Summit Financial Group Reports Fourth Quarter and Full Year

Q4 2016 Diluted EPS $0.44 compared to $0.39 for Q4 2015 and $0.40 for Q3 2016; Full year 2016 Diluted EPS $1.61 compared to $1.50 for 2015

MOOREFIELD, W. Va., Jan. 30, 2017 (GLOBE NEWSWIRE) -- Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ:SMMF) today reported fourth quarter 2016 net income of $4.71 million, or $0.44 per diluted share, compared to $4.15 million, or $0.39 per diluted share, for the fourth quarter of 2015, representing an increase of 13.6 percent, or 12.8 percent per diluted share.

For the year ended December 31, 2016, Summit recorded net income of $17.30 million, or $1.61 per diluted share, compared with $16.10 million, or $1.50 per diluted share for 2015, representing an increase of 7.4 percent, or 7.3 percent per diluted share.

On October 1, 2016, Summit completed its acquisition of Highland County Bankshares, Inc. (“HCB”) and its subsidiary, First & Citizens Bank, headquartered in Monterey, Virginia. Accordingly, HCB’s results of operations are included in Summit’s consolidated results of operation from the date of acquisition, and therefore Summit’s fourth quarter and full-year 2016 results reflect increased levels of average balances, income and expense compared to its fourth quarter and full-year 2015 results. At consummation, HCB had total assets of $122.8 million, loans of $60.8 million, and deposits of $106.9 million. In addition, our merger related expenses totaled $933,000 in 2016, with $588,000 of those expenses incurred during fourth quarter 2016.

Q4 2016 versus Q4 2015

Net interest earnings increased $1.72 million, or 14.7 percent;
Gains realized on sales of securities declined from $421,000 in Q4 2015 to $291,000 in Q4 2016;
Write-downs of foreclosed properties were $165,000 in Q4 2016 compared to $636,000 during Q4 2015;
Personnel costs increased 17.2 percent, or $778,000 in Q4 2016;
Recognized $487,000 net gain on insurance proceeds in excess of related flood losses during Q4 2016; and
Merger related expenses of $588,000 were incurred during Q4 2016, while there were none in Q4 2015.

FY 2016 versus FY 2015

Net interest earnings increased 6.5 percent, or $2.99 million;
Provision for loan losses declined to $500,000 for 2016 compared to $1.25 million during 2015;
Higher personnel costs, reaching $19.57 million during 2016 compared to $17.64 million for 2015;
Merger related expenses of $933,000 were incurred during 2016, while none were recognized in 2015;
Recognized $320,000 net gain on insurance proceeds in excess of related flood losses in 2016;
Gains on sales of foreclosed properties totaled $916,000 during 2016 compared to $26,000 during 2015; and
Write-downs of foreclosed properties declined to $668,000 for 2016 compared to $2.42 million for 2015.

Fourth Quarter 2016 Highlights

Summit completed its acquisition of HCB on October 1, 2016, and converted substantially its data processing systems to that of Summit’s effective December 5, 2016;
Our pending acquisition of First Century Bankshares, Inc. (“FCB”) was approved by FCB’s shareholders on December 6, 2016. All requisite regulatory approvals relative to this transaction were previously received, and it is expected to close at the beginning of second quarter 2017;
Total revenues increased 11.3 percent compared to the linked quarter and 12.7 percent compared to the year ago quarter;
Loans, excluding mortgage warehouse lines of credit and HCB’s purchased loan portfolio, grew $35.5 million during the quarter, or 12.5 percent (on an annualized basis), and grew $81.9 million, or 7.5 percent in 2016;
Nonperforming assets as a percentage of total assets declined for the seventeenth consecutive quarter to 2.22 percent compared to 2.36 percent for the linked quarter, reaching its lowest level since Q2 2008;
Net interest margin declined 17 basis points since Q4 2015, but increased 2 basis points compared to the linked quarter; and
Recorded charges of $165,000 to write-down foreclosed properties compared to $134,000 in Q3 2016 and $636,000 in Q4 2015.

H. Charles Maddy, III, President and Chief Executive Officer of Summit, commented, “I am very pleased to report that Summit achieved record quarterly earnings in the quarter just ended and record annual earnings in 2016. Further, I am particularly gratified by our revenue growth during 2016 which resulted principally from our continued robust lending activity and our recent acquisition of Highland County Bankshares. Our pending acquisition of First Century Bankshares has received all approvals and is expected to close in early Q2 2017. This acquisition combined with our recent Highland County purchase – that is already positively impacting our bottom line -- represent significant opportunities for us. The combination of Summit and these two financially strong institutions which have similar cultures and core values as ours should contribute significantly towards our goal of being a consistent, high-performing community banking institution and gives us optimism as we look forward to 2017 and beyond.”

Results from Operations

Total revenue for fourth quarter 2016, consisting of net interest income and noninterest income, grew 12.7 percent to $16.5 million compared to $14.6 million for the fourth quarter 2015. For the annual period ended December 31, 2016, total revenue was $60.6 million compared to $57.9 million for 2015, representing a 4.7 percent increase.

For the fourth quarter of 2016, net interest income was $13.5 million, an increase of 14.7 percent from the $11.7 million reported in the prior-year fourth quarter and increased $1.4 million compared to the linked quarter. The net interest margin for fourth quarter 2016 was 3.34 percent compared to 3.51 percent for the year-ago quarter, and 3.32 percent for the linked quarter. Summit recognized net accretion income totaling $66,000 in Q4 2016 related to HCB’s loan fair value acquisition accounting adjustments.

Noninterest income, consisting primarily of insurance commissions from Summit's insurance agency subsidiary and service fee income from community banking activities, for fourth quarter 2016 was $3.00 million compared to $2.87 million for the comparable period of 2015. Excluding realized securities gains, noninterest income was $2.71 million for fourth quarter 2016, compared to $2.45 million reported for fourth quarter 2015.

We recorded no provision for loan losses during fourth quarter 2016, compared to $250,000 for the year-ago quarter.

Noninterest expense continues to be well-controlled. Total noninterest expense increased 10.6 percent to $9.39 million compared to $8.49 million for the prior-year fourth quarter. Noninterest expense for the year 2016 increased 3.5 percent compared to 2015.

Balance Sheet

At December 31, 2016, total assets were $1.76 billion, an increase of $266.2 million, or 17.8 percent since December 31, 2015. Total loans, net of unearned fees and allowance for loan losses, were $1.31 billion at December 31, 2016, up $228.5 million, or 21.2 percent, from the $1.08 billion reported at year-end 2015. Excluding mortgage warehouse lines of credit, net loans increased $142.6 million or 13.2 percent since year-end 2015.

At December 31, 2016, deposits were $1.30 billion, an increase of $228.8 million, or 21.5 percent, since year end 2015. During 2016, checking deposits increased by $77.6 million or 23.2 percent, time deposits increased by $80.7 million or 17.3 percent, and savings deposits increased by $70.5 million or 26.4 percent.

Asset Quality

As of December 31, 2016, nonperforming assets (“NPAs”), consisting of nonperforming loans, foreclosed properties, and repossessed assets, were $39.1 million, or 2.22 percent of assets. This compares to $39.2 million, or 2.36 percent of assets at the linked quarter, and $41.3 million, or 2.77 percent of assets, at fourth quarter 2015.

Fourth quarter 2016 net loan charge-off recoveries were $56,000, or 0.02 percent of average loans annualized; with no provision for loan losses. The allowance for loan losses stood at $11.7 million, or 0.88 percent of total loans at December 31, 2016, compared to 1.05 percent at year-end 2015.

Capital Adequacy

Shareholders’ equity was $155.4 million as of December 31, 2016 compared to $143.7 million at December 31, 2015. Tangible book value per common share increased to $13.20 at December 31, 2016 compared to $12.78 at December 31, 2015. Summit had 10,736,970 outstanding common shares at year end 2016 compared to 10,671,744 at year end 2015.

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, 2016. The Bank’s total risk-based capital ratio was 12.7 percent at December 31, 2016 compared to 14.5 percent at December 31, 2015, while its Tier 1 leverage capital ratio was 9.5 percent at December 31, 2016 compared to the 10.8 percent reported at December 31, 2015.

About the Company

Summit Financial Group, Inc. is a $1.76 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 eighteen 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 -- Q4 2016 vs Q4 2015


		For the Quarter Ended						Percent
Dollars in thousands		12/31/2016			12/31/2015			Change
Condensed Statements of Income
	Interest income
	Loans, including fees	$	15,780		$	13,265		19.0	%
	Securities		1,796			1,685		6.6	%
	Other		161			1		n/a
	Total interest income		17,737			14,951		18.6	%
	Interest expense
	Deposits		2,430			2,085		16.5	%
	Borrowings		1,850			1,133		63.3	%
	Total interest expense		4,280			3,218		33.0	%
	Net interest income		13,457			11,733		14.7	%
	Provision for loan losses		-			250		-100.0	%
	Net interest income after provision
	for loan losses		13,457			11,483		17.2	%
	Noninterest income
	Insurance commissions		992			851		16.6	%
	Service fees related to deposit accounts		1,194			1,126		6.0	%
	Realized securities gains		291			421		-30.9	%
	Other income		521			471		10.6	%
	Total noninterest income		2,998			2,869		4.5	%
	Noninterest expense
	Salaries and employee benefits		5,308			4,530		17.2	%
	Net occupancy expense		522			481		8.5	%
	Equipment expense		700			617		13.5	%
	Professional fees		344			507		-32.1	%
	Amortization of intangibles		97			50		94.0	%
	FDIC premiums		75			270		-72.2	%
	Merger expense		588			-		n/a
	Foreclosed properties expense		97			150		-35.3	%
	Loss (gain) on sales of foreclosed properties		(465	)		(314	)	48.1	%
	Write-downs of foreclosed properties		165			636		-74.1	%
	Other expenses		1,961			1,567		25.1	%
	Total noninterest expense		9,392			8,494		10.6	%
	Income before income taxes		7,063			5,858		20.6	%
	Income taxes		2,353			1,712		37.4	%
	Net income	$	4,710		$	4,146		13.6	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary -- Q4 2016 vs Q4 2015

		For the Quarter Ended						Percent
		12/31/2016			12/31/2015			Change
Per Share Data
	Earnings per common share
	Basic	$	0.44		$	0.39		12.8	%
	Diluted	$	0.44		$	0.39		12.8	%

	Cash dividends	$	0.10		$	0.08		25.0	%

	Average common shares outstanding
	Basic		10,710,164			10,661,700		0.5	%
	Diluted		10,762,445			10,669,192		0.9	%

	Common shares outstanding at period end		10,736,970			10,671,744		0.6	%

Performance Ratios
	Return on average equity		12.22	%		11.66	%	4.8	%
	Return on average tangible equity		13.42	%		12.31	%	9.0	%
	Return on average assets		1.07	%		1.12	%	-4.5	%
	Net interest margin		3.34	%		3.51	%	-4.8	%
	Efficiency ratio (A)		56.67	%		54.46	%	4.1	%

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 -- 2016 vs 2015


		For the Year Ended						Percent
Dollars in thousands		12/31/2016			12/31/2015			Change
Condensed Statements of Income
	Interest income
	Loans, including fees	$	56,980		$	52,068		9.4	%
	Securities		6,938			6,808		1.9	%
	Other		173			7		n/a
	Total interest income		64,091			58,883		8.8	%
	Interest expense
	Deposits		8,964			8,336		7.5	%
	Borrowings		6,120			4,531		35.1	%
	Total interest expense		15,084			12,867		17.2	%
	Net interest income		49,007			46,016		6.5	%
	Provision for loan losses		500			1,250		-60.0	%
	Net interest income after provision
	for loan losses		48,507			44,766		8.4	%

	Noninterest income
	Insurance commissions		4,022			4,042		-0.5	%
	Service fees related to deposit accounts		4,370			4,285		2.0	%
	Realized securities gains		1,127			1,444		-22.0	%
	Other income		2,081			2,090		-0.4	%
	Total noninterest income		11,600			11,861		-2.2	%
	Noninterest expense
	Salaries and employee benefits		19,573			17,638		11.0	%
	Net occupancy expense		2,098			1,964		6.8	%
	Equipment expense		2,759			2,294		20.3	%
	Amortization of intangibles		247			200		23.5	%
	Professional fees		1,515			1,616		-6.3	%
	FDIC premiums		875			1,220		-28.3	%
	Merger expense		933			-		n/a
	Foreclosed properties expense		414			684		-39.5	%
	Loss (gain) on sales of foreclosed properties		(916	)		(26	)	n/a
	Write-downs of foreclosed properties		668			2,415		-72.3	%
	Other expenses		6,636			5,627		17.9	%
	Total noninterest expense		34,802			33,632		3.5	%
	Income before income taxes		25,305			22,995		10.0	%
	Income taxes		8,008			6,893		16.2	%
	Net income	$	17,297		$	16,102		7.4	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Annual Performance Summary -- 2016 vs 2015

		For the Year Ended						Percent
		12/31/2016			12/31/2015			Change
Per Share Data
	Earnings per common share
	Basic	$	1.62		$	1.56		3.8	%
	Diluted	$	1.61		$	1.50		7.3	%

	Cash dividends	$	0.40		$	0.32		25.0	%

	Average common shares outstanding
	Basic		10,689,224			10,295,434		3.8	%
	Diluted		10,716,871			10,715,275		0.0	%

	Common shares outstanding at period end		10,736,970			10,671,744		0.6	%

Performance Ratios
	Return on average equity		11.53	%		11.62	%	-0.8	%
	Return on average tangible equity		12.27	%		12.29	%	-0.2	%
	Return on average assets		1.08	%		1.10	%	-1.8	%
	Net interest margin		3.39	%		3.50	%	-3.1	%
	Efficiency ratio (A)		55.34	%		52.17	%	6.1	%

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		12/31/2016			9/30/2016			6/30/2016			3/31/2016			12/31/2015
Condensed Statements of Income
	Interest income
	Loans, including fees	$	15,780		$	14,142		$	13,622		$	13,436		$	13,265
	Securities		1,796			1,759			1,656			1,726			1,685
	Other		161			5			5			3			1
	Total interest income		17,737			15,906			15,283			15,165			14,951
	Interest expense
	Deposits		2,430			2,209			2,154			2,170			2,085
	Borrowings		1,850			1,659			1,395			1,216			1,133
	Total interest expense		4,280			3,868			3,549			3,386			3,218
	Net interest income		13,457			12,038			11,734			11,779			11,733
	Provision for loan losses		-			-			250			250			250
	Net interest income after provision
	for loan losses		13,457			12,038			11,484			11,529			11,483

	Noninterest income
	Insurance commissions		992			1,016			1,090			924			851
	Service fees related to deposit accounts		1,194			1,138			1,059			978			1,126
	Realized securities gains		291			61			383			393			421
	Other income		521			534			513			511			471
	Total noninterest income		2,998			2,749			3,045			2,806			2,869
	Noninterest expense
	Salaries and employee benefits		5,308			4,819			4,764			4,682			4,530
	Net occupancy expense		522			525			512			540			481
	Equipment expense		700			716			686			656			617
	Professional fees		344			270			429			472			507
	Amortization of intangibles		97			50			50			50			50
	FDIC premiums		75			200			300			300			270
	Merger expense		588			80			153			112			-
	Foreclosed properties expense		97			100			93			124			150
	Loss (gain) on sales of foreclosed properties		(465	)		(168	)		(276	)		(6	)		(314	)
	Write-downs of foreclosed properties		165			134			259			109			636
	Other expenses		1,961			1,693			1,467			1,515			1,567
	Total noninterest expense		9,392			8,419			8,437			8,554			8,494
	Income before income taxes		7,063			6,368			6,092			5,781			5,858
	Income taxes		2,353			2,087			1,849			1,719			1,712
	Net income	$	4,710		$	4,281		$	4,243		$	4,062		$	4,146

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

		For the Quarter Ended
		12/31/2016			9/30/2016			6/30/2016			3/31/2016			12/31/2015
Per Share Data
	Earnings per common share
	Basic	$	0.44		$	0.40		$	0.40		$	0.38		$	0.39
	Diluted	$	0.44		$	0.40		$	0.40		$	0.38		$	0.39

	Cash dividends	$	0.10		$	0.10		$	0.10		$	0.10		$	0.08

	Average common shares outstanding
	Basic		10,710,164			10,692,423			10,681,995			10,671,856			10,661,700
	Diluted		10,762,445			10,727,140			10,701,017			10,679,301			10,669,192

	Common shares outstanding at period end		10,736,970			10,701,841			10,692,320			10,681,880			10,671,744

Performance Ratios
	Return on average equity		12.22	%		11.29	%		11.49	%		11.10	%		11.66	%
	Return on average tangible equity		13.42	%		11.86	%		12.10	%		11.70	%		12.31	%
	Return on average assets		1.07	%		1.08	%		1.10	%		1.08	%		1.12	%
	Net interest margin		3.34	%		3.32	%		3.40	%		3.50	%		3.51	%
	Efficiency ratio (A)		56.67	%		53.30	%		55.35	%		55.93	%		54.46	%

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

Dollars in thousands, except per share amounts		12/31/2016			9/30/2016			6/30/2016			3/31/2016			12/31/2015

Assets
	Cash and due from banks	$	4,262		$	25,067		$	4,161		$	4,005		$	3,625
	Interest bearing deposits other banks		42,354			9,432			8,897			12,655			5,862
	Securities		266,542			262,102			261,633			271,515			280,792
	Loans, net		1,307,862			1,234,605			1,166,723			1,096,790			1,079,331
	Property held for sale		24,504			24,767			23,425			24,684			25,567
	Premises and equipment, net		23,737			21,802			21,405			21,589			21,572
	Intangible assets		13,652			7,348			7,398			7,448			7,498
	Cash surrender value of life insurance policies		39,143			38,504			38,246			37,989			37,732
	Other assets		36,591			34,009			33,293			31,893			30,450
	Total assets	$	1,758,647		$	1,657,636		$	1,565,181		$	1,508,568		$	1,492,429

Liabilities and Shareholders' Equity
	Deposits	$	1,295,519		$	1,156,785		$	1,096,545		$	1,094,544		$	1,066,709
	Short-term borrowings		224,461			234,657			205,552			153,448			171,394
	Long-term borrowings and
	subordinated debentures		66,259			93,735			94,214			94,692			95,170
	Other liabilities		17,048			18,640			18,201			19,755			15,412
	Shareholders' equity		155,360			153,819			150,669			146,129			143,744
	Total liabilities and shareholders' equity	$	1,758,647		$	1,657,636		$	1,565,181		$	1,508,568		$	1,492,429

	Book value per common share	$	14.47		$	14.37		$	14.09		$	13.68		$	13.48
	Tangible book value per common share	$	13.20		$	13.69		$	13.40		$	12.98		$	12.78
	Tangible common equity to tangible assets		8.1	%		8.9	%		9.2	%		9.2	%		9.2	%

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

		12/31/2016		9/30/2016		6/30/2016		3/31/2016		12/31/2015
Summit Financial Group, Inc.
	CET1 Risk-based Capital	10.5	%	11.1	%	11.5	%	11.9	%	11.8	%
	Tier 1 Risk-based Capital	11.8	%	12.4	%	12.9	%	13.5	%	13.4	%
	Total Risk-based Capital	12.6	%	13.3	%	13.8	%	14.5	%	14.4	%
	Tier 1 Leverage Ratio	9.4	%	10.4	%	10.5	%	10.7	%	10.7	%

Summit Community Bank, Inc.
	CET1 Risk-based Capital	11.9	%	12.5	%	13.0	%	13.6	%	13.6	%
	Tier 1 Risk-based Capital	11.9	%	12.5	%	13.0	%	13.6	%	13.6	%
	Total Risk-based Capital	12.7	%	13.4	%	13.9	%	14.5	%	14.5	%
	Tier 1 Leverage Ratio	9.5	%	10.5	%	10.6	%	10.7	%	10.8	%

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

Dollars in thousands	12/31/2016		9/30/2016			6/30/2016			3/31/2016			12/31/2015

Commercial	$	119,088		$	110,466		$	101,521		$	101,743		$	97,201
Mortgage warehouse lines		85,966			108,983			80,282			-			-
Commercial real estate
Owner occupied		203,047			192,254			190,534			202,680			203,555
Non-owner occupied		381,921			367,196			348,099			353,350			337,295
Construction and development
Land and development		72,042			65,430			65,702			66,483			65,500
Construction		16,584			11,276			8,506			7,997			9,970
Residential real estate
Non-jumbo		265,641			228,777			225,919			221,368			221,749
Jumbo		65,628			57,276			52,105			50,057			50,313
Home equity		74,596			75,161			75,904			74,097			74,300
Consumer		25,534			19,756			19,520			19,095			19,251
Other		9,489			9,649			10,008			11,235			11,669
Total loans, net of unearned fees		1,319,536			1,246,224			1,178,100			1,108,105			1,090,803
Less allowance for loan losses		11,674			11,619			11,377			11,315			11,472
Loans, net	$	1,307,862		$	1,234,605		$	1,166,723		$	1,096,790		$	1,079,331

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

Dollars in thousands	12/31/2016		9/30/2016			6/30/2016			3/31/2016			12/31/2015
Non interest bearing checking	$	149,737		$	122,652		$	120,845		$	122,378		$	119,010
Interest bearing checking		262,591			212,172			205,095			210,878			215,721
Savings		337,348			321,563			306,785			286,695			266,825
Time deposits		545,843			500,398			463,820			474,593			465,153
Total deposits	$	1,295,519		$	1,156,785		$	1,096,545		$	1,094,544		$	1,066,709

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

		For the Quarter Ended
Dollars in thousands		12/31/2016				9/30/2016				6/30/2016				3/31/2016				12/31/2015

	Gross loan charge-offs		$	400			$	331			$	263			$	561			$	132
	Gross loan recoveries			(456	)			(573	)			(75	)			(154	)			(126	)
	Net loan charge-offs (recoveries)		$	(56	)		$	(242	)		$	188			$	407			$	6

	Net loan charge-offs to average loans (annualized)			-0.02	%			-0.09	%			0.07	%			0.15	%			0.00	%

	Allowance for loan losses		$	11,674			$	11,619			$	11,377			$	11,315			$	11,472
	Allowance for loan losses as a percentage
	of period end loans			0.88	%			0.93	%			0.97	%			1.02	%			1.05	%

	Nonperforming assets:
	Nonperforming loans
	Commercial		$	298			$	846			$	399			$	430			$	853
	Commercial real estate			4,844				4,867				5,773				6,140				5,955
	Residential construction and development			4,465				4,360				5,400				5,467				5,623
	Residential real estate			4,815				4,174				3,531				3,248				3,245
	Consumer			152				169				91				121				92
	Total nonperforming loans			14,574				14,416				15,194				15,406				15,768
	Foreclosed properties
	Commercial real estate			1,749				1,749				976				976				1,300
	Commercial construction and development			8,610				8,664				8,708				8,717				8,717
	Residential construction and development			13,265				13,741				12,989				13,808				14,068
	Residential real estate			880				613				752				1,183				1,482
	Total foreclosed properties			24,504				24,767				23,425				24,684				25,567
	Other repossessed assets			12				12				38				-				5
	Total nonperforming assets		$	39,090			$	39,195			$	38,657			$	40,090			$	41,340

	Nonperforming loans to period end loans			1.10	%			1.16	%			1.29	%			1.39	%			1.45	%
	Nonperforming assets to period end assets			2.22	%			2.36	%			2.47	%			2.66	%			2.77	%

	Troubled debt restructurings
	Performing		$	28,066			$	28,287			$	27,750			$	29,452			$	29,473
	Nonperforming			564				863				2,133				897				1,051
	Total troubled debt restructurings		$	28,630			$	29,150			$	29,883			$	30,349			$	30,524

Loans Past Due 30-89 Days
		For the Quarter Ended
In thousands		12/31/2016			9/30/2016			6/30/2016			3/31/2016			12/31/2015

	Commercial		$	175		$	405		$	422		$	465		$	339
	Commercial real estate			434			626			214			920			543
	Construction and development			552			235			520			218			1,182
	Residential real estate			5,517			2,941			4,763			3,055			4,442
	Consumer			375			144			177			73			186
	Other			14			13			12			14			9
	Total		$	7,067		$	4,364		$	6,108		$	4,745		$	6,701

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q4 2016 vs Q4 2015
	Q4 2016									Q4 2015
	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	$	1,308,418			$	15,650		4.76	%	$	1,064,491			$	13,111		4.89	%
Tax-exempt		13,845				195		5.60	%		16,393				232		5.61	%
Securities
Taxable		191,951				1,111		2.30	%		202,417				1,027		2.01	%
Tax-exempt		89,745				1,039		4.61	%		82,013				997		4.82	%
Interest bearing deposits other banks
and Federal funds sold		49,341				161		1.30	%		7,345				1		0.05	%
Total interest earning assets		1,653,300				18,156		4.37	%		1,372,659				15,368		4.44	%

Noninterest earning assets
Cash & due from banks		4,650									3,828
Premises & equipment		23,616									21,701
Other assets		96,165									91,596
Allowance for loan losses		(11,905	)								(11,370	)
Total assets	$	1,765,826								$	1,478,414

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	256,307			$	128		0.20	%	$	215,315			$	72		0.13	%
Savings deposits		335,658				633		0.75	%		262,557				474		0.72	%
Time deposits		542,602				1,669		1.22	%		469,249				1,539		1.30	%
Short-term borrowings		221,200				954		1.72	%		156,812				156		0.39	%
Long-term borrowings and
subordinated debentures		85,699				896		4.16	%		95,531				977		4.06	%
Total interest bearing liabilities		1,441,466				4,280		1.18	%		1,199,464				3,218		1.06	%

Noninterest bearing liabilities
Demand deposits		150,318									119,785
Other liabilities		19,902									16,970
Total liabilities		1,611,686									1,336,219

Shareholders' equity - common		154,140									142,195
Total liabilities and
shareholders' equity	$	1,765,826								$	1,478,414

NET INTEREST EARNINGS					$	13,876								$	12,150

NET INTEREST MARGIN								3.34	%								3.51	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
YTD 2016 vs YTD 2015

	YTD 2016									YTD 2015
	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	$	1,177,445			$	56,439		4.79	%	$	1,049,172			$	51,554		4.91	%
Tax-exempt		14,628				820		5.61	%		13,706				779		5.68	%
Securities
Taxable		202,795				4,395		2.17	%		209,316				4,328		2.07	%
Tax-exempt		79,571				3,853		4.84	%		77,280				3,756		4.86	%
Interest bearing deposits other banks
and Federal funds sold		19,211				173		0.90	%		8,878				8		0.09	%
Total interest earning assets		1,493,650				65,680		4.40	%		1,358,352				60,425		4.45	%

Noninterest earning assets
Cash & due from banks		3,968									3,839
Premises & equipment		21,858									20,707
Other assets		90,957									94,996
Allowance for loan losses		(10,836	)								(11,307	)
Total assets	$	1,599,597								$	1,466,587

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	220,708			$	376		0.17	%	$	208,160			$	251		0.12	%
Savings deposits		306,312				2,296		0.75	%		255,186				1,781		0.70	%
Time deposits		491,652				6,292		1.28	%		481,732				6,304		1.31	%
Short-term borrowings		190,876				2,288		1.20	%		151,102				525		0.35	%
Long-term borrowings and
subordinated debentures		92,343				3,832		4.15	%		99,805				4,007		4.01	%
		1,301,891				15,084		1.16	%		1,195,985				12,868		1.08	%
Noninterest bearing liabilities
Demand deposits		128,894									116,995
Other liabilities		18,795									15,024
Total liabilities		1,449,580									1,328,004

Shareholders' equity - preferred		-									1,786
Shareholders' equity - common		150,017									136,797
Total liabilities and
shareholders' equity	$	1,599,597								$	1,466,587

NET INTEREST EARNINGS					$	50,596								$	47,557

NET INTEREST MARGIN								3.39	%								3.50	%

Summit Financial Group Reports Fourth Quarter and Full Year 2016 Results

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