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

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8-K - SUMMIT FINANCIAL GROUP FROM 8K - SUMMIT FINANCIAL GROUP, INC.	f8kearningsreleaseq42012.htm

Exhibit 99

FOR RELEASE 6:00 AM ET, January 30, 2013

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

Telephone: (304) 530-0552

Email: rtissue@summitfgi.com

SUMMIT FINANCIAL GROUP REPORTS FOURTH QUARTER & FULL YEAR 2012 RESULTS

Q4 2012 Diluted EPS $0.22 compared to $0.16 in Q4 2011 and $0.10 in Q3 2012; Full-year 2012 Diluted EPS $0.60 compared to $0.49 in 2011

MOOREFIELD, WV – January 30, 2013 (GLOBE NEWSWIRE) – Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ: SMMF) today reported fourth quarter 2012 net income applicable to common shares of $1,911,000, or $0.22 per diluted share, compared to $1,331,000, or $0.16 per diluted share, for the fourth quarter of 2011.

Excluding from fourth quarter 2012 nonrecurring items (on a pre-tax basis) consisting of realized securities gains of $103,000, losses on sales of assets of $94,000, charges for other-than-temporary impairment (“OTTI”) of securities of $76,000 and write-downs of foreclosed properties of $748,000, pro forma fourth quarter 2012 earnings were approximately $2.4 million, or $0.28 per diluted share. Excluding from fourth quarter 2011 nonrecurring realized securities gains of $542,000, gains on sales of assets of $19,000, OTTI of securities of $401,000, and write-downs of foreclosed properties of $882,000, pro forma earnings of $1.8 million would have resulted, or $0.21 per diluted share.

For the full-year 2012, Summit recorded net income applicable to common shares of $4.94 million, or $0.60 per diluted share, compared with $3.70 million, or $0.49 per diluted share, for 2011.

Excluding from the full-year 2012 nonrecurring items (on a pre-tax basis) of realized securities gains of $2.35 million, losses on sales of assets of $677,000, OTTI charges of $451,000 and write-downs of foreclosed properties of $6.86 million, and from the full-year 2011 realized securities gains of $4.01 million, gains on sales of assets of $295,000, OTTI charges of $2.65 million, and write-downs of foreclosed properties of $6.65 million, pro forma earnings for 2012 were approximately $8.49 million, or $0.97 per diluted share, compared to $6.85 million, or $0.86 per diluted share, for 2011.

Highlights for Q4 2012 include:

·	Achieved seventh consecutive quarter of positive quarterly earnings.

·	Nonperforming assets continued to decline, reaching its lowest level since Q1 2011.

·	Net interest margin increased 2 basis points quarter over quarter and 16 basis points compared to Q4 2011.

·	Recorded charges of $748,000 and $76,000, respectively, to write-down foreclosed properties and to recognize OTTI of securities, which were partially offset by $103,000 in realized securities gains.

·	Noninterest expenses remained well-controlled, declining 5.3% compared to Q4 2012 and 0.6% compared to Q3 2012.

·	Summit’s leverage capital ratio is at its highest level in six years and its total risk-based capital ratio is at highest level in twelve years.

H. Charles Maddy III, President and Chief Executive Officer of Summit, commented, “We are pleased by our continued improved earnings performance, progress in reducing our portfolio of problem assets, and strengthened capital levels. I am particularly pleased that during 2012: net interest income remained stable, despite a decline in average earning assets; the net interest margin improved; core noninterest income increased, while noninterest expenses declined; and OTTI of securities charges were very modest compared to prior-year amounts, and are expected to remain at relatively low levels. Reducing our portfolio of problem assets remains our top priority, and we reduced nonperforming assets in each of the four most recent quarters. However, dispositions of foreclosed properties remain frustratingly slow -- particularly with respect to commercial and residential development properties. Further, we anticipate earnings may remain choppy quarter-to-quarter in the near term as our foreclosed properties are re-appraised and written-down to estimated fair values on an ongoing basis.”

Results from Operations

Total revenue for full-year 2012, consisting of net interest income and noninterest income, was $45.2 million compared to $45.4 million for the full-year 2011. For the quarter ended December 31, 2012, total revenue was $11.9 million compared to $11.7 million for the same period in 2011.

Total revenue excluding nonrecurring items (as enumerated above) was $12.7 million for fourth quarter 2012 compared to $12.4 million in the prior-year quarter. For the full-year 2012, total revenue excluding nonrecurring items was $50.8 million versus $50.4 million for the same period in 2011.

For the fourth quarter of 2012, net interest income was $9.9 million, an increase of 2.4 percent from the $9.7 million reported in the prior-year fourth quarter and remained relatively unchanged compared to the linked quarter. The net interest margin for fourth quarter 2012 was 3.19 percent compared to 3.03 percent for the year-ago quarter, and 3.17 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 2012 was $2.00 million compared to $1.99 million for the comparable period of 2011. Excluding nonrecurring items (as enumerated above), noninterest income was $2.82 million for fourth quarter 2012, up $107,000 or 3.95 percent from the $2.71 million reported for fourth quarter 2011.

The provision for loan losses was $2.5 million for the fourth quarter of 2012 compared to $2.0 million for the linked and year-ago quarters.

Noninterest expense continues to be well-controlled. Total noninterest expense decreased 5.3% to $7.42 million compared to $7.83 million for the prior-year fourth quarter. Noninterest expense for full-year 2012 was $557,000 or 1.8 percent, less than during 2011. Our cost-saving initiatives continue and their impact remains beneficial.

Balance Sheet

At December 31, 2012, total assets were $1.39 billion, a decrease of $63.0 million, or 4.4 percent since December 31, 2011. Total loans, net of unearned fees, were $937.2 million at December 31, 2012, down $28.3 million, or 2.9 percent, from the $965.5 million reported at year-end 2011.

All loan categories have declined since year-end 2011, except for commercial real estate (“CRE”), the largest component of Summit’s loan portfolio, which increased $1.4 million, or 0.3 percent. The second largest component of Summit’s loan portfolio, residential real estate, declined $2.6 million, or 0.8 percent, while construction and development (“C&D”) loans declined $12.9 million, or 13.4 percent and commercial (“C&I”) loans declined $13.2 million, or 13.3 percent.

At year end, 2012, retail deposits were $757.4 million, a decrease of $26.6 million, or 3.4 percent, since year end 2011. During 2012, retail checking deposits grew $29.2 million, or 11.8 percent, to $276.3 million, while retail savings and time deposits declined during the same period by $15.8 million and $40.0 million, respectively, or 7.6 percent and 12.2 percent, respectively. This reflects management’s ongoing effort to enhance Summit’s cost of funds by improving its deposit mix by attracting lower-cost checking deposits to replace higher-cost savings and time deposits.

Long-term borrowings and subordinated debentures declined by 21.8 percent since year end 2011, as the Company paid down $67.0 million in maturing borrowings during this period.

Asset Quality

As of December 31, 2012, nonperforming assets (“NPAs”), consisting of nonperforming loans, foreclosed properties, and repossessed assets, were $94.0 million, or 6.77 percent of assets. This compares to $99.8 million, or 7.11 percent of assets at the linked quarter, and $116.6 million, or 8.04 percent of assets, at year-end 2011.

Fourth quarter 2012 net loan charge-offs were $2.4 million, or 0.99 percent of average loans annualized; for full year 2012, Summit’s net loan charge-offs were $8.3 million, while adding $8.5 million to its allowance for loan losses. The allowance for loan losses stood at $17.9 million, or 1.88 percent of total loans at December 31, 2012, compared to 1.80 percent at year-end 2011.

Capital Adequacy

Shareholders’ equity was $108.6 million as of December 31, 2012 compared to $102.6 million December 31, 2011.

Summit's depository institution, Summit Community Bank, Inc. (the “Bank”), remains well in excess of regulatory requirements for a "well capitalized" institution at December 31, 2012. The Bank’s total risk-based capital ratio improved to 15.0 percent at December 31, 2012 compared to 13.6 percent at December 31, 2011, while its Tier 1 leverage capital ratio improved to 9.8 from the 8.9 percent reported at December 31, 2011. Total common shares outstanding as of December 31, 2012 were 7,425,472.

About the Company

Summit Financial Group, Inc. is a $1.39 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 these items to be unusual in nature and believes presentations of financial measures excluding the impact of these items provide useful supplemental information that is important for a proper understanding of the operating results of Summit's core business. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary -- Q4 2012 vs Q4 2011


	For the Quarter Ended						Percent
Dollars in thousands	12/31/2012			12/31/2011			Change
Condensed Statements of Income
Interest income
Loans, including fees	$	13,512		$	14,362		-5.9	%
Securities		1,703			2,711		-37.2	%
Other		5			13		-61.5	%
Total interest income		15,220			17,086		-10.9	%
Interest expense
Deposits		3,017			4,302		-29.9	%
Borrowings		2,307			3,123		-26.1	%
Total interest expense		5,324			7,425		-28.3	%
Net interest income		9,896			9,661		2.4	%
Provision for loan losses		2,498			1,999		25.0	%
Net interest income after provision
for loan losses		7,398			7,662		-3.4	%

Noninterest income
Insurance commissions		1,082			1,003		7.9	%
Service fees related to deposit accounts		1,092			1,102		-0.9	%
Realized securities gains		103			542		-81.0	%
Gain (loss) on sale of assets		(94	)		18		-622.2	%
Other-than-temporary impairment of securities		(76	)		(401	)	-81.0	%
Write-downs of foreclosed properties		(748	)		(882	)	-15.2	%
Other income		644			607		6.1	%
Total noninterest income		2,003			1,989		0.7	%
Noninterest expense
Salaries and employee benefits		3,799			3,846		-1.2	%
Net occupancy expense		495			472		4.9	%
Equipment expense		576			593		-2.9	%
Professional fees		314			565		-44.4	%
FDIC premiums		535			564		-5.1	%
Foreclosed properties expense		269			377		-28.6	%
Other expenses		1,434			1,417		1.2	%
Total noninterest expense		7,422			7,834		-5.3	%
Income before income taxes		1,979			1,817		8.9	%
Income taxes		(126	)		337		-137.4	%
Net income		2,105			1,480		42.2	%
Preferred stock dividends		194			149		30.2	%

Net income applicable to common shares	$	1,911		$	1,331		43.6	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary -- Q4 2012 vs Q4 2011

	For the Quarter Ended						Percent
	12/31/2012			12/31/2011			Change
Per Share Data
Earnings per common share
Basic	$	0.26		$	0.18		44.4	%
Diluted	$	0.22		$	0.16		37.5	%

Average shares outstanding
Basic		7,425,472			7,425,472		0.0	%
Diluted		9,601,435			9,044,976		6.2	%

Performance Ratios
Return on average equity (A)		7.76	%		5.87	%	32.2	%
Return on average assets		0.60	%		0.41	%	46.3	%
Net interest margin		3.19	%		3.03	%	5.3	%
Efficiency ratio (B)		54.00	%		57.17	%	-5.5	%

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

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

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Annual Performance Summary -- 2012 vs 2011


	For the Years Ended						Percent
Dollars in thousands	12/31/2012			12/31/2011			Change
Condensed Statements of Income
Interest income
Loans, including fees	$	55,567		$	59,176		-6.1	%
Securities		8,282			11,799		-29.8	%
Other		35			72		-51.4	%
Total interest income		63,884			71,047		-10.1	%
Interest expense
Deposits		13,158			18,273		-28.0	%
Borrowings		10,906			12,930		-15.7	%
Total interest expense		24,064			31,203		-22.9	%
Net interest income		39,820			39,844		-0.1	%
Provision for loan losses		8,500			10,000		-15.0	%
Net interest income after provision
for loan losses		31,320			29,844		4.9	%

Noninterest income
Insurance commissions		4,433			4,460		-0.6	%
Service fees related to deposit accounts		4,255			4,125		3.2	%
Realized securities gains		2,348			4,006		-41.4	%
Gain (loss) on sale of assets		(677	)		295		-329.5	%
Other-than-temporary impairment of securities		(451	)		(2,646	)	-83.0	%
Write-downs of foreclosed properties		(6,862	)		(6,651	)	3.2	%
Other income		2,294			1,961		17.0	%
Total noninterest income		5,340			5,550		-3.8	%
Noninterest expense
Salaries and employee benefits		15,532			15,833		-1.9	%
Net occupancy expense		1,939			1,935		0.2	%
Equipment expense		2,349			2,342		0.3	%
Professional fees		1,161			1,373		-15.4	%
FDIC premiums		2,067			2,423		-14.7	%
Foreclosed properties expense		1,221			1,458		-16.3	%
Other expenses		5,459			4,921		10.9	%
Total noninterest expense		29,728			30,285		-1.8	%
Income before income taxes		6,932			5,109		35.7	%
Income taxes		1,219			1,035		17.8	%
Net income		5,713			4,074		40.2	%
Preferred stock dividends		777			371		109.4	%

Net income applicable to common shares	$	4,936		$	3,703		33.3	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Annual Performance Summary -- 2012 vs 2011

	For the Years Ended						Percent
	12/31/2012			12/31/2011			Change
Per Share Data
Earnings per common share
Basic	$	0.66		$	0.50		32.0	%
Diluted	$	0.60		$	0.49		22.4	%

Average shares outstanding
Basic		7,425,472			7,425,472		0.0	%
Diluted		9,601,169			8,338,199		15.1	%

Performance Ratios
Return on average equity (A)		5.36	%		4.32	%	24.1	%
Return on average assets		0.40	%		0.28	%	42.9	%
Net interest margin		3.19	%		3.08	%	3.6	%
Efficiency ratio (B)		53.78	%		55.73	%	-3.5	%

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

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

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

	For the Quarter Ended
Dollars in thousands	12/31/2012			9/30/2012			6/30/2012			3/31/2012			12/31/2011
Condensed Statements of Income
Interest income
Loans, including fees	$	13,512		$	13,648		$	14,041		$	14,365		$	14,362
Securities		1,703			1,934			2,225			2,421			2,711
Other		5			7			12			11			13
Total interest income		15,220			15,589			16,278			16,797			17,086
Interest expense
Deposits		3,017			3,067			3,360			3,713			4,302
Borrowings		2,307			2,587			2,947			3,066			3,123
Total interest expense		5,324			5,654			6,307			6,779			7,425
Net interest income		9,896			9,935			9,971			10,018			9,661
Provision for loan losses		2,498			2,000			2,001			2,001			1,999
Net interest income after provision
for loan losses		7,398			7,935			7,970			8,017			7,662

Noninterest income
Insurance commissions		1,082			1,052			1,141			1,158			1,003
Service fees related to deposit accounts		1,092			1,074			1,075			1,014			1,102
Gain (loss) on sale of assets		(94	)		760			320			1,165			18
Realized securities gains (losses)		103			16			(523	)		(77	)		542
Other-than-temporary impairment of securities		(76	)		(39	)		(106	)		(229	)		(401)
Write-downs of foreclosed properties		(748	)		(2,571	)		(1,631	)		(1,912	)		(882)
Other income		644			514			552			584			607
Total noninterest income		2,003			806			828			1,703			1,989
Noninterest expense
Salaries and employee benefits		3,799			3,940			3,892			3,901			3,846
Net occupancy expense		495			476			490			479			472
Equipment expense		576			576			603			594			593
Professional fees		314			289			242			316			565
FDIC premiums		535			510			500			522			564
Foreclosed properties expense		269			356			233			362			377
Other expenses		1,434			1,325			1,335			1,365			1,417
Total noninterest expense		7,422			7,472			7,295			7,539			7,834
Income before income taxes		1,979			1,269			1,503			2,181			1,817
Income taxes		(126	)		272			590			483			337
Net income		2,105			997			913			1,698			1,480
Preferred stock dividends		194			194			194			194			149
Net income applicable to common shares	$	1,911		$	803		$	719		$	1,504		$	1,331

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

	For the Quarter Ended
	12/31/2012			9/30/2012			6/30/2012			3/31/2012			12/31/2011
Per Share Data
Earnings per common share
Basic	$	0.26		$	0.11		$	0.10		$	0.20		$	0.18
Diluted	$	0.22		$	0.10		$	0.09		$	0.18		$	0.16

Average shares outstanding
Basic		7,425,472			7,425,472			7,425,472			7,425,472			7,425,472
Diluted		9,601,435			9,601,278			8,927,802			9,600,017			9,044,976

Performance Ratios
Return on average equity (A)		7.76	%		3.71	%		3.44	%		6.49	%		5.87%
Return on average assets		0.60	%		0.28	%		0.25	%		0.47	%		0.41%
Net interest margin		3.19	%		3.17	%		3.20	%		3.20	%		3.03%
Efficiency ratio (B)		54.00	%		54.37	%		53.13	%		53.71	%		57.17%

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

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

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

	For the Quarter Ended
Dollars in thousands, except per share amounts	12/31/2012			9/30/2012			6/30/2012			3/31/2012			12/31/2011

Assets
Cash and due from banks	$	3,833		$	3,752		$	4,266		$	4,059		$	4,398
Interest bearing deposits other banks		10,969			13,441			14,288			26,855			28,294
Securities		281,539			291,992			289,151			292,002			286,599
Loans, net		937,168			940,933			948,294			957,797			965,516
Property held for sale		56,172			56,033			60,069			61,584			63,938
Premises and equipment, net		21,129			21,265			21,470			21,756			22,084
Intangible assets		8,300			8,387			8,475			8,563			8,651
Cash surrender value of life insurance policies		29,553			30,065			29,808			29,559			29,284
Other assets		38,441			38,218			40,620			42,190			41,357
Total assets	$	1,387,104		$	1,404,086		$	1,416,441		$	1,444,365		$	1,450,121

Liabilities and Shareholders' Equity
Retail deposits	$	757,429		$	766,555		$	767,413		$	785,283		$	784,029
Wholesale deposits		269,696			260,752			234,256			225,856			232,471
Short-term borrowings		3,958			20,957			10,957			15,956			15,956
Long-term borrowings and
subordinated debentures		239,657			240,133			290,024			303,510			306,643
Other liabilities		7,809			8,361			8,084			9,361			8,456
Shareholders' equity		108,555			107,328			105,707			104,399			102,566
Total liabilities and shareholders' equity	$	1,387,104		$	1,404,086		$	1,416,441		$	1,444,365		$	1,450,121

Book value per common share (A)	$	11.31		$	11.20		$	11.01		$	10.87		$	10.68
Tangible book value per common share (A)	$	10.44		$	10.33		$	10.13		$	9.98		$	9.78
Tangible equity / Tangible assets		7.3	%		7.1	%		6.9	%		6.7	%		6.5%

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

NOTE

(

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

	12/31/2012		9/30/2012		6/30/2012		3/31/2012		12/31/2011
Summit Financial Group, Inc.
Total Risk Based Capital	14.0	%	13.8	%	13.6	%	13.3	%	13.0	%
Tier 1 Risk Based Capital	11.6	%	11.3	%	11.1	%	10.8	%	10.5	%
Tier 1 Leverage Ratio	8.3	%	8.0	%	7.9	%	7.8	%	7.6	%

Summit Community Bank, Inc.
Total Risk Based Capital	15.0	%	14.6	%	14.3	%	14.0	%	13.6	%
Tier 1 Risk Based Capital	13.7	%	13.3	%	13.1	%	12.7	%	12.3	%
Tier 1 Leverage Ratio	9.8	%	9.5	%	9.3	%	9.1	%	8.9	%

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

Dollars in thousands	12/31/2012		9/30/2012		6/30/2012		3/31/2012		12/31/2011

Commercial	$	85,829	$	88,997	$	92,060	$	99,386	$	99,024
Commercial real estate
Owner occupied		154,252		150,090		152,347		153,528		158,754
Non-owner occupied		276,082		279,132		280,891		275,727		270,226
Construction and development
Land and development		79,335		82,857		84,383		88,212		93,035
Construction		3,772		2,087		1,793		2,148		2,936
Residential real estate
Non-jumbo		216,714		215,584		217,321		219,485		221,733
Jumbo		61,567		62,748		61,962		62,836		61,535
Home equity		53,263		53,455		51,692		50,884		50,898
Consumer		20,586		21,290		21,212		21,573		22,325
Other		3,701		2,513		2,523		2,540		2,762
Total loans, net of unearned fees		955,101		958,753		966,184		976,319		983,228
Less allowance for loan losses		17,933		17,820		17,890		18,522		17,712
Loans, net	$	937,168	$	940,933	$	948,294	$	957,797	$	965,516

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

Dollars in thousands	12/31/2012		9/30/2012		6/30/2012		3/31/2012		12/31/2011
Non interest bearing checking	$	100,592	$	96,764	$	96,172	$	87,916	$	88,655
Interest bearing checking		175,706		177,236		164,867		172,506		158,483
Savings		193,039		197,610		204,509		212,402		208,809
Time deposits		288,092		294,945		301,865		312,459		328,082
Total retail deposits	$	757,429	$	766,555	$	767,413	$	785,283	$	784,029

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Asset Quality Information

	For the Quarter Ended
Dollars in thousands	12/31/2012			9/30/2012			6/30/2012			3/31/2012			12/31/2011
Gross loan charge-offs	$	2,545		$	2,142		$	2,790		$	1,340		$	2,368
Gross loan recoveries		(160	)		(73	)		(156	)		(149	)		(133	)
Net loan charge-offs	$	2,385		$	2,069		$	2,634		$	1,191		$	2,235

Net loan charge-offs to average loans (annualized)		0.99	%		0.86	%		1.08	%		0.49	%		0.91	%
Allowance for loan losses	$	17,933		$	17,820		$	17,890		$	18,523		$	17,712
Allowance for loan losses as a percentage
of period end loans		1.88	%		1.86	%		1.85	%		1.89	%		1.80	%
Nonperforming assets:
Nonperforming loans
Commercial	$	5,002		$	5,343		$	6,476		$	2,477		$	3,259
Commercial real estate		2,556			2,803			3,536			4,282			7,163
Commercial construction and development		-			428			662			799			1,052
Residential construction and development		13,641			16,333			16,735			21,375			22,634
Residential real estate		16,522			18,809			18,550			17,754			18,187
Consumer		55			88			78			81			145
Total nonperforming loans		37,776			43,804			46,037			46,768			52,440
Foreclosed properties
Commercial		-			-			-			-			-
Commercial real estate		11,835			11,802			12,029			14,703			15,721
Commercial construction and development		17,597			17,683			18,632			17,377			17,101
Residential construction and development		23,074			23,769			26,014			25,724			27,877
Residential real estate		3,666			2,779			3,393			3,780			3,239
Total foreclosed properties		56,172			56,033			60,068			61,584			63,938
Other repossessed assets		6			-			-			266			263
Total nonperforming assets	$	93,954		$	99,837		$	106,105		$	108,618		$	116,641

Nonperforming loans to period end loans		3.96	%		4.57	%		4.76	%		4.79	%		5.33	%
Nonperforming assets to period end assets		6.77	%		7.11	%		7.49	%		7.52	%		8.04	%

Loans Past Due 30-89 Days
	For the Quarter Ended
In thousands	12/31/2012		9/30/2012		6/30/2012		3/31/2012		12/31/2011

Commercial	$	180	$	874	$	300	$	689	$	533
Commercial real estate		437		1,264		1,787		2,776		5,746
Construction and development		-		56		293		518		1,756
Residential real estate		6,170		4,346		5,763		5,509		6,633
Consumer		326		313		408		242		466
Total	$	7,113	$	6,853	$	8,551	$	9,734	$	15,134

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q4 2012 vs Q4 2011
	Q4 2012							Q4 2011
	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	$	956,864		$	13,436	5.59	%	$	985,496		$	14,287	5.75%
Tax-exempt		6,184			117	7.53	%		6,115			114	7.40%
Securities
Taxable		226,629			1,097	1.93	%		225,089			1,817	3.20%
Tax-exempt		75,466			912	4.81	%		86,389			1,353	6.21%
Interest bearing deposits other banks
and Federal funds sold		10,779			4	0.15	%		25,926			13	0.20%
Total interest earning assets		1,275,922			15,566	4.85	%		1,329,015			17,584	5.25%

Noninterest earning assets
Cash & due from banks		4,166							4,229
Premises & equipment		21,266							22,274
Other assets		113,952							121,215
Allowance for loan losses		(18,053	)						(18,211	)
Total assets	$	1,397,253						$	1,458,522

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	179,198		$	78	0.17	%	$	156,751		$	94	0.24%
Savings deposits		194,839			307	0.63	%		208,772			427	0.81%
Time deposits		556,748			2,632	1.88	%		573,798			3,781	2.61%
Short-term borrowings		10,263			7	0.27	%		11,879			6	0.20%
Long-term borrowings and
subordinated debentures		239,722			2,300	3.82	%		307,937			3,117	4.02%
Total interest bearing liabilities		1,180,770			5,324	1.79	%		1,259,137			7,425	2.34%

Noninterest bearing liabilities
Demand deposits		99,845							89,640
Other liabilities		8,198							8,958
Total liabilities		1,288,813							1,357,735

Shareholders' equity - preferred		9,326							8,315
Shareholders' equity - common		99,114							92,472
Total liabilities and
shareholders' equity	$	1,397,253						$	1,458,522

NET INTEREST EARNINGS				$	10,242						$	10,159

NET INTEREST MARGIN						3.19	%						3.03%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
YTD 2012 vs YTD 2011

	YTD 2012							YTD 2011
	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	$	963,209		$	55,248	5.74	%	$	987,315		$	58,911	5.97%
Tax-exempt		6,628			483	7.29	%		5,105			402	7.87%
Securities
Taxable		233,560			5,689	2.44	%		252,901			9,106	3.60%
Tax-exempt		71,937			3,929	5.46	%		63,894			4,080	6.39%
Interest bearing deposits other banks
and Federal funds sold		19,731			35	0.18	%		33,690			72	0.21%
Total interest earning assets		1,295,065			65,384	5.05	%		1,342,905			72,571	5.40%

Noninterest earning assets
Cash & due from banks		4,188							4,022
Premises & equipment		21,578							22,620
Other assets		118,427							118,408
Allowance for loan losses		(18,157	)						(18,161	)
Total assets	$	1,421,101						$	1,469,794

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	170,698		$	325	0.19	%	$	152,552		$	391	0.26%
Savings deposits		203,908			1,361	0.67	%		207,226			1,899	0.92%
Time deposits		548,044			11,472	2.09	%		601,925			15,983	2.66%
Short-term borrowings		13,248			31	0.23	%		4,238			8	0.19%
Long-term borrowings and
subordinated debentures		276,092			10,875	3.94	%		315,900			12,921	4.09%
		1,211,990			24,064	1.99	%		1,281,841			31,202	2.43%
Noninterest bearing liabilities
Demand deposits		94,243							85,247
Other liabilities		8,256							8,474
Total liabilities		1,314,489							1,375,562

Shareholders' equity - preferred		9,326							4,738
Shareholders' equity - common		97,286							89,494
Total liabilities and
shareholders' equity	$	1,421,101						$	1,469,794

NET INTEREST EARNINGS				$	41,320						$	41,369

NET INTEREST MARGIN						3.19	%						3.08%

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	12/31/2012			12/31/2011			12/31/2012			12/31/2011

Net income applicable to common shares - excluding
realized securities gains, gains/losses on sales of assets,
other-than-temporary impairment of securities and
write-downs of foreclosed properties	$	2,424		$	1,786		$	8,491		$	6,850

Realized securities gains		103			542			2,348			4,006
Applicable income tax effect		(38	)		(201	)		(869	)		(1,482	)
Gain (loss) on sale of assets		(94	)		19			(677	)		295
Applicable income tax effect		35			(7	)		250			(109	)
Other-than-temporary impairment of securities		(76	)		(401	)		(451	)		(2,646	)
Applicable income tax effect		28			148			167			979
Write-downs foreclosed properties		(748	)		(882	)		(6,862	)		(6,651	)
Applicable income tax effect		277			326			2,539			2,461
		(513	)		(455	)		(3,555	)		(3,147	)
GAAP net income applicable to common shares	$	1,911		$	1,331		$	4,936		$	3,703



Diluted earnings per common share - excluding realized
securities gains, gains/losses on sales of assets,
other-than-temporary impairment of securities and
write-downs of foreclosed properties
	$	0.28		$	0.21		$	0.97		$	0.86

Realized securities gains		0.01			0.06			0.24			0.48
Applicable income tax effect		-			(0.02	)		(0.09	)		(0.18	)
Gain (loss) on sale of assets		(0.01	)		-			(0.07	)		0.04
Applicable income tax effect		-			-			0.03			(0.01	)
Other-than-temporary impairment of securities		(0.01	)		(0.04	)		(0.05	)		(0.32	)
Applicable income tax effect		-			0.01			0.02			0.12
Write-downs of foreclosed properties		(0.08	)		(0.10	)		(0.71	)		(0.80	)
Applicable income tax effect		0.03			0.04			0.26			0.30
		(0.06	)		(0.05	)		(0.37	)		(0.37	)
GAAP diluted earnings per common share	$	0.22		$	0.16		$	0.60		$	0.49

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	12/31/2012			12/31/2011			12/31/2012			12/31/2011

Total revenue - excluding realized securities gains,
gains/losses on sales of assets, other-than-temporary
impairment of securities and write-downs of
foreclosed properties	$	12,714		$	12,372		$	50,802		$	50,390

Realized securities gains		103			542			2,348			4,006
Gain (loss) on sale of assets		(94	)		19			(677	)		295
Other-than-temporary impairment of securities		(76	)		(401	)		(451	)		(2,646	)
Write-downs of foreclosed properties		(748	)		(882	)		(6,862	)		(6,651	)
		(815	)		(722	)		(5,642	)		(4,996	)
GAAP total revenue	$	11,899		$	11,650		$	45,160		$	45,394



Total noninterest income - excluding realized securities
gains, gains/losses on sales of assets, other-than-
temporary impairment of securities and write-downs
of foreclosed properties	$	2,818		$	2,711		$	10,982		$	10,545

Realized securities gains		103			542			2,348			4,006
Gain (loss) on sale of assets		(94	)		19			(677	)		295
Other-than-temporary impairment of securities		(76	)		(401	)		(451	)		(2,645	)
Write-downs of foreclosed properties		(748	)		(882	)		(6,862	)		(6,651	)
		(815	)		(722	)		(5,642	)		(4,995	)
GAAP total noninterest income	$	2,003		$	1,989		$	5,340		$	5,550

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SUMMIT FINANCIAL GROUP, INC. Reports