non-annualized) during Q4 2015, and $59.8 million, or 5.8 percent during 2015.


•	Nonperforming assets as a percentage of total assets declined to 2.77 percent compared to 3.07 percent for the linked quarter, and 3.48 percent at year end 2014; foreclosed properties are at the lowest level since Q2 2009.


•	Recorded charges of $636,000 to write-down foreclosed properties compared to $1.05 million in Q3 2015 and $300,000 in Q4 2014.

H. Charles Maddy III, President and Chief Executive Officer of Summit, commented, “The year just concluded marked a significant milestone towards Summit’s goal of being a consistent, high-performing community banking institution. Our improved earnings performance, increased return on assets and equity, growing loan portfolio, increasing revenues, improved net interest margin, strengthened capital, and continuing reductions in the portfolio of problem assets, all serve as evidence towards achievement of this goal. Further, we are very pleased to end 2015 with another exceptional quarter of solid performance, which gives us optimism as we look forward to 2016 and beyond.”

Results from Operations

Total revenue for fourth quarter 2015, consisting of net interest income and noninterest income, grew 6.0 percent to $14.6 million compared to $13.8 million for the fourth quarter 2014. For the year-to-date period ended December 31, 2015, total revenue was $57.9 million compared to $53.6 million for 2014, representing a 8.0 percent increase.

Total core revenue (excluding nonrecurring items, enumerated above) was $14.2 million for fourth quarter 2015 compared to $13.6 million for the same prior-year quarter, an increase of 4.1 percent. For full-year 2015, total core revenue (excluding nonrecurring items) was $56.4 million compared to $53.4 million for full-year 2014, a 5.7 percent improvement.

For the fourth quarter of 2015, net interest income was $11.7 million, an increase of 7.1 percent from the $11.0 million reported in the prior-year fourth quarter and 3.8 percent or

$428,000 more than the linked quarter. The net interest margin for fourth quarter 2015 was 3.51 percent compared to 3.42 percent for the year-ago quarter, and 3.41 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 2015 was $2.87 million compared to $2.82 million for the comparable period of 2014. Excluding realized securities gains/losses, noninterest income was $2.45 million for fourth quarter 2015, compared to $2.67 million reported for fourth quarter 2014.

Summit recognized $250,000 provision for loan losses in both the fourth quarter 2015, and the linked quarter, compared to none for the year-ago quarter.

Core noninterest expense continues to be well-controlled. Total noninterest expense decreased 6.8% to $8.49 million compared to $9.11 million for the prior-year fourth quarter. Excluding from noninterest expense (on a pre-tax basis) gains on sales of foreclosed properties of $314,000 in Q4 2015 and losses of $628,000 in Q4 2014, write-downs of foreclosed properties of $636,000 in Q4 2015 and $300,000 in Q4 2014, and a fraud loss in Q4 2014 of $461,000, noninterest expense would have approximated $8.17 million for Q4 2015 compared to $7.72 million for the comparable period of 2014. Noninterest expense for the full-year 2015 decreased 4.8% compared to 2014.

Balance Sheet

At December 31, 2015, total assets were $1.49 billion, an increase of $48.9 million, or 3.4 percent since December 31, 2014. Total loans, net of unearned fees and allowance for loan losses, were $1.08 billion at December 31, 2015, up $59.5 million, or 5.8 percent, from the $1.02 billion reported at year-end 2014.

At December 31, 2015, deposits were $1.07 billion, an increase of $5.4 million, or 0.5 percent, since year end 2014. During 2015, checking and savings grew by $15.3 million and $13.2 million, respectively, or 4.8 percent and 5.2 percent, respectively. Long-term borrowings and subordinated debentures declined by 16.4 percent since year end 2014, as the Company prepaid $16.8 million in subordinated debentures, which was funded primarily by short-term borrowings.

Asset Quality

As of December 31, 2015, nonperforming assets (“NPAs”), consisting of nonperforming loans, foreclosed properties, and repossessed assets, were $41.3 million, or 2.77 percent of assets. This compares to $45.2 million, or 3.07 percent of assets at the linked quarter, and $50.2 million, or 3.48 percent of assets, at fourth quarter 2014.

Fourth quarter 2014 net loan charge-offs were $6,000, or 0.00 percent of average loans annualized. The allowance for loan losses stood at $11.5 million, or 1.05 percent of total loans at December 31, 2015, compared to 1.08 percent at year-end 2014.

Capital Adequacy

Shareholders’ equity was $143.7 million as of December 31, 2015 compared to $131.6 million December 31, 2014. Tangible book value per common share increased to $12.78 at December 31, 2015 compared to $11.86 at December 31, 2014.

Summit's depository institution, Summit Community Bank, Inc. (the “Bank”), is well in excess of regulatory requirements for a "well capitalized" institution at December 31, 2015. The Bank’s total risk-based capital ratio was 14.5 percent at December 31, 2015 compared to 15.3 percent at December 31, 2014, while its Tier 1 leverage capital ratio improved to 10.8 percent from the 10.6 percent reported at December 31, 2014.

About the Company

Summit Financial Group, Inc. is a $1.49 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, gains/losses on sales of assets, and write-downs of foreclosed properties to estimated fair value included in its Statements of Income. Management deems 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 2015 vs Q4 2014
	For the Quarter Ended					Percent
Dollars in thousands	12/31/2015			12/31/2014		Change
Condensed Statements of Income
Interest income
Loans, including fees	$	13,265		$	12,666	4.7	%
Securities	1,685			1,784		-5.5	%
Other	1			2		-50.0	%
Total interest income	14,951			14,452		3.5	%
Interest expense
Deposits	2,085			2,130		-2.1	%
Borrowings	1,133			1,371		-17.4	%
Total interest expense	3,218			3,501		-8.1	%
Net interest income	11,733			10,951		7.1	%
Provision for loan losses	250			—		n/a
Net interest income after provision for loan losses	11,483			10,951		4.9	%

Noninterest income
Insurance commissions	851			1,023		-16.8	%
Service fees related to deposit accounts	1,126			1,113		1.2	%
Realized securities gains	421			149		182.6	%
Other income	471			537		-12.3	%
Total noninterest income	2,869			2,822		1.7	%
Noninterest expense
Salaries and employee benefits	4,530			4,133		9.6	%
Net occupancy expense	481			495		-2.8	%
Equipment expense	617			487		26.7	%
Professional fees	507			452		12.2	%
FDIC premiums	270			315		-14.3	%
Foreclosed properties expense	150			239		-37.2	%
Loss (gain) on sales of foreclosed properties	(314		)	628		-150.0	%
Write-downs of foreclosed properties	636			300		112.0	%
Other expenses	1,617			2,061		-21.5	%
Total noninterest expense	8,494			9,110		-6.8	%
Income before income taxes	5,858			4,663		25.6	%
Income taxes	1,712			1,464		16.9	%
Net income	4,146			3,199		29.6	%
Preferred stock dividends	—			191		-100.0	%

Net income applicable to common shares	$	4,146		$	3,008	37.8	%



SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary -- Q4 2015 vs Q4 2014

	For the Quarter Ended						Percent
	12/31/2015			12/31/2014			Change
Per Share Data
Earnings per common share
Basic	$	0.39		$	0.39		—	%
Diluted	$	0.39		$	0.32		21.9	%

Cash dividends	$	0.08		$	—		n/a

Average common shares outstanding
Basic	10,661,700			7,796,508			36.7	%
Diluted	10,669,192			9,963,214			7.1	%

Common shares outstanding at period end	10,671,744			8,301,746			28.5	%

Performance Ratios
Return on average equity	11.66		%	10.10		%	15.4	%
Return on average tangible equity	12.31		%	10.76		%	14.4	%
Return on average assets	1.12		%	0.89		%	25.8	%
Net interest margin	3.51		%	3.42		%	2.6	%
Efficiency ratio (A)	54.46		%	53.07		%	2.6	%


NOTE (A) - 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 -- 2015 vs 2014
	For the Years Ended						Percent
Dollars in thousands	12/31/2015			12/31/2014			Change
Condensed Statements of Income
Interest income
Loans, including fees	$	52,068		$	50,430		3.2	%
Securities	6,808			7,188			-5.3	%
Other	7			8			-12.5	%
Total interest income	58,883			57,626			2.2	%
Interest expense
Deposits	8,336			8,995			-7.3	%
Borrowings	4,531			6,246			-27.5	%
Total interest expense	12,867			15,241			-15.6	%
Net interest income	46,016			42,385			8.6	%
Provision for loan losses	1,250			2,250			-44.4	%
Net interest income after provision for loan losses	44,766			40,135			11.5	%

Noninterest income
Insurance commissions	4,042			4,400			-8.1	%
Service fees related to deposit accounts	4,285			4,405			-2.7	%
Realized securities gains	1,444			213			577.9	%
Other-than-temporary impairment of securities	—			(1		)	-100.0	%
Other income	2,090			2,206			-5.3	%
Total noninterest income	11,861			11,223			5.7	%
Noninterest expense
Salaries and employee benefits	17,638			16,185			9.0	%
Net occupancy expense	1,964			2,023			-2.9	%
Equipment expense	2,294			2,086			10.0	%
Professional fees	1,616			1,429			13.1	%
FDIC premiums	1,220			1,792			-31.9	%
Foreclosed properties expense	684			1,020			-32.9	%
Loss (gain) on sales of foreclosed properties	(26		)	827			-103.1	%
Write-downs of foreclosed properties	2,415			3,771			-36.0	%
Other expenses	5,827			6,191			-5.9	%
Total noninterest expense	33,632			35,324			-4.8	%
Income before income taxes	22,995			16,034			43.4	%
Income taxes	6,893			4,678			47.3	%
Net income	16,102			11,356			41.8	%
Preferred stock dividends	—			771			-100.0	%

Net income applicable to common shares	$	16,102		$	10,585		52.1	%



SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Annual Performance Summary -- 2015 vs 2014

	For the Years Ended						Percent
	12/31/2015			12/31/2014			Change
Per Share Data
Earnings per common share
Basic	$	1.56		$	1.40		11.4	%
Diluted	$	1.50		$	1.17		28.2	%

Cash dividends	$	0.32		$	—		n/a

Average common shares outstanding
Basic	10,295,434			7,539,444			36.6	%
Diluted	10,715,275			9,711,561			10.3	%

Common shares outstanding at period end	10,671,744			8,301,746			28.5	%

Performance Ratios
Return on average equity	11.62		%	9.54		%	21.8	%
Return on average tangible equity	12.29		%	10.22		%	20.3	%
Return on average assets	1.10		%	0.80		%	37.5	%
Net interest margin	3.50		%	3.39		%	3.2	%
Efficiency ratio (A)	52.17		%	52.78		%	-1.2	%


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	12/31/2015			9/30/2015		6/30/2015		3/31/2015		12/31/2014
Condensed Statements of Income
Interest income
Loans, including fees	$	13,265		$	12,983	$	12,972	$	12,848	$	12,666
Securities	1,685			1,543		1,685		1,894		1,784
Other	1			5		1		1		2
Total interest income	14,951			14,531		14,658		14,743		14,452
Interest expense
Deposits	2,085			2,106		2,074		2,071		2,130
Borrowings	1,133			1,120		1,126		1,152		1,371
Total interest expense	3,218			3,226		3,200		3,223		3,501
Net interest income	11,733			11,305		11,458		11,520		10,951
Provision for loan losses	250			250		500		250		—
Net interest income after provision for loan losses	11,483			11,055		10,958		11,270		10,951

Noninterest income
Insurance commissions	851			983		1,080		1,128		1,023
Service fees related to deposit accounts	1,126			1,111		1,072		976		1,113
Realized securities gains	421			372		170		480		149
Other income	471			527		538		555		537
Total noninterest income	2,869			2,993		2,860		3,139		2,822
Noninterest expense
Salaries and employee benefits	4,530			4,479		4,442		4,187		4,133
Net occupancy expense	481			496		489		498		495
Equipment expense	617			582		560		535		487
Professional fees	507			402		372		335		452
FDIC premiums	270			300		320		330		315
Foreclosed properties expense	150			168		158		208		239
Loss (gain) on sale of foreclosed properties	(314		)	35		103		150		628
Write-downs of foreclosed properties	636			1,046		160		572		300
Other expenses	1,617			1,364		1,457		1,389		2,061
Total noninterest expense	8,494			8,872		8,061		8,204		9,110
Income before income taxes	5,858			5,176		5,757		6,205		4,663
Income taxes	1,712			1,515		1,747		1,920		1,464
Net income	4,146			3,661		4,010		4,285		3,199
Preferred stock dividends				—		—		—		191
Net income applicable to common shares	$	4,146		$	3,661	$	4,010	$	4,285	$	3,008



SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Five Quarter Performance Summary

	For the Quarter Ended
	12/31/2015			9/30/2015			6/30/2015			3/31/2015			12/31/2014
Per Share Data
Earnings per common share
Basic	$	0.39		$	0.34		$	0.38		$	0.49		$	0.39
Diluted	$	0.39		$	0.34		$	0.38		$	0.41		$	0.32

Cash dividends	$	0.08		$	0.08		$	0.08		$	0.08		$	—

Average common shares outstanding
Basic	10,661,700			10,703,526			10,667,892			8,815,961			7,796,508
Diluted	10,669,192			10,712,203			10,676,474			10,493,323			9,963,214

Common shares outstanding at period end	10,671,744			10,658,199			10,843,676			10,586,242			8,301,746

Performance Ratios
Return on average equity	11.66		%	10.42		%	11.67		%	12.79		%	10.10		%
Return on average tangible equity	12.31		%	11.01		%	12.36		%	13.56		%	10.76		%
Return on average assets	1.12		%	1.00		%	1.09		%	1.18		%	0.89		%
Net interest margin	3.51		%	3.41		%	3.49		%	3.59		%	3.42		%
Efficiency ratio - (A)	54.46		%	52.93		%	52.05		%	49.27		%	53.07		%

NOTE (A) - 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	12/31/2015			9/30/2015			6/30/2015			3/31/2015			12/31/2014

Assets
Cash and due from banks	$	3,625		$	4,232		$	3,988		$	3,850		$	3,728
Interest bearing deposits other banks	5,862			8,057			9,274			8,437			8,783
Securities	280,792			272,127			276,661			282,135			282,834
Loans, net	1,079,331			1,062,348			1,064,472			1,039,669			1,019,842
Property held for sale	25,567			29,713			31,500			34,368			37,529
Premises and equipment, net	21,572			20,457			20,490			20,208			20,060
Intangible assets	7,498			7,548			7,598			7,648			7,698
Cash surrender value of life insurance policies	37,732			37,482			37,222			36,961			36,700
Other assets	30,450			27,340			28,764			27,216			26,394
Total assets	$	1,492,429		$	1,469,304		$	1,479,969		$	1,460,492		$	1,443,568

Liabilities and Shareholders' Equity
Deposits	$	1,066,709		$	1,072,091		$	1,053,310		$	1,058,308		$	1,061,314
Short-term borrowings	171,394			145,291			174,599			148,985			123,633
Long-term borrowings and subordinated debentures	95,170			95,648			98,625			101,602			113,879
Other liabilities	15,412			15,985			13,363			15,708			13,098
Shareholders' equity	143,744			140,289			140,072			135,889			131,644
Total liabilities and shareholders' equity	$	1,492,429		$	1,469,304		$	1,479,969		$	1,460,492		$	1,443,568

Book value per common share (A)	$	13.48		$	13.16		$	12.92		$	12.84		$	12.60
Tangible book value per common share (A)	$	12.78		$	12.45		$	12.22		$	12.11		$	11.86
Tangible equity to tangible assets	9.2		%	9.1		%	9.0		%	8.8		%	8.6		%
Tangible common equity to tangible assets	9.2		%	9.1		%	9.0		%	8.8		%	8.0		%

NOTE (A) - Assumes conversion of convertible preferred stock



SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Regulatory Capital Ratios (A)

	12/31/2015		9/30/2015		6/30/2015		3/31/2015		12/31/2014
Summit Financial Group, Inc.
CET1 Risk-based Capital	11.8	%	11.7	%	11.6	%	11.3	%	n/a
Tier 1 Risk-based Capital	13.4	%	13.4	%	13.2	%	13.0	%	13.3	%
Total Risk Based Capital	14.4	%	14.4	%	14.2	%	14.0	%	14.9	%
Tier 1 Leverage Ratio	10.7	%	10.5	%	10.4	%	10.1	%	9.9	%

Summit Community Bank, Inc.
CET1 Risk-based Capital	13.6	%	13.6	%	13.4	%	13.5	%	n/a
Tier 1 Risk-based Capital	13.6	%	13.6	%	13.4	%	13.5	%	14.2	%
Total Risk Based Capital	14.5	%	14.6	%	14.4	%	14.5	%	15.3	%
Tier 1 Leverage Ratio	10.8	%	10.7	%	10.6	%	10.5	%	10.6	%

NOTE (A) - Computed in accordance with Basel III regulatory capital guidelines beginning January 1, 2015



SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Loan Composition

Dollars in thousands	12/31/2015		9/30/2015		6/30/2015		3/31/2015		12/31/2014

Commercial	$	97,201	$	89,250	$	97,284	$	89,928	$	88,590
Commercial real estate
Owner occupied	203,555		199,068		191,743		180,269		157,783
Non-owner occupied	337,295		336,550		331,056		325,764		317,136
Construction and development
Land and development	65,500		66,164		64,435		66,558		67,881
Construction	9,970		8,419		18,214		19,094		28,591
Residential real estate
Non-jumbo	221,749		222,739		220,199		219,938		220,071
Jumbo	50,313		46,092		49,203		50,492		52,879
Home equity	74,300		73,652		72,504		68,894		67,115
Consumer	19,251		19,124		18,683		18,485		19,456
Other	11,669		12,518		12,423		11,074		11,507
Total loans, net of unearned fees	1,090,803		1,073,576		1,075,744		1,050,496		1,031,009
Less allowance for loan losses	11,472		11,228		11,272		10,827		11,167
Loans, net	$	1,079,331	$	1,062,348	$	1,064,472	$	1,039,669	$	1,019,842



SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Deposit Composition

Dollars in thousands	12/31/2015		9/30/2015		6/30/2015		3/31/2015		12/31/2014
Non interest bearing checking	$	119,010	$	118,887	$	113,256	$	117,049	$	115,427
Interest bearing checking	215,721		217,242		202,957		196,606		204,030
Savings	266,825		259,185		246,949		257,687		253,578
Time deposits	465,153		476,777		490,148		486,966		488,279
Total deposits	$	1,066,709	$	1,072,091	$	1,053,310	$	1,058,308	$	1,061,314



SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Asset Quality Information
	For the Quarter Ended
Dollars in thousands	12/31/2015			9/30/2015			6/30/2015			3/31/2015			12/31/2014

Gross loan charge-offs	$	132		$	774		$	463		$	782		$	362
Gross loan recoveries	(126		)	(481		)	(407		)	(192		)	(488		)
Net loan charge-offs	$	6		$	293		$	56		$	590		$	(126	)

Net loan charge-offs to average loans (annualized)	—		%	0.11		%	0.02		%	0.23		%	-0.05		%
Allowance for loan losses	$	11,472		$	11,228		$	11,272		$	10,827		$	11,167
Allowance for loan losses as a percentage of period end loans	1.05		%	1.05		%	1.05		%	1.03		%	1.08		%

Nonperforming assets:
Nonperforming loans
Commercial	$	853		$	884		$	1,065		$	788		$	392
Commercial real estate	5,955			5,294			2,421			1,340			1,844
Commercial construction and development	—			—			—			—			—
Residential construction and development	5,623			5,345			5,627			5,333			4,619
Residential real estate	3,245			3,881			4,433			4,491			5,556
Consumer	92			53			45			65			83
Total nonperforming loans	15,768			15,457			13,591			12,017			12,494
Foreclosed properties
Commercial	—			—			—			110			110
Commercial real estate	1,300			3,209			3,279			3,657			5,204
Commercial construction and development	8,717			9,328			10,178			10,191			10,179
Residential construction and development	14,068			14,965			15,839			17,590			19,267
Residential real estate	1,482			2,211			2,204			2,819			2,769
Total foreclosed properties	25,567			29,713			31,500			34,367			37,529
Other repossessed assets	5			—			55			55			221
Total nonperforming assets	$	41,340		$	45,170		$	45,146		$	46,439		$	50,244

Nonperforming loans to period end loans	1.45		%	1.44		%	1.26		%	1.14		%	1.21		%
Nonperforming assets to period end assets	2.77		%	3.07		%	3.05		%	3.18		%	3.48		%



Loans Past Due 30-89 Days
	For the Quarter Ended
In thousands	12/31/2015		9/30/2015		6/30/2015		3/31/2015		12/31/2014

Commercial	$	339	$	42	$	344	$	387	$	382
Commercial real estate	543		1,926		4,945		783		266
Construction and development	1,182		39		21		2,735		2,278
Residential real estate	4,442		3,888		3,932		3,614		7,413
Consumer	186		216		211		148		269
Other	9		9		7		18		14
Total	$	6,701	$	6,120	$	9,460	$	7,685	$	10,622



SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q4 2015 vs Q4 2014
	Q4 2015							Q4 2014
	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	$	1,064,491		$	13,111	4.89	%	$	1,006,641		$	12,562	4.95	%
Tax-exempt	16,393			232		5.61	%	9,488			158		6.61	%
Securities
Taxable	202,417			1,027		2.01	%	207,577			1,127		2.15	%
Tax-exempt	82,013			997		4.82	%	83,729			995		4.71	%
Interest bearing deposits other banks and Federal funds sold	7,345			1		0.05	%	8,102			2		0.10	%
Total interest earning assets	1,372,659			15,368		4.44	%	1,315,537			14,844		4.48	%

Noninterest earning assets
Cash & due from banks	3,828							3,654
Premises & equipment	21,701							20,149
Other assets	91,596							107,467
Allowance for loan losses	(11,370		)					(11,239		)
Total assets	$	1,478,414						$	1,435,568

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	215,315		$	72	0.13	%	$	199,932		$	60	0.12	%
Savings deposits	262,557			474		0.72	%	254,986			443		0.69	%
Time deposits	469,249			1,539		1.30	%	489,884			1,627		1.32	%
Short-term borrowings	156,812			156		0.39	%	124,001			97		0.31	%
Long-term borrowings and subordinated debentures	95,531			977		4.06	%	114,533			1,274		4.41	%
Total interest bearing liabilities	1,199,464			3,218		1.06	%	1,183,336			3,501		1.17	%

Noninterest bearing liabilities
Demand deposits	119,785							113,926
Other liabilities	16,970							11,633
Total liabilities	1,336,219							1,308,895

Shareholders' equity - preferred	—							9,249
Shareholders' equity - common	142,195							117,424
Total liabilities and shareholders' equity	$	1,478,414						$	1,435,568

NET INTEREST EARNINGS				$	12,150						$	11,343

NET INTEREST MARGIN						3.51	%						3.42	%



SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
YTD 2015 vs YTD 2014
	YTD 2015							YTD 2014
	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	$	1,049,172		$	51,554	4.91	%	$	984,723		$	50,078	5.09	%
Tax-exempt	13,706			779		5.68	%	7,823			533		6.81	%
Securities
Taxable	209,316			4,328		2.07	%	211,700			4,692		2.22	%
Tax-exempt	77,280			3,756		4.86	%	81,549			3,780		4.64	%
Interest bearing deposits other banks and Federal funds sold	8,878			8		0.09	%	9,325			8		0.09	%
Total interest earning assets	1,358,352			60,425		4.45	%	1,295,120			59,091		4.56	%

Noninterest earning assets
Cash & due from banks	3,839							3,756
Premises & equipment	20,707							20,346
Other assets	94,996							112,504
Allowance for loan losses	(11,307		)					(11,724		)
Total assets	$	1,466,587						$	1,420,002

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	208,160		$	251	0.12	%	$	192,190		$	222	0.12	%
Savings deposits	255,186			1,781		0.70	%	238,340			1,580		0.66	%
Time deposits	481,732			6,304		1.31	%	513,110			7,193		1.40	%
Short-term borrowings	151,102			525		0.35	%	100,786			306		0.30	%
Long-term borrowings and subordinated debentures	99,805			4,007		4.01	%	142,213			5,939		4.18	%
Total interest bearing liabilities	1,195,985			12,868		1.08	%	1,186,639			15,240		1.28	%

Noninterest bearing liabilities
Demand deposits	116,995							104,262
Other liabilities	15,024							10,119
Total liabilities	1,328,004							1,301,020

Shareholders' equity - preferred	1,786							9,276
Shareholders' equity - common	136,797							109,706
Total liabilities and shareholders' equity	$	1,466,587						$	1,420,002

NET INTEREST EARNINGS				$	47,557						$	43,851

NET INTEREST MARGIN						3.50	%						3.39	%



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	12/31/2015			9/30/2015			12/31/2014			12/31/2015			12/31/2014

Core earnings applicable to common shares	$	4,084		$	4,108		$	3,789		$	16,697		$	13,638

Realized securities gains	421			372			149			1,444			213
Applicable income tax effect	(156		)	(138		)	(55		)	(534		)	(79		)
Gain (loss) on sale of foreclosed properties	314			(35		)	(628		)	26			(827		)
Applicable income tax effect	(116		)	13			232			(10		)	306
Fraud loss	—			—			(461		)	—			(461		)
Applicable income tax effect	—			—			171			—			171
Write-downs foreclosed properties	(636		)	(1,046		)	(300		)	(2,415		)	(3,771		)
Applicable income tax effect	235			387			111			894			1,395
	62			(447		)	(781		)	(595		)	(3,053		)
GAAP net income applicable to common shares	$	4,146		$	3,661		$	3,008		$	16,102		$	10,585


Core diluted earnings per common share	$	0.38		$	0.38		$	0.40		$	1.56		$	1.50

Realized securities gains	0.04			—			0.01			0.13			0.02
Applicable income tax effect	(0.01		)	—			—			(0.05		)	(0.01		)
Gain (loss) on sale of foreclosed properties	0.03			0.03			(0.06		)	—			(0.09		)
Applicable income tax effect	(0.01		)	(0.01		)	0.02			—			0.03
Fraud loss	—			—			(0.05		)	—			(0.05		)
Applicable income tax effect	—			—			0.02			—			0.02
Write-downs of foreclosed properties	(0.06		)	(0.10		)	(0.03		)	(0.23		)	(0.39		)
Applicable income tax effect	0.02			0.04			0.01			0.09			0.14
	0.01			(0.04		)	(0.08		)	(0.06		)	(0.33		)
GAAP diluted earnings per common share	$	0.39		$	0.34		$	0.32		$	1.50		$	1.17



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	12/31/2015			9/30/2015		12/31/2014		12/31/2015			12/31/2014

Total core revenue	$	14,181		$	13,926	$	13,624	$	56,433		$	53,395

FHLB special dividend	—			—		—		176			—
Realized securities gains	421			372		149		1,444			213
	421			372		149		1,444			213
GAAP total revenue	$	14,602		$	14,298	$	13,773	$	57,877		$	53,608


Total core noninterest income	$	2,448		$	2,621	$	2,673	$	10,417		$	11,010

Realized securities gains	421			372		149		1,444			213
	421			372		149		1,444			213
GAAP total noninterest income	$	2,869		$	2,993	$	2,822	$	11,861		$	11,223


Total core noninterest expense	$	8,172		$	7,791	$	7,721	$	31,243		$	30,265

Fraud loss	—			—		461		—			461
(Gains)/losses on sales of foreclosed properties	(314		)	35		628		(26		)	827
Write-downs of foreclosed properties	636			1,046		300		2,415			3,771
	322			1,081		1,389		2,389			5,059
GAAP total noninterest expense	$	8,494		$	8,872	$	9,110	$	33,632		$	35,324

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SUMMIT FINANCIAL GROUP, INC. Reports