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 29, 2019

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 2018 RESULTS

Q4 2018 Diluted EPS $0.60, equaling a Quarterly Record; Full Year 2018 Diluted EPS $2.26, an Annual Record

MOOREFIELD, WV - January 29, 2019 (GLOBE NEWSWIRE) - Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ: SMMF) today reported quarterly net income of $7.45 million for fourth quarter 2018, or $0.60 per diluted share -- equaling our previous quarterly record, compared to $2.32 million, or $0.19 per diluted share, for the fourth quarter of 2017. Earnings per diluted share for fourth quarter 2017 were negatively impacted (on an after-tax basis) by the one-time charge of $0.28 to re-measure the Company’s net deferred tax assets as result of enactment of the Tax Cuts and Jobs Act (“TCJA”).

For the full year 2018, Summit achieved record net income of $28.07 million, and record earnings per diluted share of $2.26, compared with $11.92 million, or $1.00 per diluted share, for 2017. Full year 2018 results were positively impacted (on a diluted earnings per share basis) $0.29 as result of higher net interest income, $0.06 due to growth in trust and wealth management fees, $0.08 from increased deposit account-related fees and $0.25 in lower income tax expense as result of TCJA’s lower income tax rates. Higher total noninterest expense of $0.16 per diluted share partially offset these positive impacts. Lower earnings in 2017 were principally attributable to the following non-core or one-time items (on an after-tax, diluted earnings per share basis): $0.52 as result of a litigation settlement, $0.29 due to the enactment of the TCJA, and $0.08 as result of merger-related expenses.

Highlights for Q4 2018


•	Loan balances, excluding mortgage warehouse lines of credit, increased $46.1 million during the quarter, or 11.5 percent (on an annualized basis); excluding mortgage warehouse lines of credit, loans grew $80.4 million or 5.1 percent since year-end 2017;


•	Net interest margin for the quarter increased 8 basis points to 3.61 percent compared to Q3 2018;


•	Efficiency ratio improved to 51.02 percent compared to 54.25 percent for the linked-quarter as result of the improved net interest margin and well-controlled overhead;


•	Provision for loan losses remained unchanged at $500,000 compared to the prior quarter;


•	Realized securities losses of $205,000 in Q4 2018 compared to realized securities gains of $8,000 in Q3 2018; and


•	Write-downs of foreclosed properties were $318,000 in Q4 2018 compared to $39,000 in Q3 2018, while the net loss on sales of foreclosed properties increased to $70,000 in Q4 2018 from $18,000 in Q3 2018.

H. Charles Maddy, III, President and Chief Executive Officer of Summit, commented, “I am very gratified to report that for fourth quarter 2018, Summit had record quarterly net income and tied its previous record for quarterly earnings per share; and for the full year 2018, we achieved a new annual earnings record both in net income and on a per share basis. In addition, I am particularly pleased by our continued solid lending activity and strong core operating performance in this past quarter. Our acquisition of Peoples Bankshares, Inc. closed at the beginning of 2019, and it serves to combine Summit with a financially strong bank that shares the same commitment to build long-term client relationships by providing ‘Service Beyond Expectations’. The financial synergies relative to this transaction are already evident. I optimistically look forward to 2019 and beyond as we are laser-focused on our goal to be a consistent growing, high-performing community banking institution.

Results from Operations

Total revenue for fourth quarter 2018, consisting of net interest income and noninterest income, increased 4.1 percent to $22.2 million compared to $21.4 million for the fourth quarter 2017. For the full year 2018, total revenue was $87.2 million compared to $80.6 million for 2017, representing an 8.2 percent increase primarily due to the acquisition of First Century Bankshares, Inc. (“FCB”) in Q2 2017.

For the fourth quarter of 2018, net interest income increased 3.5 percent to $18.1 million compared to $17.4 million for the prior-year fourth quarter and grew 4.9 percent compared to the linked quarter principally as result of $44.2 million in growth in average loans and 19 basis point improvement in average loan yields during the quarter. The net interest margin for fourth quarter 2018 was 3.61 percent compared to 3.65 percent for the same year-ago quarter, and 3.53 percent for the linked quarter. Excluding the impact of accretion and amortization of fair value acquisition accounting adjustments related to the acquired interest earning assets and interest bearing liabilities, Summit’s net interest margin was 3.57 percent for Q4 2018 and 3.54 percent for full year 2018.

Noninterest income, consisting primarily of insurance commissions from Summit's insurance agency subsidiary, trust and wealth management fees and service fee income from community banking activities, for fourth quarter 2018 was $4.19 million compared to $3.93 million for the comparable period of 2017. Excluding realized securities gains and losses, noninterest income was $4.39 million for fourth quarter 2018, compared to $4.00 million reported for fourth quarter 2017 and $4.20 million for the linked quarter.

We recorded a $500,000 provision for loan losses during fourth quarter 2018 and $375,000 in Q4 2017. The need for increased loan loss provisioning during 2018 is directionally consistent with changes in the credit quality in our loan portfolio and our loan growth.

Q4 2018 total noninterest expense increased 1.0 percent to $12.47 million compared to $12.35 million for the prior-year fourth quarter. Noninterest expense for full year 2018 decreased 13.6 percent compared to 2017 principally due to: 1) $144,000 in merger expenses being incurred in 2018 compared to $1.59 million in 2017; and 2) a $9.9 million charge to resolve fully all litigation with Residential Funding Company, LLC and ResCap Liquidating Trust (collectively “ResCap”) recorded during 2017. Excluding the impact of the ResCap litigation settlement charge and merger-related expenses, noninterest expense for 2018 increased 7.5 percent to $49.9 million compared to $46.3 million for 2017, principally as result of the FCB acquisition.

Balance Sheet

At December 31, 2018, total assets were $2.20 billion, an increase of $66.3 million, or 3.1 percent since December 31, 2017. Total loans, net of unearned fees and allowance for loan losses, were $1.68 billion at December 31, 2018, up $88.3 million, or 5.5 percent, from the $1.59 billion reported at year-end 2017. Loans, excluding mortgage warehouse lines of credit, increased $46.1 million during the quarter, or 11.5 percent (on an annualized basis), and have grown $80.4 million or 5.1 percent since year-end 2017.

At December 31, 2018, deposits were $1.63 billion, an increase of $34.2 million, or 2.1 percent, since year end 2017. During 2018, checking deposits increased $117.3 million or 18.7 percent, time deposits declined by $9.1 million or 1.5 percent and savings deposits declined $74.0 million or 20.7 percent.

Shareholders’ equity was $219.8 million as of December 31, 2018 compared to $213.6 million at September 30, 2018 and $201.5 million at December 31, 2017. Tangible book value per common share increased to $15.75 at December 31, 2018 compared to $15.13 at the end of third quarter 2018 and $14.08 at year end 2017. Summit had 12,312,933 outstanding common shares at year end 2018 compared to 12,358,562 at year end 2017.

As previously announced in Q3 2018, the Board of Directors authorized the open market repurchase of up to 500,000 shares of the issued and outstanding shares of Summit's common stock. The timing and quantity of purchases under this stock repurchase plan are at the discretion of management. The plan will expire December 31, 2019, but may be discontinued, suspended, or restarted at any time at the Company's discretion. During Q4 2018, 82,423 shares of our common stock were repurchased under the Plan at an average price of $20.46 per share.

Asset Quality

As of December 31, 2018, nonperforming assets (“NPAs”), consisting of nonperforming loans, foreclosed properties, and repossessed assets, were $36.5 million, or 1.66 percent of assets. This compares to $39.0 million, or 1.82 percent of assets at the linked quarter-end, and $36.9 million, or 1.73 percent of assets, at year-end 2017 as result of our continuing emphasis on improving our overall asset quality.

Fourth quarter 2018 net loan charge-offs were $398,000, or 0.10 percent of average loans annualized; while adding $500,000 to the allowance for loan losses through the provision for loan losses. The allowance for loan losses stood at 0.77 percent of total loans at December 31, 2018, compared to 0.78 percent at year-end 2017. If the acquired FCB and HCB loans, which were recorded at fair value on the acquisition dates were excluded, the allowance for loan losses to total loans ratio at December 31, 2018 and December 31, 2017 would have been 0.84 percent and 0.91 percent, respectively.

About the Company

Summit Financial Group, Inc. is a $2.20 billion financial holding company headquartered in Moorefield, West Virginia. Summit provides community banking services primarily in the Eastern Panhandle and Southern regions of West Virginia and the Northern, Shenandoah Valley and Southwestern regions of Virginia, through its bank subsidiary, Summit Community Bank, Inc., which operates thirty-three 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.



SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary (unaudited) -- Q4 2018 vs Q4 2017
	For the Quarter Ended						Percent
Dollars in thousands	12/31/2018			12/31/2017			Change
Statements of Income
Interest income
Loans, including fees	$	22,659		$	20,031		13.1	%
Securities	2,527			2,412			4.8	%
Other	127			144			-11.8	%
Total interest income	25,313			22,587			12.1	%
Interest expense
Deposits	5,103			3,224			58.3	%
Borrowings	2,158			1,925			12.1	%
Total interest expense	7,261			5,149			41.0	%

Net interest income	18,052			17,438			3.5	%
Provision for loan losses	500			375			33.3	%
Net interest income after provision for loan losses	17,552			17,063			2.9	%

Noninterest income
Insurance commissions	1,132			1,005			12.6	%
Trust and wealth management fees	627			578			8.5	%
Service charges on deposit accounts	1,209			1,200			0.8	%
Bank card revenue	809			743			8.9	%
Realized securities (losses) gains	(205		)	(71		)	188.7	%
Bank owned life insurance income	249			258			-3.5	%
Other income	366			218			67.9	%
Total noninterest income	4,187			3,931			6.5	%
Noninterest expense
Salaries and employee benefits	6,928			6,520			6.3	%
Net occupancy expense	836			772			8.3	%
Equipment expense	1,139			1,095			4.0	%
Professional fees	385			355			8.5	%
Advertising and public relations	193			185			4.3	%
Amortization of intangibles	410			435			-5.7	%
FDIC premiums	140			250			-44.0	%
Bank card expense	395			319			23.8	%
Foreclosed properties expense, net of losses	507			516			-1.7	%
Merger-related expense	59			14			321.4	%
Other expenses	1,474			1,885			-21.8	%
Total noninterest expense	12,466			12,346			1.0	%
Income before income taxes	9,273			8,648			7.2	%
Income tax expense	1,823			6,325			-71.2	%
Net income	$	7,450		$	2,323		220.7	%



SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary (unaudited) -- Q4 2018 vs Q4 2017

	For the Quarter Ended						Percent
	12/31/2018			12/31/2017			Change
Per Share Data
Earnings per common share
Basic	$	0.60		$	0.19		215.8	%
Diluted	$	0.60		$	0.19		215.8	%

Cash dividends	$	0.14		$	0.11		27.3	%

Average common shares outstanding
Basic	12,358,104			12,325,067			0.3	%
Diluted	12,407,678			12,371,507			0.3	%

Common shares outstanding at period end	12,312,933			12,358,562			-0.4	%

Performance Ratios
Return on average equity	13.85		%	4.62		%	199.8	%
Return on average tangible equity	16.41		%	6.12		%	168.1	%
Return on average assets	1.38		%	0.44		%	213.6	%
Net interest margin (A)	3.61		%	3.65		%	-1.1	%
Efficiency ratio (B)	51.02		%	51.47		%	-0.9	%


NOTE (A) - Presented on a tax-equivalent basis assuming a federal tax rate of 21% for 2018 and 35% for 2017.

NOTE (B) - Computed on a tax equivalent basis excluding gains/losses on sales of assets, write-downs of OREO properties to fair value and amortization of intangibles.



SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Annual Performance Summary (unaudited) -- 2018 vs 2017
	For the Year Ended					Percent
Dollars in thousands	12/31/2018		12/31/2017			Change
Statements of Income
Interest income
Loans, including fees	$	85,283	$	74,908		13.9	%
Securities	9,587		9,010			6.4	%
Other	539		609			-11.5	%
Total interest income	95,409		84,527			12.9	%
Interest expense
Deposits	17,675		11,210			57.7	%
Borrowings	7,937		7,170			10.7	%
Total interest expense	25,612		18,380			39.3	%

Net interest income	69,797		66,147			5.5	%
Provision for loan losses	2,250		1,250			80.0	%
Net interest income after provision for loan losses	67,547		64,897			4.1	%

Noninterest income
Insurance commissions	4,320		4,005			7.9	%
Trust and wealth management fees	2,653		1,863			42.4	%
Service charges on deposit accounts	4,631		4,109			12.7	%
Bank card revenue	3,152		2,697			16.9	%
Realized securities gains (losses)	622		(14		)	n/m
Bank owned life insurance income	1,022		1,017			0.5	%
Other income	1,022		750			36.3	%
Total noninterest income	17,422		14,427			20.8	%
Noninterest expense
Salaries and employee benefits	27,478		25,075			9.6	%
Net occupancy expense	3,364		3,011			11.7	%
Equipment expense	4,411		3,954			11.6	%
Professional fees	1,607		1,367			17.6	%
Advertising and public relations	654		578			13.1	%
Amortization of intangibles	1,671		1,410			18.5	%
FDIC premiums	830		1,065			-22.1	%
Bank card expense	1,475		1,432			3.0	%
Foreclosed properties expense, net of losses	1,350		1,339			0.8	%
Litigation settlement	—		9,900			-100.0	%
Merger-related expense	144		1,589			-90.9	%
Other expenses	6,889		7,025			-1.9	%
Total noninterest expense	49,873		57,745			-13.6	%
Income before income taxes	35,096		21,579			62.6	%
Income tax expense	7,024		9,664			-27.3	%
Net income	$	28,072	$	11,915		135.6	%



SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Annual Performance Summary (unaudited) -- 2018 vs 2017

	For the Year Ended						Percent
	12/31/2018			12/31/2017			Change
Per Share Data
Earnings per common share
Basic	$	2.27		$	1.00		127.0	%
Diluted	$	2.26		$	1.00		126.0	%

Cash dividends	$	0.53		$	0.44		20.5	%

Average common shares outstanding
Basic	12,364,468			11,918,390			3.7	%
Diluted	12,424,573			11,949,245			4.0	%

Common shares outstanding at period end	12,312,933			12,358,562			-0.4	%

Performance Ratios
Return on average equity	13.43		%	6.40		%	109.8	%
Return on average tangible equity	16.09		%	8.01		%	100.9	%
Return on average assets	1.32		%	0.59		%	123.7	%
Net interest margin (A)	3.57		%	3.67		%	-2.7	%
Efficiency ratio (B)	53.72		%	52.41		%	2.5	%


NOTE (A) - Presented on a tax-equivalent basis assuming a federal tax rate of 21% for 2018 and 35% for 2017.

NOTE (B) - Computed on a tax equivalent basis excluding gains/losses on sales of assets, write-downs of OREO properties to fair value and amortization of intangibles.



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

	For the Quarter Ended
Dollars in thousands	12/31/2018			9/30/2018		6/30/2018		3/31/2018		12/31/2017
Statements of Income
Interest income
Loans, including fees	$	22,659		$	21,295	$	20,962	$	20,366	$	20,031
Securities	2,527			2,367		2,303		2,391		2,412
Other	127			138		134		140		144
Total interest income	25,313			23,800		23,399		22,897		22,587
Interest expense
Deposits	5,103			4,714		4,309		3,549		3,224
Borrowings	2,158			1,873		1,815		2,091		1,925
Total interest expense	7,261			6,587		6,124		5,640		5,149

Net interest income	18,052			17,213		17,275		17,257		17,438
Provision for loan losses	500			500		750		500		375
Net interest income after provision for loan losses	17,552			16,713		16,525		16,757		17,063

Noninterest income
Insurance commissions	1,132			1,062		1,013		1,113		1,005
Trust and wealth management fees	627			687		672		667		578
Service charges on deposit accounts	1,209			1,215		1,116		1,091		1,200
Bank card revenue	809			793		801		749		742
Realized securities (losses) gains	(205		)	8		87		732		(71		)
Bank owned life insurance income	248			250		249		275		258
Other income	367			196		210		249		219
Total noninterest income	4,187			4,211		4,148		4,876		3,931
Noninterest expense
Salaries and employee benefits	6,928			6,806		6,922		6,821		6,520
Net occupancy expense	836			856		840		832		772
Equipment expense	1,139			1,118		1,071		1,083		1,095
Professional fees	385			503		385		333		355
Advertising and public relations	193			170		188		103		185
Amortization of intangibles	410			413		413		436		435
FDIC premiums	140			210		240		240		250
Bank card expense	395			384		361		335		319
Foreclosed properties expense, net of losses	507			169		350		325		516
Merger-related expense	59			86		—		—		14
Other expenses	1,474			1,643		1,965		1,806		1,885
Total noninterest expense	12,466			12,358		12,735		12,314		12,346
Income before income taxes	9,273			8,566		7,938		9,319		8,648
Income tax expense	1,823			1,667		1,658		1,876		6,325
Net income	$	7,450		$	6,899	$	6,280	$	7,443	$	2,323



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

	For the Quarter Ended
	12/31/2018			9/30/2018			6/30/2018			3/31/2018			12/31/2017
Per Share Data
Earnings per common share
Basic	$	0.60		$	0.56		$	0.51		$	0.60		$	0.19
Diluted	$	0.60		$	0.55		$	0.51		$	0.60		$	0.19

Cash dividends	$	0.14		$	0.13		$	0.13		$	0.13		$	0.11

Average common shares outstanding
Basic	12,358,104			12,374,350			12,366,522			12,358,849			12,325,067
Diluted	12,407,678			12,439,051			12,431,984			12,383,757			12,371,507

Common shares outstanding at period end	12,312,933			12,382,450			12,373,747			12,366,360			12,358,562

Performance Ratios
Return on average equity	13.85		%	13.00		%	12.16		%	14.73		%	4.62		%
Return on average tangible equity	16.41		%	15.53		%	14.68		%	17.80		%	6.12		%
Return on average assets	1.38		%	1.31		%	1.19		%	1.40		%	0.44		%
Net interest margin (A)	3.61		%	3.53		%	3.58		%	3.58		%	3.65		%
Efficiency ratio (B)	51.02		%	54.25		%	55.88		%	53.84		%	52.44		%

NOTE (A) - Presented on a tax-equivalent basis assuming a federal tax rate of 21% for 2018 and 35% for 2017.

NOTE (B) - Computed on a tax equivalent basis excluding gains/losses on sales of assets, write-downs of OREO properties to fair value and amortization of intangibles.



SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Selected Balance Sheet Data (unaudited)

Dollars in thousands, except per share amounts	12/31/2018			9/30/2018			6/30/2018			3/31/2018			12/31/2017

Assets
Cash and due from banks	$	23,061		$	9,382		$	8,314		$	9,042		$	9,641
Interest bearing deposits other banks	36,479			44,452			38,097			38,365			42,990
Securities	293,284			288,040			283,221			296,890			328,723
Loans, net	1,682,005			1,632,747			1,617,373			1,631,150			1,593,744
Property held for sale	21,432			22,017			21,606			21,442			21,470
Premises and equipment, net	37,553			36,888			36,017			35,554			34,209
Goodwill and other intangible assets	25,842			26,252			26,665			27,077			27,513
Cash surrender value of life insurance policies	42,420			42,208			41,932			41,668			41,358
Other assets	38,510			36,741			34,427			33,707			34,592
Total assets	$	2,200,586		$	2,138,727		$	2,107,652		$	2,134,895		$	2,134,240

Liabilities and Shareholders' Equity
Deposits	$	1,634,826		$	1,651,064		$	1,639,996		$	1,654,523		$	1,600,601
Short-term borrowings	309,084			238,403			202,429			193,513			250,499
Long-term borrowings and subordinated debentures	20,324			20,328			40,332			65,336			65,340
Other liabilities	16,522			15,376			15,016			16,514			16,295
Shareholders' equity	219,830			213,556			209,879			205,009			201,505
Total liabilities and shareholders' equity	$	2,200,586		$	2,138,727		$	2,107,652		$	2,134,895		$	2,134,240

Book value per common share	$	17.85		$	17.25		$	16.96		$	16.55		$	16.30
Tangible book value per common share	$	15.75		$	15.13		$	14.81		$	14.36		$	14.08
Tangible common equity to tangible assets	8.9		%	8.9		%	8.8		%	8.4		%	8.3		%



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

	12/31/2018		9/30/2018		6/30/2018		3/31/2018		12/31/2017
Summit Financial Group, Inc.
CET1 Risk-based Capital	11.1	%	11.1	%	11.0	%	10.7	%	10.6	%
Tier 1 Risk-based Capital	12.2	%	12.2	%	12.1	%	11.8	%	11.8	%
Total Risk Based Capital	12.9	%	12.9	%	12.8	%	12.5	%	12.5	%
Tier 1 Leverage Ratio	10.1	%	10.1	%	9.9	%	9.5	%	9.4	%

Summit Community Bank, Inc.
CET1 Risk-based Capital	12.0	%	12.0	%	12.0	%	11.7	%	11.7	%
Tier 1 Risk-based Capital	12.0	%	12.0	%	12.0	%	11.7	%	11.7	%
Total Risk Based Capital	12.8	%	12.7	%	12.8	%	12.5	%	12.5	%
Tier 1 Leverage Ratio	10.0	%	9.9	%	9.8	%	9.5	%	9.4	%



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

Dollars in thousands	12/31/2018		9/30/2018		6/30/2018		3/31/2018		12/31/2017

Commercial	$	194,315	$	167,972	$	171,410	$	189,586	$	189,981
Mortgage warehouse lines	39,140		35,910		54,332		45,702		30,757
Commercial real estate
Owner occupied	266,362		272,475		262,174		265,075		250,202
Non-owner occupied	564,826		530,568		503,047		498,445		484,902
Construction and development
Land and development	68,833		71,819		74,018		66,841		67,219
Construction	24,731		25,703		25,711		33,327		33,412
Residential real estate
Non-jumbo	336,977		340,783		343,044		346,477		354,101
Jumbo	73,599		72,327		66,831		67,169		62,267
Home equity	80,910		82,018		82,409		83,382		84,028
Consumer	32,460		33,664		34,249		34,825		36,202
Other	12,899		12,452		12,728		12,578		13,238
Total loans, net of unearned fees	1,695,052		1,645,691		1,629,953		1,643,407		1,606,309
Less allowance for loan losses	13,047		12,944		12,580		12,257		12,565
Loans, net	$	1,682,005	$	1,632,747	$	1,617,373	$	1,631,150	$	1,593,744



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

Dollars in thousands	12/31/2018		9/30/2018		6/30/2018		3/31/2018		12/31/2017
Core deposits
Non interest bearing checking	$	222,120	$	232,697	$	217,134	$	219,293	$	217,493
Interest bearing checking	523,257		505,411		472,041		447,172		410,606
Savings	284,173		301,269		322,940		346,962		358,168
Time deposits	316,914		316,941		322,801		318,556		318,036
Total core deposits	1,346,464		1,356,318		1,334,916		1,331,983		1,304,303

Brokered deposits	220,497		227,312		238,662		242,049		202,509
Other non-core time deposits	67,866		67,434		66,418		80,491		93,789
Total deposits	$	1,634,827	$	1,651,064	$	1,639,996	$	1,654,523	$	1,600,601



SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Asset Quality Information (unaudited)
	For the Quarter Ended
Dollars in thousands	12/31/2018			9/30/2018			6/30/2018			3/31/2018			12/31/2017

Gross loan charge-offs	$	705		$	413		$	525		$	960		$	550
Gross loan recoveries	(307		)	(278		)	(97		)	(153		)	(276		)
Net loan charge-offs (recoveries)	$	398		$	135		$	428		$	807		$	274

Net loan charge-offs to average loans (annualized)	0.10		%	0.03		%	0.10		%	0.20		%	0.07		%
Allowance for loan losses	$	13,047		$	12,944		$	12,580		$	12,257		$	12,565
Allowance for loan losses as a percentage of period end loans	0.77		%	0.79		%	0.77		%	0.75		%	0.78		%

Nonperforming assets:
Nonperforming loans
Commercial	$	935		$	801		$	954		$	734		$	696
Commercial real estate	3,239			5,090			3,238			3,400			3,164
Residential construction and development	3,198			3,200			3,233			3,642			3,569
Residential real estate	7,506			7,760			8,241			7,521			7,656
Consumer	147			118			110			160			238
Total nonperforming loans	15,025			16,969			15,776			15,457			15,323
Foreclosed properties
Commercial real estate	1,762			1,762			1,818			1,875			1,789
Commercial construction and development	6,479			6,790			6,815			7,140			7,392
Residential construction and development	11,543			11,614			11,517			11,053			11,182
Residential real estate	1,648			1,851			1,456			1,374			1,107
Total foreclosed properties	21,432			22,017			21,606			21,442			21,470
Other repossessed assets	5			5			12			18			68
Total nonperforming assets	$	36,462		$	38,991		$	37,394		$	36,917		$	36,861

Nonperforming loans to period end loans	0.89		%	1.03		%	0.97		%	0.94		%	0.95		%
Nonperforming assets to period end assets	1.66		%	1.82		%	1.77		%	1.73		%	1.73		%

Troubled debt restructurings
Performing	$	26,609		$	27,441		$	27,559		$	27,408		$	28,347
Nonperforming	388			113			281			76			26
Total troubled debt restructurings	$	26,997		$	27,554		$	27,840		$	27,484		$	28,373



Loans Past Due 30-89 Days (unaudited)
	For the Quarter Ended
Dollars in thousands	12/31/2018		9/30/2018		6/30/2018		3/31/2018		12/31/2017

Commercial	$	219	$	607	$	319	$	539	$	586
Commercial real estate	161		988		546		601		1,082
Construction and development	194		393		264		174		1,127
Residential real estate	6,249		5,513		4,125		5,218		7,236
Consumer	593		345		337		425		504
Other	38		11		8		15		38
Total	$	7,454	$	7,857	$	5,599	$	6,972	$	10,573



SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q4 2018 vs Q3 2018 vs Q4 2017 (unaudited)
	Q4 2018							Q3 2018							Q4 2017
	Average			Earnings/		Yield/		Average			Earnings /		Yield /		Average			Earnings /		Yield /
Dollars in thousands	Balances			Expense		Rate		Balances			Expense		Rate		Balances			Expense		Rate

ASSETS
Interest earning assets
Loans, net of unearned interest (1)
Taxable	$	1,660,250		$	22,519	5.38	%	$	1,615,700		$	21,154	5.19	%	$	1,562,978		$	19,879	5.05	%
Tax-exempt (2)	15,322			177		4.58	%	15,688			178		4.50	%	16,902			234		5.49	%
Securities
Taxable	176,059			1,502		3.38	%	155,574			1,227		3.13	%	202,377			1,328		2.60	%
Tax-exempt (2)	132,088			1,296		3.89	%	146,174			1,443		3.92	%	142,641			1,668		4.64	%
Interest bearing deposits other banks and Federal funds sold	35,402			127		1.42	%	38,642			138		1.42	%	42,021			144		1.36	%
Total interest earning assets	2,019,121			25,621		5.03	%	1,971,778			24,140		4.86	%	1,966,919			23,253		4.69	%

Noninterest earning assets
Cash & due from banks	9,686							9,326							9,753
Premises & equipment	37,224							36,533							34,263
Other assets	109,228							108,628							111,596
Allowance for loan losses	(13,172		)					(12,865		)					(12,628		)
Total assets	$	2,162,087						$	2,113,400						$	2,109,903

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	519,465		$	1,504	1.15	%	$	486,107		$	1,168	0.95	%	$	405,307		$	447	0.44	%
Savings deposits	289,809			861		1.18	%	312,467			857		1.09	%	360,630			684		0.75	%
Time deposits	607,037			2,738		1.79	%	616,657			2,689		1.73	%	629,871			2,093		1.32	%
Short-term borrowings	270,092			1,909		2.80	%	211,211			1,436		2.70	%	220,027			1,240		2.24	%
Long-term borrowings and subordinated debentures	20,326			249		4.86	%	39,265			437		4.42	%	65,342			685		4.16	%
Total interest bearing liabilities	1,706,729			7,261		1.69	%	1,665,707			6,587		1.57	%	1,681,177			5,149		1.22	%

Noninterest bearing liabilities
Demand deposits	223,999							219,986							214,624
Other liabilities	16,138							15,447							12,886
Total liabilities	1,946,866							1,901,140							1,908,687

Shareholders' equity - common	215,221							212,260							201,216
Total liabilities and shareholders' equity	$	2,162,087						$	2,113,400						$	2,109,903

NET INTEREST EARNINGS				$	18,360						$	17,553						$	18,104

NET INTEREST MARGIN						3.61	%						3.53	%						3.65	%

(1) For purposes of this table, nonaccrual loans are included in average loan balances.

(2) For purposes of this table, interest income on tax-exempt securities and loans has been adjusted assuming a Federal tax rate of 21% for 2018 periods and 35% for 2017 period. The taxable equivalent adjustment results in an increase in interest income of $309,000, $340,000 and $666,000 for Q4 2018, Q3 2018 and Q4 2017, respectively.



SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
YTD 2018 vs YTD 2017 (unaudited)
	YTD 2018							YTD 2017
	Average			Earnings /		Yield /		Average			Earnings /		Yield /
Dollars in thousands	Balances			Expense		Rate		Balances			Expense		Rate

ASSETS
Interest earning assets
Loans, net of unearned interest (1)
Taxable	$	1,626,725		$	84,716	5.21	%	$	1,480,601		$	74,365	5.02	%
Tax-exempt (2)	15,776			718		4.55	%	14,899			835		5.60	%
Securities
Taxable	170,912			5,341		3.13	%	200,596			5,071		2.53	%
Tax-exempt (2)	136,913			5,375		3.93	%	129,342			6,060		4.69	%
Interest bearing deposits other banks and Federal funds sold	38,148			539		1.41	%	43,400			609		1.40	%
Total interest earning assets	1,988,474			96,689		4.86	%	1,868,838			86,940		4.65	%

Noninterest earning assets
Cash & due from banks	9,517							8,492
Premises & equipment	36,025							31,750
Other assets	107,856							109,456
Allowance for loan losses	(12,830		)					(12,196		)
Total assets	$	2,129,042						$	2,006,340

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	471,725		$	4,205	0.89	%	$	358,225		$	1,169	0.33	%
Savings deposits	320,184			3,233		1.01	%	363,949			2,563		0.70	%
Time deposits	621,659			10,237		1.65	%	609,156			7,478		1.23	%
Short-term borrowings	228,142			5,993		2.63	%	205,743			4,473		2.17	%
Long-term borrowings and subordinated debentures	44,132			1,944		4.40	%	65,629			2,697		4.11	%
Total interest bearing liabilities	1,685,842			25,612		1.52	%	1,602,702			18,380		1.15	%

Noninterest bearing liabilities
Demand deposits	218,541							200,707
Other liabilities	15,574							16,669
Total liabilities	1,919,957							1,820,078

Shareholders' equity - common	209,085							186,262
Total liabilities and shareholders' equity	$	2,129,042						$	2,006,340

NET INTEREST EARNINGS				$	71,077						$	68,560

NET INTEREST MARGIN						3.57	%						3.67	%

(1) For purposes of this table, nonaccrual loans are included in average loan balances.

(2) For purposes of this table, interest income on tax-exempt securities and loans has been adjusted assuming a Federal tax rate of 21% for 2018 and 35% for 2017. The taxable equivalent adjustment results in an increase in interest income of $1,280,000 and $2,413,000, respectively.

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SUMMIT FINANCIAL GROUP, INC. Reports