Filed Pursuant to Rule 424(b)(3)
Registration No. 333-227080
MERGER PROPOSEDYOUR VOTE IS VERY IMPORTANT
Dear Shareholder:
On July 24, 2018,
Summit Financial Group, Inc., or Summit, and Peoples Bankshares, Inc., or Peoples, announced a strategic business combination in which Peoples will merge with and into PB Merger Sub LLC, a wholly-owned subsidiary of Summits wholly-owned
subsidiary, Summit Community Bank, Inc., or Summit Community Bank. The combined company, which will retain the Summit name, will have approximately $2.2 billion in assets and operate 31 full-service branches across the states of West Virginia
and Virginia. Peoples is sending you this prospectus and proxy statement to invite you to attend a special meeting of Peoples shareholders to allow you to vote on the plan of merger. The special meeting will be held on November 8, 2018, at 1:30
p.m., local time, at Twin Falls State Park, located at Rte. 97, Mullens, WV, 25882.
If the merger is completed, holders of Peoples common
stock may elect to receive (i) 1.7193 shares of Summit common stock, par value $2.50 per share, in exchange for each share of Peoples common stock, par value $1.00 per share, held immediately prior to the merger, which is referred to as the stock
consideration, (ii) cash in the amount of $47.00 per share of Peoples common stock held immediately prior to the merger, which is referred to as the cash consideration or (iii) a combination of cash and shares of Summit common stock in
accordance with the election procedures set forth in the Agreement and Plan of Merger, dated as of July 24, 2018, between Summit and Peoples, which we refer to as the merger agreement. However, the aggregate number of Peoples shares that will
be converted for cash consideration will be equal to 271,020 shares, and the aggregate cash consideration will be equal to $12,737,940, or approximately 50% of the merger consideration. The remaining 50% of the merger consideration will be stock
consideration consisting of an aggregate of 271,021 shares of Peoples common stock converting to a maximum of 465,967 shares of Summit common stock after applying the exchange ratio. The merger agreement provides for pro rata adjustments to and
reallocation of the stock and cash elections made by Peoples shareholders in order to achieve a 50% cash and 50% stock consideration mix.
The merger consideration is subject to adjustment if Peoples total shareholders equity decreases, as specified under The
Merger AgreementShareholders Equity beginning on page 58, and Peoples has the right to terminate the merger agreement if Summits stock price falls below a certain floor, as specified under The Merger
AgreementTermination of the Merger Agreement beginning on page 73.
The number of shares of Summit common stock that Peoples
shareholders making a stock election will receive in the merger for each share of Peoples common stock is fixed. The implied value of the stock consideration that Peoples shareholders will receive in the merger will change depending on changes in
the market price of Summit common stock and will not be known at the time you vote on the merger
.
The market value of the stock
consideration will fluctuate with the market price of Summit common stock, however the cash consideration will remain a fixed amount regardless of any change in the market value of the stock consideration. The following table presents the closing
prices of Summit common stock on July 24, 2018, the last trading day before public announcement of the merger, and on September 21, 2018, the last practicable trading day before the distribution of this prospectus and proxy statement. The table
also presents the implied value of the stock consideration proposed for each share of Peoples common stock converted into the stock consideration on those dates, as determined by multiplying the closing price of Summit common stock on those dates by
the exchange ratio of 1.7193 provided for in the merger agreement. This table also presents the value of the cash consideration proposed for each share of Peoples common stock converted into the cash consideration, which will remain a fixed amount
regardless of any change in the market value of the stock consideration.
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Summit
Common Stock
(NASDAQ: SMMF)
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Implied Value of
One Share of
Peoples Common
Stock
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Value of the Cash
Consideration for
One Share of Peoples
Common Stock
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At July 24, 2018
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$
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26.79
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$
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46.06
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$
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47.00
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At September 21, 2018
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$
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24.24
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$
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41.68
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$
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47.00
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The common stock of Summit is listed on the NASDAQ Capital Market. Summit and Peoples urge you to obtain
current market quotations for Summit (trading symbol SMMF).
The merger and the bank merger are intended to be treated as a
single integrated transaction qualifying as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, and holders of Peoples common stock are not expected to recognize any gain or loss for United
States federal income tax purposes on the exchange of shares of Peoples common stock for shares of Summit common stock in the merger, except to the extent of the total cash consideration and cash in lieu of any fractional shares of Summit common
stock.
At the special meeting of Peoples shareholders to be held on November 8, 2018, holders of Peoples common stock will be asked to vote
to (1) approve the merger agreement, which is the plan of merger, and (2) approve the adjournment of the special meeting, if necessary or appropriate, in order to further solicit proxies in favor of approval of the merger agreement.
Approval of the merger agreement requires the affirmative vote of a majority of the votes cast at the Peoples special meeting at which a quorum is present.
The Peoples board of directors unanimously recommends that holders of Peoples common stock vote FOR approval of the merger
agreement and FOR the approval of the adjournment of the special meeting, if necessary or appropriate, in order to further solicit proxies in favor of the merger agreement.
This prospectus and proxy statement describes the special meeting, the merger, the documents related to the merger and other related matters.
Please carefully read this entire document, including
Risk Factors
beginning on page 17 for a discussion of the risks relating to the proposed merger and owning Summit common stock after the merger. You
also can obtain information about Summit from documents that it has filed with the Securities and Exchange Commission.
Sincerely,
Ronald L. Bowling
President and Chief Executive Officer
Peoples Bankshares, Inc.
Neither the Securities
and Exchange Commission nor any state securities commission or bank regulatory agency has approved or disapproved the Summit common stock to be issued in the merger or passed upon the adequacy or accuracy of this prospectus and proxy statement. Any
representation to the contrary is a criminal offense.
The securities to be issued in the merger are not savings and deposit accounts
of any bank or
non-bank
subsidiary of Summit or of Peoples and they are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.
The date of this prospectus and proxy statement is September 26, 2018 and it is first being mailed or otherwise delivered to Peoples
shareholders on or about October 1, 2018.