SMMF Summit Financial Group Inc

Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ: SMMF) today reported first quarter 2021 net income of $10.4 million, or $0.80 per diluted share, both representing a quarterly record. In comparison, earnings for fourth quarter 2020 were $10.3 million, or $0.79 per diluted share, and for first quarter 2020 were $4.51 million, or $0.35 per diluted share.

H. Charles Maddy, III, President and Chief Executive Officer commented, “For the second consecutive quarter, Summit achieved both record quarterly earnings per share and net income in Q1 2021. I am particularly pleased by our continued strong core operating performance, highlighted by our strong year-over-year growth in revenue, all while maintaining a relatively stable net interest margin and well-controlled noninterest expenses. Such results serve to validate not only our core growth strategies, but our ability to remain disciplined despite somewhat challenging economic conditions. I am inspired by our gaining momentum towards our goal to be a consistently growing, high-performing community banking institution.”

Highlights for Q1 2021

• Net interest income was nearly unchanged compared to Q4 2020, despite Q1 2021 having two less days than Q4 2020, and increased 22.4 percent year over year, primarily due to loan growth and lower funding costs.
• Net interest margin in Q1 2021 decreased 11 basis points to 3.65 percent as compared to the linked quarter, as yield on interest earning assets decreased 20 basis points while the cost of deposits and other funding declined 10 basis points.
• Excluding mortgage warehouse lines of credit and PPP loans, loan balances increased a net $135.8 million during the quarter.
• Recorded provision for credit losses of $1.50 million in Q1 2021 compared to $3.00 million in Q4 2020 and $5.25 million in Q1 2020; our increased credit provisions in 2020 were principally due to the estimated potential future economic impact of the COVID-19 crisis.
• Efficiency ratio was 49.79 percent compared to 49.38 percent in the linked quarter and 51.41 percent for Q1 2020.
• Net foreclosed properties expenses decreased to $227,000 in Q1 2021 compared to $676,000 in Q4 2020, as net losses on sales of foreclosed properties in Q1 2021 totaled $113,000 compared to $489,000 in Q4 2020, and write downs of foreclosed properties to estimated fair values totaled $23,000 in Q1 2021 compared to $64,000 in Q4 2020. During Q1 2020, such write downs totaled $946,000 and realized net gains were $61,000.
• Realized $476,000 securities gains in Q1 2021 compared to $912,000 in the linked quarter and $1.04 million in Q1 2020.
• Nonperforming assets as a percentage of total assets increased slightly to 1.21 percent compared to 1.16 percent for the linked quarter and 1.16 percent at first quarter end 2020.

Results from Operations

Total revenue for first quarter 2021, consisting of net interest income and noninterest income, increased 20.4 percent to $31.2 million, which included $476,000 in realized securities gains, compared to $25.9 million for first quarter 2020.

For the first quarter of 2021, net interest income was $26.3 million, an increase of 22.4 percent from the $21.4 million reported in the prior-year first quarter and remained nearly unchanged compared to the linked quarter. The net interest margin for first quarter 2021 was 3.65 percent compared to 3.76 percent for both the linked quarter and the year-ago quarter. Excluding the impact of accretion and amortization of fair value acquisition accounting adjustments, Summit’s net interest margin would have been 3.60 percent for Q1 2021, 3.70 percent for Q4 2020 and 3.70 percent for Q1 2020.

Noninterest income, consisting primarily of service fee income from community banking activities and trust and wealth management fees, for first quarter 2021 was $4.97 million compared to $5.78 million for the linked quarter and $4.50 million for the comparable period of 2020, which included realized securities gains of $476,000 in Q1 2021, $912,000 in the linked quarter and $1.04 million in Q1 2020. Excluding realized securities gains, noninterest income was $4.50 million for first quarter 2021 and $3.46 million for first quarter 2020. Mortgage origination revenue was $998,000 in Q1 2021 compared to $1.16 million for Q4 2020 and $214,000 in Q1 2020 due to higher volumes of secondary market loans driven primarily by historically low interest rates.

We recorded a $1.50 million provision for credit losses during first quarter 2021 compared to $3.00 million for the linked quarter and $5.25 million in Q1 2020.

Q1 2021 total noninterest expense decreased 1.0 percent to $16.4 million compared to the linked quarter and increased 9.6 percent compared to $15.0 million for the prior-year first quarter. This year-over-year increase resulted primarily due to the acquisition of Cornerstone, MVB Bank branches and WinFirst during 2020. Additionally, other significant factors contributing to the changes in total noninterest expense period over period are as follows: decreased write downs of foreclosed properties to estimated fair values totaling $23,000 in Q1 2021 compared to $64,000 in Q4 2020 and $946,000 in Q1 2020, net losses on sales of foreclosed properties in Q1 2021 of $113,000 compared to $489,000 in Q4 2020 and net gains of $61,000 during Q1 2020 and deferred director compensation expense totaling $236,000 in Q1 2021, compared to $571,000 in Q4 2020 and income of $483,000 in Q1 2020.

Balance Sheet

At March 31, 2021, total assets were $3.25 billion, an increase of $141.8 million, or 4.6 percent since December 31, 2020. Total loans, net of unearned fees and allowance for loan losses, were $2.42 billion at March 31, 2021, up $38.1 million, or 1.6 percent, from the $2.38 billion reported at year-end 2020. Loans, excluding mortgage warehouse lines of credit and PPP loans, increased $135.8 million during the quarter, or 26.0 percent (annualized), while net mortgage warehouse lines and PPP loans decreased $83.2 million and $12.6 million, respectively.

At March 31, 2021, core deposits were $2.61 billion, an increase of $149.8 million, or 6.1 percent, since year end 2020. During Q1 2021, checking deposits increased $118.5 million or 8.6 percent, core time deposits declined by $4.0 million or 0.9 percent and savings deposits increased $35.3 million or 5.7 percent.

Shareholders’ equity was $293.4 million as of March 31, 2021 compared to $281.6 million at December 31, 2020.

Tangible book value per common share increased to $18.47 as of March 31, 2021 compared to $17.50 at December 31, 2020 and $17.17 at March 31, 2020. Summit had 12,950,714 outstanding common shares at Q1 2021 quarter end compared to 12,942,004 at year end 2020.

As announced in Q1 2020, the Board of Directors authorized the open market repurchase of up to 750,000 shares of the issued and outstanding shares of Summit's common stock. The timing and quantity of stock purchases under this repurchase plan are at the discretion of management. During Q1 2021, no shares of our common stock were repurchased under the Plan.

Asset Quality

We incurred net loan charge-offs of $189,000 in first quarter 2021 (0.03 percent of average loans annualized), compared to fourth quarter 2020 net loan charge-offs of $239,000 while $1.99 million and $2.34 million were added to the allowance for loan credit losses through the provision for credit losses during Q1 2021 and Q4 2020, respectively. The allowance for loan credit losses stood at 1.39 percent of total loans as of March 31, 2021, compared to 1.34 percent at year-end 2020.

During Q1 2021, we decreased our allowance for credit losses on unfunded loan commitments $485,000 primarily due to an improved economic forecast and during Q4 2020, we added $665,000 through the provision for credit losses.

As of March 31, 2021, nonperforming assets (“NPAs”), consisting of nonperforming loans, foreclosed properties and repossessed assets, totaled $39.3 million, or 1.21 percent of assets, which included a $3.3 million downgraded client relationship in the hospitality industry, compared to NPAs of $35.9 million, or 1.16 percent of assets at the linked quarter-end and $29.1 million, or 1.16 percent of assets at the end first quarter 2020. The Q1 2021 increase was partially offset by sales of $1.67 million of foreclosed properties during the quarter.

The following tables summarize the aggregate balances of loans the Company has modified as result of the COVID-19 pandemic as of March 31, 2021 and December 31, 2020 classified by types of loans and impacted borrowers.

			Loan Balances Modified Due to COVID-19 as of 3/31/2021
Dollars in thousands	Total LoanBalance as of3/31/2021		Loans Modifiedto Interest OnlyPayments		Loans Modifiedto PaymentDeferral		Total LoansModified		Percentageof LoansModified
Hospitality Industry	$	123,829	$	14,546	$	9,154	$	23,700	19.1	%
Non-Owner Occupied Retail Stores		146,837		7,223		-		7,223	4.9	%
Owner-Occupied Retail Stores		143,246		-		-		-	0.0	%
Restaurants		8,192		-		-		-	0.0	%
Oil & Gas Industry		16,831		-		-		-	0.0	%
Other Commercial Loans		1,235,204		-		581		581	0.0	%
Total Commercial Loans		1,674,139		21,769		9,735		31,504	1.9	%
Residential 1-4 Family Personal		292,846		12		2,282		2,294	0.8	%
Residential 1-4 Family Rentals		184,108		-		-		-	0.0	%
Home Equity Loans		77,684		-		-		-	0.0	%
Total Residential Real Estate Loans		554,638		12		2,282		2,294	0.4	%
Consumer Loans		32,924		-		76		76	0.2	%
Mortgage Warehouse Loans		187,995		-		-		-	0.0	%
Credit Cards and Overdrafts		2,375		-		-		-	0.0	%
Total Loans	$	2,452,071	$	21,781	$	12,093	$	33,874	1.4	%

			Loan Balances Modified Due to COVID-19 as of 12/31/2020
Dollars in thousands	Total LoanBalance as of12/31/2020		Loans Modifiedto Interest OnlyPayments		Loans Modifiedto PaymentDeferral		Total LoansModified		Percentage ofLoansModified
Hospitality Industry	$	121,502	$	40,513	$	12,930	$	53,443	44.0	%
Non-Owner Occupied Retail Stores		135,405		7,223		447		7,670	5.7	%
Owner-Occupied Retail Stores		126,451		2,317		1,246		3,563	2.8	%
Restaurants		7,481		-		-		-	0.0	%
Oil & Gas Industry		17,152		-		-		-	0.0	%
Other Commercial Loans		1,134,759		12,006		286		12,292	1.1	%
Total Commercial Loans		1,542,750		62,059		14,909		76,968	5.0	%
Residential 1-4 Family Personal		305,093		159		1,754		1,913	0.6	%
Residential 1-4 Family Rentals		194,612		148		73		221	0.1	%
Home Equity Loans		81,588		-		-		-	0.0	%
Total Residential Real Estate Loans		581,293		307		1,827		2,134	0.4	%
Consumer Loans		33,906		48		143		191	0.6	%
Mortgage Warehouse Loans		251,810		-		-		-	0.0	%
Credit Cards and Overdrafts		2,394		-		-		-	0.0	%
Total Loans	$	2,412,153	$	62,414	$	16,879	$	79,293	3.3	%

About the Company

Summit Financial Group, Inc. is a $3.25 billion financial holding company headquartered in Moorefield, West Virginia. Summit provides community banking services primarily in the Eastern Panhandle, Southern and North Central regions of West Virginia, the Northern, Shenandoah Valley and Southwestern regions of Virginia and the central region of Kentucky, through its bank subsidiary, Summit Community Bank, Inc., which operates 43 banking locations.

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: the effect of the COVID-19 pandemic, including the negative impacts and disruptions on the communities we serve, and the domestic and global economy, which may have an adverse effect on our business; current and future economic and market conditions, including the effects of declines in housing prices, high unemployment rates, U.S. fiscal debt, budget and tax matters, geopolitical matters, and any slowdown in global economic growth; fiscal and monetary policies of the Federal Reserve; future provisions for credit losses on loans and debt securities; changes in nonperforming assets; changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; the successful integration of operations of our acquisitions; 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)
Q1 2021 vs Q1 2020
		For the Quarter Ended					Percent
Dollars in thousands		3/31/2021			3/31/2020		Change
Statements of Income
	Interest income
	Loans, including fees	$	27,538		$	25,235	9.1	%
	Securities		2,157			2,310	-6.6	%
	Other		67			98	-31.6	%
	Total interest income		29,762			27,643	7.7	%
	Interest expense
	Deposits		2,496			5,351	-53.4	%
	Borrowings		1,014			849	19.4	%
	Total interest expense		3,510			6,200	-43.4	%
	Net interest income		26,252			21,443	22.4	%
	Provision for credit losses		1,500			5,250	n/m
	Net interest income after provision
	for credit losses		24,752			16,193	52.9	%
	Noninterest income
	Trust and wealth management fees		638			665	-4.1	%
	Mortgage origination revenue		998			214	366.4	%
	Service charges on deposit accounts		1,100			1,263	-12.9	%
	Bank card revenue		1,341			933	43.7	%
	Realized securities gains		476			1,038	-54.1	%
	Bank owned life insurance and annuity income		298			264	12.9	%
	Other income		123			125	-1.6	%
	Total noninterest income		4,974			4,502	10.5	%
	Noninterest expense
	Salaries and employee benefits		9,004			7,672	17.4	%
	Net occupancy expense		1,174			883	33.0	%
	Equipment expense		1,581			1,429	10.6	%
	Professional fees		338			387	-12.7	%
	Advertising and public relations		90			152	-40.8	%
	Amortization of intangibles		405			429	-5.6	%
	FDIC premiums		277			165	67.9	%
	Bank card expense		573			503	13.9	%
	Foreclosed properties expense, net		227			966	-76.5	%
	Merger-related expense		440			788	-44.2	%
	Other expenses		2,324			1,625	43.0	%
	Total noninterest expense		16,433			14,999	9.6	%
	Income before income taxes		13,293			5,696	133.4	%
	Income taxes		2,933			1,190	146.5	%
	Net income	$	10,360		$	4,506	129.9	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary (unaudited)
Q1 2021 vs Q1 2020
		For the Quarter Ended						Percent
		3/31/2021			3/31/2020			Change
Per Share Data
	Earnings per common share
	Basic	$	0.80		$	0.35		128.6	%
	Diluted	$	0.80		$	0.35		128.6	%
	Cash dividends	$	0.17		$	0.17		0.0	%
	Dividend payout ratio		20.6	%		49.1	%	-58.0	%
	Average common shares outstanding
	Basic		12,942,099			12,975,429		-0.3	%
	Diluted		13,002,062			13,028,409		-0.2	%
	Common shares outstanding at period end		12,950,714			12,920,244		0.2	%
Performance Ratios
	Return on average equity		14.51	%		6.92	%	109.7	%
	Return on average tangible equity		18.49	%		8.55	%	116.3	%
	Return on average assets		1.31	%		0.73	%	79.5	%
	Net interest margin (A)		3.65	%		3.76	%	-2.9	%
	Efficiency ratio (B)		49.79	%		51.41	%	-3.2	%

NOTE (A) – Presented on a tax-equivalent basis assuming a federal tax rate of 21%.

NOTE (B) – Computed on a tax equivalent basis excluding merger-related expenses, 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		3/31/2021		12/31/2020			9/30/2020			6/30/2020			3/31/2020
Statements of Income
	Interest income
	Loans, including fees	$	27,538		$	27,897		$	26,807		$	25,624		$	25,235
	Securities		2,157			2,228			2,382			2,253			2,310
	Other		67			51			57			60			98
	Total interest income		29,762			30,176			29,246			27,937			27,643
	Interest expense
	Deposits		2,496			2,956			3,552			4,186			5,351
	Borrowings		1,014			1,014			928			685			849
	Total interest expense		3,510			3,970			4,480			4,871			6,200
	Net interest income		26,252			26,206			24,766			23,066			21,443
	Provision for credit losses		1,500			3,000			3,250			3,000			5,250
	Net interest income after provision
	for credit losses		24,752			23,206			21,516			20,066			16,193
	Noninterest income
	Trust and wealth management fees		638			626			622			582			665
	Mortgage origination revenue		998			1,163			780			641			214
	Service charges on deposit accounts		1,100			1,305			1,138			882			1,263
	Bank card revenue		1,341			1,237			1,237			1,087			933
	Realized securities gains		476			912			1,522			-			1,038
	Bank owned life insurance and annuity income		298			233			795			275			264
	Other income		123			301			113			131			125
	Total noninterest income		4,974			5,777			6,207			3,598			4,502
	Noninterest expense
	Salaries and employee benefits		9,004			8,501			8,108			7,930			7,672
	Net occupancy expense		1,174			1,046			1,057			977			883
	Equipment expense		1,581			1,502			1,474			1,360			1,429
	Professional fees		338			370			364			417			387
	Advertising and public relations		90			207			145			93			152
	Amortization of intangibles		405			409			412			410			429
	FDIC premiums		277			261			320			110			165
	Bank card expense		573			573			589			560			503
	Foreclosed properties expense, net		227			676			607			240			966
	Merger-related expenses		440			218			28			637			788
	Other expenses		2,324			2,843			2,405			2,463			1,625
	Total noninterest expense		16,433			16,606			15,509			15,197			14,999
	Income before income taxes		13,293			12,377			12,214			8,467			5,696
	Income tax expense		2,933			2,126			2,594			1,518			1,190
	Net income	$	10,360		$	10,251		$	9,620		$	6,949		$	4,506

SUMMIT FINANCIAL GROUP, INC. (NASDAQ:  SMMF)
Five Quarter Performance Summary (unaudited)
		For the Quarter Ended
			3/31/2021				12/31/2020				9/30/2020				6/30/2020				3/31/2020
Per Share Data
	Earnings per common share
	Basic	$	0.80			$	0.79			$	0.74			$	0.54			$	0.35
	Diluted	$	0.80			$	0.79			$	0.74			$	0.54			$	0.35
	Cash dividends	$	0.17			$	0.17			$	0.17			$	0.17			$	0.17
	Dividend payout ratio		20.6	%			21.5	%			22.9	%			31.7	%			49.1	%
	Average common shares outstanding
	Basic		12,942,099				12,932,768				12,922,158				12,911,979				12,975,429
	Diluted		13,002,062				12,980,041				12,949,584				12,943,804				13,028,409
	Common shares outstanding at period end		12,950,714				12,942,004				12,932,415				12,922,045				12,920,244
Performance Ratios
	Return on average equity		14.51	%			14.90	%			14.38	%			10.75	%			6.92	%
	Return on average tangible equity		18.49	%			18.70	%			18.12	%			13.57	%			8.55	%
	Return on average assets		1.31	%			1.37	%			1.31	%			1.02	%			0.73	%
	Net interest margin (A)		3.65	%			3.76	%			3.64	%			3.68	%			3.76	%
	Efficiency ratio (B)		49.79	%			49.38	%			48.95	%			51.97	%			51.41	%

 

NOTE (A) – Presented on a tax-equivalent basis assuming a federal tax rate of 21%.

NOTE (B) – Computed on a tax equivalent basis excluding merger-related expenses, 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		3/31/2021			12/31/2020				9/30/2020				6/30/2020				3/31/2020
Assets
	Cash and due from banks	$	20,732			$	19,522			$	16,257			$	16,572			$	18,633
	Interest bearing deposits other banks		155,865				80,265				92,729				26,218				22,821
	Debt securities, available for sale		311,384				286,127				297,989				322,539				305,045
	Debt securities, held to maturity		99,457				99,914				91,600				80,497				-
	Loans, net		2,418,029				2,379,907				2,222,450				2,192,541				1,982,661
	Property held for sale		13,918				15,588				17,831				17,954				18,287
	Premises and equipment, net		53,289				52,537				52,880				51,847				47,078
	Goodwill and other intangible assets		54,239				55,123				48,101				48,513				34,132
	Cash surrender value of life insurance policies and annuities		59,740				59,438				57,029				55,315				46,497
	Other assets		61,482				57,963				49,996				49,355				38,168
	Total assets	$	3,248,135			$	3,106,384			$	2,946,862			$	2,861,351			$	2,513,322
Liabilities and Shareholders' Equity
	Deposits	$	2,725,010			$	2,595,651			$	2,451,891			$	2,451,769			$	2,044,914
	Short-term borrowings		140,145				140,146				140,145				90,945				161,745
	Long-term borrowings and
	subordinated debentures		49,681				49,652				50,292				20,297				20,301
	Other liabilities		39,854				39,355				32,571				34,909				30,337
	Shareholders' equity		293,445				281,580				271,963				263,431				256,025
	Total liabilities and shareholders' equity	$	3,248,135			$	3,106,384			$	2,946,862			$	2,861,351			$	2,513,322
	Book value per common share	$	22.66			$	21.76			$	21.03			$	20.39			$	19.82
	Tangible book value per common share	$	18.47			$	17.50			$	17.31			$	16.63			$	17.17
	Tangible common equity to tangible assets		7.5	%			7.4	%			7.7	%			7.6	%			9.0	%

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Regulatory Capital Ratios (unaudited)
		3/31/2021		12/31/2020		9/30/2020		6/30/2020		3/31/2020
Summit Financial Group, Inc.
	CET1 Risk-based Capital	9.3	%	9.3	%	9.9	%	9.7	%	10.8	%
	Tier 1 Risk-based Capital	10.1	%	10.0	%	10.7	%	10.5	%	11.7	%
	Total Risk-based Capital	12.1	%	12.1	%	12.9	%	11.3	%	12.5	%
	Tier 1 Leverage	8.5	%	8.6	%	8.7	%	9.0	%	10.2	%
Summit Community Bank, Inc.
	CET1 Risk-based Capital	11.1	%	11.1	%	11.8	%	10.5	%	11.7	%
	Tier 1 Risk-based Capital	11.1	%	11.1	%	11.8	%	10.5	%	11.7	%
	Total Risk-based Capital	12.0	%	12.0	%	12.7	%	11.4	%	12.5	%
	Tier 1 Leverage	9.3	%	9.5	%	9.6	%	9.0	%	10.2	%

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Loan Composition (unaudited)
Dollars in thousands		3/31/2021		12/31/2020			9/30/2020			6/30/2020			3/31/2020
Commercial		$	358,971		$	296,832		$	338,685		$	311,755		$	224,659
Mortgage warehouse lines			168,582			251,815			243,730			252,472			166,826
Commercial real estate
Owner occupied			358,200			351,859			312,502			336,143			331,486
Non-owner occupied			735,594			685,563			618,624			593,168			580,619
Construction and development
Land and development			106,312			107,342			97,343			92,706			92,332
Construction			126,011			91,100			66,878			48,115			43,121
Residential real estate
Conventional			411,103			425,520			368,008			371,225			378,540
Jumbo			65,851			74,185			73,836			76,360			64,944
Home equity			77,684			81,588			82,991			88,929			75,170
Consumer			34,083			35,269			35,905			35,781			36,611
Other			9,680			11,080			13,302			13,053			12,961
Total loans, net of unearned fees			2,452,071			2,412,153			2,251,804			2,219,707			2,007,269
Less allowance for credit losses			34,042			32,246			29,354			27,166			24,608
Loans, net		$	2,418,029		$	2,379,907		$	2,222,450		$	2,192,541		$	1,982,661

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Deposit Composition (unaudited)
Dollars in thousands		3/31/2021		12/31/2020			9/30/2020			6/30/2020			3/31/2020
Core deposits
Non-interest bearing checking		$	505,264		$	440,819		$	420,070		$	443,190		$	337,446
Interest bearing checking			988,204			934,185			867,442			830,258			648,214
Savings			656,514			621,168			598,564			561,029			457,010
Time deposits			456,431			460,443			414,542			422,286			384,062
Total core deposits			2,606,413			2,456,615			2,300,618			2,256,763			1,826,732
Brokered time deposits			39,125			55,454			64,120			90,279			111,156
Other non-core time deposits			79,472			83,582			87,153			104,727			107,026
Total deposits		$	2,725,010		$	2,595,651		$	2,451,891		$	2,451,769		$	2,044,914

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Asset Quality Information (unaudited)
		For the Quarter Ended
Dollars in thousands		3/31/2021			12/31/2020				9/30/2020				6/30/2020				3/31/2020
	Gross loan charge-offs	$	354			$	434			$	1,259			$	218			$	698
	Gross loan recoveries		(165	)			(195	)			(245	)			(269	)			(197	)
	Net loan charge-offs/(recoveries)	$	189			$	239			$	1,014			$	(51	)		$	501
	Net loan charge-offs to average loans (annualized)		0.03	%			0.04	%			0.18	%			-0.01	%			0.10	%
	Allowance for loan credit losses	$	34,042			$	32,246			$	29,354			$	27,166			$	24,608
	Allowance for loan credit losses as a percentage
	of period end loans		1.39	%			1.34	%			1.30	%			1.22	%			1.23	%
	Allowance for credit losses on
	unfunded loan commitments	$	3,705			$	4,190			$	3,525			$	3,477			$	2,984
	Nonperforming assets:
	Nonperforming loans
	Commercial	$	848			$	525			$	553			$	754			$	560
	Commercial real estate		17,137				14,237				4,313				5,822				5,644
	Residential construction and development		626				235				2				14				11
	Residential real estate		6,667				5,264				5,104				5,873				4,343
	Consumer		54				74				31				29				65
	Other		-				-				-				35				100
	Total nonperforming loans		25,332				20,335				10,003				12,527				10,723
	Foreclosed properties
	Commercial real estate		2,281				2,581				2,500				1,774				1,866
	Commercial construction and development		3,884				4,154				4,154				4,511				4,511
	Residential construction and development		7,129				7,791				10,330				10,645				10,774
	Residential real estate		624				1,062				847				1,024				1,136
	Total foreclosed properties		13,918				15,588				17,831				17,954				18,287
	Other repossessed assets		-				-				-				-				49
	Total nonperforming assets	$	39,250			$	35,923			$	27,834			$	30,481			$	29,059
	Nonperforming loans to period end loans		1.03	%			0.84	%			0.44	%			0.56	%			0.53	%
	Nonperforming assets to period end assets		1.21	%			1.16	%			0.94	%			1.07	%			1.16	%
	Troubled debt restructurings
	Performing	$	20,462			$	21,375			$	22,232			$	22,117			$	22,966
	Nonperforming		3,828				3,127				2,988				3,003				2,831
	Total troubled debt restructurings	$	24,290			$	24,502			$	25,220			$	25,120			$	25,797

Loans Past Due 30-89 Days (unaudited)
		For the Quarter Ended
Dollars in thousands		3/31/2021		12/31/2020			9/30/2020			6/30/2020			3/31/2020
	Commercial	$	335		$	1		$	147		$	196		$	160
	Commercial real estate		508			274			1,740			1,231			2,106
	Construction and development		330			47			422			8			53
	Residential real estate		2,146			4,405			4,464			2,763			5,178
	Consumer		96			233			160			164			222
	Other		3			5			2			3			7
	Total	$	3,418		$	4,965		$	6,935		$	4,365		$	7,726

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q1 2021 vs Q4 2020 vs Q1 2020 (unaudited)
	Q1 2021									Q4 2020									Q1 2020
	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	$	2,355,705		$	27,419		4.72	%		$	2,292,797		$	27,774		4.82	%		$	1,935,473		$	25,089		5.21	%
Tax-exempt (2)		12,679			151		4.83	%			13,062			156		4.75	%			14,873			185		5.00	%
Securities
Taxable		266,289			1,295		1.97	%			258,594			1,341		2.06	%			258,889			1,757		2.73	%
Tax-exempt (2)		144,880			1,091		3.05	%			147,979			1,122		3.02	%			70,239			699		4.00	%
Interest bearing deposits other banks
and Federal funds sold		166,531			67		0.16	%			87,151			51		0.23	%			35,648			98		1.11	%
Total interest earning assets		2,946,084			30,023		4.13	%			2,799,583			30,444		4.33	%			2,315,122			27,828		4.83	%
Noninterest earning assets
Cash & due from banks		17,961									16,846									14,422
Premises & equipment		53,317									52,688									46,151
Other assets		167,343									157,436									120,846
Allowance for credit losses		(32,706	)								(30,778	)								(20,452	)
Total assets	$	3,151,999								$	2,995,775								$	2,476,089
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	960,190		$	394		0.17	%		$	895,325		$	357		0.16	%		$	643,955		$	1,081		0.68	%
Savings deposits		642,241			645		0.41	%			607,481			716		0.47	%			449,021			1,337		1.20	%
Time deposits		583,723			1,457		1.01	%			566,917			1,883		1.32	%			615,102			2,933		1.92	%
Short-term borrowings		140,146			469		1.36	%			140,243			467		1.32	%			119,607			630		2.12	%
Long-term borrowings and
subordinated debentures		49,664			545		4.45	%			49,637			547		4.38	%			20,304			219		4.34	%
Total interest bearing liabilities		2,375,964			3,510		0.60	%			2,259,603			3,970		0.70	%			1,847,989			6,200		1.35	%
Noninterest bearing liabilities
Demand deposits		451,957									426,441									339,340
Other liabilities		38,393									34,558									28,400
Total liabilities		2,866,314									2,720,602									2,215,729
Shareholders' equity		285,685									275,173									260,360
Total liabilities and
shareholders' equity	$	3,151,999								$	2,995,775								$	2,476,089
NET INTEREST EARNINGS				$	26,513								$	26,474								$	21,628
NET INTEREST MARGIN							3.65	%								3.76	%								3.76	%
(1) - For purposes of this table, nonaccrual loans are included in average loan balances.
(2) - Interest income on tax-exempt securities and loans has been adjusted assuming a Federal tax rate of 21% for all periods presented. The tax equivalent adjustment resulted in an increase in interest income of $260,000, $268,000, and $185,000 for Q1 2021,

Contact:	Robert S. Tissue, Executive Vice President & CFO
Telephone:	(304) 530-0552
Email:	rtissue@summitfgi.com