SMMF Summit Financial Group Inc

Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ: SMMF) today reported continued strong financial results for the fourth quarter of 2021, including growth in earnings, net interest income, revenue, and commercial and total loans to new record levels, while maintaining sustained asset quality strength and expense discipline.

The Company, which serves commercial and individual clients across West Virginia, the Washington metropolitan area, Virginia and Kentucky through Summit Community Bank, Inc., grew fourth quarter 2021 net income applicable to common shares to $12.4 million, or $0.95 per diluted share. Earnings increased 2.8 percent from $12.0 million, or $0.92 per diluted share, in the third quarter of 2021 and 20.5 percent from $10.3 million, or $0.79 per share, in the fourth quarter of 2020. For the year ended December 31, 2021, Summit grew earnings by 44.1 percent to $45.1 million, or $3.47 per share, from $31.3 million, or $2.41 per share in 2020.  

“We believe we have some of the best bankers in the markets we serve, which has been key to our ability to accelerate organic loan growth through the fourth quarter and position us well with significant commercial new business pipelines heading into 2022,” said H. Charles Maddy, III, President and Chief Executive Officer. “We also continued to manage the balance sheet to maximize profitability while maintaining our low operating expense advantage relative to peers.”

Highlights for Q4 2021

• Total loans, excluding mortgage warehouse lines of credit and Paycheck Protection Program (“PPP”) lending, increased 6.4 percent, or 25.7 percent annualized, during the quarter and 20.9 percent during the year.
• Commercial loans excluding PPP lending increased 8.6 percent (34.4 percent annualized) during the quarter and 34.3 percent during 2021.
• Net interest income increased 2.8 percent from the linked quarter and 10.0 percent from the year-ago period, primarily due to loan growth and lower funding costs.
• Net interest margin (“NIM”) increased 2 basis points to 3.49 percent from the linked quarter, as yield on interest earning assets increased 3 basis points while the cost of funds increased 1 basis point. Summit remains strategically well positioned for a rising rate environment.
• Revenue from net interest income and noninterest income, excluding gains and losses on debt securities and equity investments, grew 6.2 percent from the linked quarter and 11.7 percent from the year-ago quarter.
• Incurred $1.5 million provision for credit losses in the quarter compared to none in the linked quarter and $3.0 million in the year-ago quarter; period-end allowance for loan credit losses equaled $32.3 million, or 1.17 percent of total loans and 254.4 percent of nonperforming loans.
• Grew pre-tax, pre-provision earnings 10.5 percent from the linked quarter and 9.6 percent from the year-ago quarter.
• Achieved an efficiency ratio of 49.04 percent and annualized non-interest expense of 2.02 percent of average assets.
• Reduced property held for sale by 20.8 percent during the quarter and 36.8 percent from December 31, 2020.
• Reduced nonperforming assets (“NPAs”) to 0.63 percent of total assets, excluding restructured assets, down 4 basis points during the quarter and 53 basis points from December 31, 2020.
• Issued $75 million of growth capital through the private placement of 3.25% Fixed-to-Floating Rate Subordinated Notes due 2031.

Results from Operations

Net interest income grew to $28.8 million in the fourth quarter of 2021, an increase of 2.8 percent from the linked quarter and 10.0 percent from the prior-year fourth quarter. NIM for fourth quarter of 2021 was 3.49 percent compared to 3.47 percent for the linked quarter and 3.76 percent for 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 3.45 percent for the fourth quarter of 2021, 3.41 percent for the linked quarter and 3.70 percent for the year-ago period.

Noninterest income, consisting primarily of service fee income from community banking activities and trust and wealth management fees, for fourth quarter 2021 was $6.0 million compared to $4.6 million for the linked quarter and $5.8 million for the comparable period of 2020. The Company recorded realized securities losses on debt securities of $109,000 and $68,000 in the fourth quarter and linked quarter of 2021, respectively, and gains of $912,000 in the year-ago quarter. In addition, we recognized a gain on equity investments of $202,000 in Q4 2021.

Mortgage origination revenue was $1.4 million in the fourth quarter of 2021, including an $879,000 increase in the fair value of mortgage servicing rights, compared to $742,000 for the linked quarter and $1.2 million for the year-ago period, including a positive $284,000 mortgage servicing rights fair value adjustment. Year-to-date, mortgage origination revenue grew to $4.0 million, increasing 42.9 percent from 2020.

Excluding gains and losses on debt securities and equity investments and mortgage servicing rights fair value adjustments, noninterest income was $5.0 million in fourth quarter 2021 compared to $4.6 million in the linked quarter and $4.6 million in the year-ago quarter.

Revenue from net interest income and noninterest income, excluding gains and losses on debt securities and equity investments and mortgage servicing rights fair value adjustments, grew to $33.8 million, up 3.5 percent from $32.7 million in the linked quarter and 9.8 percent from $30.8 million in the year-ago quarter. Revenue, excluding gains and losses on debt securities and equity investments and mortgage servicing rights fair value adjustments, for the full year 2021, grew to $128.6 million, up 15.0 percent from 2020 and outpacing the 10.3 percent noninterest expense increase.

Total noninterest expense increased to $17.9 million in the fourth quarter of 2021, up 3.3 percent from $17.3 million in the linked quarter and 8.0 percent from $16.6 million for the prior-year fourth quarter, reflecting acquisition-related expenses primarily from Summit’s recently completed branch acquisitions, as well as ongoing operating costs for its December 2020 purchase of Kentucky’s WinFirst Bank.

Salary and benefit expenses of $9.0 million in the fourth quarter of 2021 increased from $8.7 million in the linked quarter, while acquisitions closed in December 2020 and July 2021 contributed to an increase from $8.3 million in the year-ago period.

Additionally, other significant factors contributing to the changes in total noninterest expense in the fourth quarter of 2021 were:   equipment expense of $1.9 million compared to $1.9 million for the linked quarter and $1.5 million for the year-ago period, foreclosed properties expense of $403,000 compared to $370,000 in the linked quarter and $676,000 in the year-ago period, as well as other expenses of $3.3 million compared to $2.7 million for the linked quarter and $3.1 million in the year-ago period. The changes in these other expenses include:

• Fraud and robbery losses of $190,000 during Q4 2021 compared to $36,000 and $86,000 in the linked and year-ago quarters, respectively;
• Virginia franchise tax of $228,000 during Q4 2021 compared to $137,000 and $95,000 in the linked and year-ago quarters, respectively;
• Debit card processing expenses of $340,000 during Q4 2021 compared to $343,000 and $259,000 in the linked and year-ago quarters, respectively; and
• Internet banking expenses of $322,000 during Q4 2021 compared to $306,000 and $279,000 in the linked and year-ago quarters, respectively.

Summit’s efficiency ratio was 49.04 percent in the fourth quarter of 2021 compared to 49.53 percent in the linked quarter and 48.93 percent for the year-ago period. Non-interest expense was 2.02 percent of average assets in the fourth quarter of 2021, compared to 2.01 percent during the linked quarter and 2.22 percent in the year-ago period.

Balance Sheet

At December 31, 2021, total assets were $3.58 billion, an increase of $67.8 million, or 1.9 percent, during the fourth quarter and $470.3 million, or 15.1 percent since December 31, 2020.

Total loans net of unearned fees grew to $2.76 billion on December 31, 2021, increasing 8.1 percent during the fourth quarter and 14.5 percent year-to-date. Excluding PPP and mortgage warehouse lending, total loans grew to $2.52 billion on December 31, 2021, increasing 6.4 percent during the fourth quarter and 20.9 percent year-to-date.

Total commercial loans, including commercial and industrial (C&I) and commercial real estate (CRE) and excluding PPP lending, grew to $1.7 billion on December 31, 2021, increasing 8.6 percent during the fourth quarter and 34.3 percent year-to-date. Residential real estate and consumer lending totaled $567.9 million on December 31, 2021, down 0.5 percent during the fourth quarter and 7.7 percent year-to-date.

PPP balances paid down to $12.8 million on December 31, 2021 from a peak of $98.5 million on September 30, 2020. Mortgage warehouse lines of credit, sourced solely from a participation arrangement with a large regional bank, were $227.9 million on December 31, 2021 compared to a peak of $252.5 million on June 30, 2020.

As Summit deployed excess liquidity to enhance profitability and fund continued loan growth, it lowered total deposits to $2.94 billion on December 31, 2021, down 0.4 percent during the fourth quarter.   Total deposits grew 13.4 percent year-to-date. Core deposits decreased to $2.85 billion on December 31, 2021 compared to the linked quarter, decreasing 0.4 percent during the fourth quarter and grew 15.9 percent year-to-date.

Total shareholders’ equity was $327.5 million as of December 31, 2021 compared to $323.3 million at September 30, 2021 and $281.6 million at December 31, 2020. During the fourth quarter of 2021, Summit raised $75 million of growth capital through the private placement of 3.25% Fixed-to-Floating Rate Subordinated Notes due 2031.

Tangible book value per common share increased to $19.54 as of December 31, 2021 compared to $18.83 at September 30, 2021 and $17.50 at December 31, 2020. Summit had 12,743,125 outstanding common shares at the end of the fourth quarter of 2021 compared to 12,976,693 at the end of the linked quarter and 12,942,004 at year-end 2020.

As announced in the first quarter of 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 the fourth quarter of 2021, 248,244 shares of Summit’s common stock were repurchased under the Plan at an average price of $26.95 per share.

Asset Quality

Net loan charge-offs (“NCOs”) were $193,000, or 0.03 percent of average loans annualized, in the fourth quarter of 2021. NCOs of $370,000 represented 0.06 percent of average loans annualized in the linked quarter, and $239,000 or 0.04 percent of average loans annualized for fourth quarter 2020.

Summit recorded $1.5 million provision for credit losses in the fourth quarter of 2021, reflecting reserve build to support our substantial growth in both loans and unfunded loan commitments, partially offset by reserve reductions due to improving forecasted economic factors. The provision for credit losses was zero and $3.0 million for the linked and year-ago quarters, respectively.

Summit’s allowance for loan credit losses and allowance for credit losses on unfunded loan commitments were $32.3 million and $7.28 million, respectively, as of December 31, 2021, compared to $32.4 million and $5.86 million, respectively, at the end of the linked quarter. The allowance for loan credit losses declined just slightly in Q4 2021 as the impact of improving forecasted economic factors served to offset fully the additional provisions for credit losses resulting from the significant volumes of new loans. The allowance for credit losses on unfunded loan commitments increased $1.42 million during the most recent quarter, principally as result of the recent strong volumes of construction loan commitments having a higher historical loss ratio than do our other loans as a whole.

The allowance for loan credit losses stood at 1.17 percent of total loans at year-end 2021 compared to1.27 percent at September 30, 2021 and 1.34 percent at December 31, 2020.

As of December 31, 2021, NPAs consisting of nonperforming loans, foreclosed properties and repossessed assets, totaled $22.6 million, or 0.63 percent of assets, compared to $23.6 million, or 0.67 percent of assets at the linked quarter-end and $35.9 million, or 1.16 percent of assets at the end 2020. During January 2022, we closed on the sale of a foreclosed residential land development project carried on the balance sheet at $2.00 million in property held for sale at year-end 2021 and realized a gain of $201,000 as a result of the sale.

About the Company

Summit Financial Group, Inc. is the $3.58 billion financial holding company for Summit Community Bank, Inc. Its talented bankers serve commercial and individual clients throughout West Virginia, the Washington, D.C. metropolitan area, Virginia, and Kentucky. Summit’s focus on in-market commercial lending and providing other business banking services in dynamic markets is designed to leverage its highly efficient operations and core deposits in strong legacy locations. Residential and consumer lending, trust and wealth management, and other retail financial services are offered through convenient digital and mobile banking platforms, including MySummit.Bank, and 45 full-service branch locations. More information on Summit Financial Group, Inc. (NASDAQ: SMMF), headquartered in West Virginia’s Eastern Panhandle in Moorefield, is available at SummitFGI.com.

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)
Q4 2021 vs Q4 2020
		For the Quarter Ended					Percent
Dollars in thousands		12/31/2021			12/31/2020		Change
Statements of Income
	Interest income
	Loans, including fees	$	28,979		$	27,897	3.9	%
	Securities		2,763			2,228	24.0	%
	Other		75			51	47.1	%
	Total interest income		31,817			30,176	5.4	%
	Interest expense
	Deposits		1,718			2,956	-41.9	%
	Borrowings		1,267			1,014	25.0	%
	Total interest expense		2,985			3,970	-24.8	%
	Net interest income		28,832			26,206	10.0	%
	Provision for credit losses		1,500			3,000	n/m
	Net interest income after provision
	for credit losses		27,332			23,206	17.8	%
	Noninterest income
	Trust and wealth management fees		847			626	35.3	%
	Mortgage origination revenue		1,361			1,163	17.0	%
	Service charges on deposit accounts		1,501			1,305	15.0	%
	Bank card revenue		1,528			1,237	23.5	%
	Gains on equity investments		202			-	n/a
	Realized gains/(losses) on debt securities, net		(109	)		912	-112.0	%
	Bank owned life insurance and annuity income		293			233	25.8	%
	Other income		330			301	9.6	%
	Total noninterest income		5,953			5,777	3.0	%
	Noninterest expense
	Salaries and employee benefits		8,977			8,250	8.8	%
	Net occupancy expense		1,265			1,046	20.9	%
	Equipment expense		1,902			1,502	26.6	%
	Professional fees		438			370	18.4	%
	Advertising and public relations		216			207	4.3	%
	Amortization of intangibles		387			409	-5.4	%
	FDIC premiums		330			261	26.4	%
	Bank card expense		703			573	22.7	%
	Foreclosed properties expense, net		403			676	-40.4	%
	Acquisition-related expense		57			218	-73.9	%
	Other expenses		3,250			3,094	5.0	%
	Total noninterest expense		17,928			16,606	8.0	%
	Income before income taxes		15,357			12,377	24.1	%
	Income taxes		2,777			2,126	30.6	%
	Net income		12,580			10,251	22.7	%
	Preferred stock dividends		225			-	n/a
	Net income applicable to common shares	$	12,355		$	10,251	20.5	%

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary (unaudited)
Q4 2021 vs Q4 2020
		For the Quarter Ended						Percent
		12/31/2021			12/31/2020			Change
Per Share Data
	Earnings per common share
	Basic	$	0.96		$	0.79		21.5	%
	Diluted	$	0.95		$	0.79		20.3	%
	Cash dividends per common share	$	0.18		$	0.17		5.9	%
	Common stock dividend payout ratio		18.3%			21.5%		-15.1	%
	Average common shares outstanding
	Basic		12,916,555			12,932,768		-0.1	%
	Diluted		12,976,181			12,980,041		-0.0	%
	Common shares outstanding at period end		12,743,125			12,942,004		-1.5	%
Performance Ratios
	Return on average equity		15.48%			14.90%		3.9	%
	Return on average tangible equity (C)		19.72%			18.70%		5.5	%
	Return on average tangible common equity (D)		20.91%			18.70%		11.8	%
	Return on average assets		1.42%			1.37%		3.6	%
	Net interest margin (A)		3.49%			3.76%		-7.2	%
	Efficiency ratio (B)		49.04%			48.93%		0.2	%

NOTES

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

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

(C) – Return on average tangible equity = (Net income – Amortization of intangibles [after-tax]) / (Average shareholders’ equity – Average intangible assets).

(D) – Return on average tangible common equity = (Net income – Amortization of intangibles [after-tax]) / (Average common shareholders’ equity – Average intangible assets).

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Annual Performance Summary (unaudited)
2021 vs 2020
		For the Year Ended						Percent
Dollars in thousands		12/31/2021			12/31/2020			Change
Statements of Income
	Interest income
	Loans, including fees	$	112,630		$	105,564		6.7	%
	Securities		9,470			9,173		3.2	%
	Other		316			266		18.8	%
	Total interest income		122,416			115,003		6.4	%
	Interest expense
	Deposits		8,182			16,044		-49.0	%
	Borrowings		4,302			3,477		23.7	%
	Total interest expense		12,484			19,521		-36.0	%
	Net interest income		109,932			95,482		15.1	%
	Provision for credit losses		4,000			14,500		n/m
	Net interest income after provision
	for credit losses		105,932			80,982		30.8	%
	Noninterest income
	Trust and wealth management fees		2,886			2,495		15.7	%
	Mortgage origination revenue		3,999			2,799		42.9	%
	Service charges on deposit accounts		5,032			4,588		9.7	%
	Bank card revenue		5,896			4,494		31.2	%
	Gains on equity investments		202			-		n/a
	Realized gains on debt securities, net		425			3,472		-87.8	%
	Bank owned life insurance and annuity income		1,026			1,567		-34.5	%
	Other income		742			668		11.1	%
	Total noninterest income		20,208			20,083		0.6	%
	Noninterest expense
	Salaries and employee benefits		34,386			32,211		6.8	%
	Net occupancy expense		4,824			3,963		21.7	%
	Equipment expense		6,990			5,765		21.2	%
	Professional fees		1,578			1,538		2.6	%
	Advertising and public relations		697			596		16.9	%
	Amortization of intangibles		1,563			1,659		-5.8	%
	FDIC premiums		1,449			856		69.3	%
	Bank card expense		2,668			2,225		19.9	%
	Foreclosed properties expense, net		1,745			2,490		-29.9	%
	Acquisition-related expense		1,224			1,671		-26.8	%
	Other expenses		11,615			9,337		24.4	%
	Total noninterest expense		68,739			62,311		10.3	%
	Income before income taxes		57,401			38,754		48.1	%
	Income taxes		11,663			7,428		57.0	%
	Net income		45,738			31,326		46.0	%
	Preferred stock dividends		589			-		n/a
	Net income applicable to common shares	$	45,149		$	31,326		44.1	%

    

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Annual Performance Summary (unaudited)
2021 vs 2020
		For the Year Ended						Percent
		12/31/2021			12/31/20020			Change
Per Share Data
	Earnings per common share
	Basic	$	3.49		$	2.42		44.2	%
	Diluted	$	3.47		$	2.41		44.0	%
	Cash dividends per common share	$	0.70		$	0.68		2.9	%
	Common stock dividend payout ratio		19.9%			28.2%		-29.6	%
	Average common shares outstanding
	Basic		12,943,883			12,935,430		0.1	%
	Diluted		13,003,428			12,975,385		0.2	%
	Common shares outstanding at period end		12,743,125			12,942,004		-1.5	%
Performance Ratios
	Return on average equity		14.76%			11.80%		25.1	%
	Return on average tangible equity (C)		18.71%			14.73%		27.0	%
	Return on average tangible common equity (D)		19.51%			14.73%		32.5	%
	Return on average assets		1.36%			1.13%		20.4	%
	Net interest margin (A)		3.54%			3.71%		-4.6	%
	Efficiency ratio (B)		49.22%			50.00%		-1.6	%

NOTES

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

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

(C) – Return on average tangible equity = (Net income – Amortization of intangibles [after-tax]) / (Average shareholders’ equity – Average intangible assets).

(D) – Return on average tangible common equity = (Net income – Amortization of intangibles [after-tax]) / (Average common shareholders’ equity – Average intangible assets).

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Five Quarter Performance Summary (unaudited)
		For the Quarter Ended
Dollars in thousands		12/31/2021			9/30/2021			6/30/2021			3/31/2021			12/31/2020
Statements of Income
	Interest income
	Loans, including fees	$	28,979		$	28,416		$	27,697		$	27,538		$	27,897
	Securities		2,763			2,348			2,202			2,157			2,228
	Other		75			118			56			67			51
	Total interest income		31,817			30,882			29,955			29,762			30,176
	Interest expense
	Deposits		1,718			1,832			2,136			2,496			2,956
	Borrowings		1,267			1,013			1,008			1,014			1,014
	Total interest expense		2,985			2,845			3,144			3,510			3,970
	Net interest income		28,832			28,037			26,811			26,252			26,206
	Provision for credit losses		1,500			-			1,000			1,500			3,000
	Net interest income after provision
	for credit losses		27,332			28,037			25,811			24,752			23,206
	Noninterest income
	Trust and wealth management fees		847			718			683			638			626
	Mortgage origination revenue		1,361			742			898			998			1,163
	Service charges on deposit accounts		1,501			1,338			1,093			1,100			1,305
	Bank card revenue		1,528			1,509			1,519			1,341			1,237
	Gains on equity investments		202			-			-			-			-
	Realized gains/(losses) on debt securities, net		(109	)		(68	)		127			476			912
	Bank owned life insurance and annuity income		293			160			275			298			233
	Other income		330			168			120			123			301
	Total noninterest income		5,953			4,567			4,715			4,974			5,777
	Noninterest expense
	Salaries and employee benefits		8,977			8,745			8,230			8,435			8,250
	Net occupancy expense		1,265			1,254			1,131			1,174			1,046
	Equipment expense		1,902			1,908			1,598			1,581			1,502
	Professional fees		438			374			428			338			370
	Advertising and public relations		216			254			138			90			207
	Amortization of intangibles		387			390			382			405			409
	FDIC premiums		330			354			488			277			261
	Bank card expense		703			705			685			573			573
	Foreclosed properties expense, net		403			370			746			227			676
	Acquisition-related expenses		57			273			454			440			218
	Other expenses		3,250			2,716			2,756			2,893			3,094
	Total noninterest expense		17,928			17,343			17,036			16,433			16,606
	Income before income taxes		15,357			15,261			13,490			13,293			12,377
	Income tax expense		2,777			3,023			2,930			2,933			2,126
	Net income		12,580			12,238			10,560			10,360			10,251
	Preferred stock dividends		225			225			139			-			-
	Net income applicable to common shares	$	12,355		$	12,013		$	10,421		$	10,360		$	10,251

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Five Quarter Performance Summary (unaudited)
		For the Quarter Ended
		12/31/2021			9/30/2021			6/30/2021			3/31/2021			12/31/2020
Per Share Data
	Earnings per common share
	Basic	$	0.96		$	0.93		$	0.80		$	0.80		$	0.79
	Diluted	$	0.95		$	0.92		$	0.80		$	0.80		$	0.79
	Cash dividends per common share	$	0.18		$	0.18		$	0.17		$	0.17		$	0.17
	Common stock dividend payout ratio		18.5%			19.1%			21.2%			20.6%			21.5%
	Average common shares outstanding
	Basic		12,916,555			12,964,575			12,952,357			12,942,099			12,932,768
	Diluted		12,976,181			13,018,672			13,013,714			13,002,062			12,980,041
	Common shares outstanding at period end		12,743,125			12,976,693			12,963,057			12,950,714			12,942,004
Performance Ratios
	Return on average equity		15.48%			15.30%			13.67%			14.51%			14.90%
	Return on average tangible equity (C)		19.72%			19.51%			17.03%			18.49%			18.70%
	Return on average tangible common equity (D)		20.91%			20.71%			17.59%			18.49%			18.70%
	Return on average assets		1.42%			1.42%			1.29%			1.31%			1.37%
	Net interest margin (A)		3.49%			3.47%			3.55%			3.65%			3.76%
	Efficiency ratio (B)		49.04%			49.53%			48.82%			49.50%			48.93%

NOTES

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

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

(C) – Return on average tangible equity = (Net income – Amortization of intangibles [after-tax]) / (Average shareholders’ equity – Average intangible assets).

(D) – Return on average tangible common equity = (Net income – Amortization of intangibles [after-tax]) / (Average common shareholders’ equity – Average intangible assets).

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Selected Balance Sheet Data (unaudited)
Dollars in thousands, except per share amounts		12/31/2021			9/30/2021			6/30/2021			3/31/2021			12/31/2020
Assets
	Cash and due from banks	$	21,006		$	21,247		$	18,707		$	20,732		$	19,522
	Interest bearing deposits other banks		57,452			189,862			176,282			155,865			80,265
	Debt securities, available for sale		401,103			424,741			345,742			311,384			286,127
	Debt securities, held to maturity		98,060			98,528			98,995			99,457			99,914
	Equity investments		20,202			-			-			-			-
	Other investments		11,304			10,649			10,661			10,776			14,185
	Loans, net		2,729,093			2,521,704			2,395,885			2,418,029			2,379,907
	Property held for sale		9,858			12,450			13,170			13,918			15,588
	Premises and equipment, net		56,371			56,818			53,104			53,289			52,537
	Goodwill and other intangible assets		63,590			63,977			53,858			54,239			55,123
	Cash surrender value of life insurance policies and annuities		60,613			60,241			60,087			59,740			59,438
	Other assets		48,067			48,734			46,042			50,706			43,778
	Total assets	$	3,576,719		$	3,508,951		$	3,272,533		$	3,248,135		$	3,106,384
Liabilities and Shareholders' Equity
	Deposits	$	2,943,089		$	2,955,940		$	2,729,205		$	2,725,010		$	2,595,651
	Short-term borrowings		140,146			140,146			140,146			140,145			140,146
	Long-term borrowings and
	subordinated debentures		123,159			49,739			49,710			49,681			49,652
	Other liabilities		42,852			39,837			38,265			39,854			39,355
	Shareholders' equity - preferred		14,920			14,920			14,920			-			-
	Shareholders' equity - common		312,553			308,369			300,287			293,445			281,580
	Total liabilities and shareholders' equity	$	3,576,719		$	3,508,951		$	3,272,533		$	3,248,135		$	3,106,384
	Book value per common share	$	24.53		$	23.76		$	23.16		$	22.66		$	21.76
	Tangible book value per common share (A)	$	19.54		$	18.83		$	19.01		$	18.47		$	17.50
	Tangible common equity to tangible assets (B)		7.1%			7.1%			7.7%			7.5%			7.4%

NOTES(A) – Tangible book value per share = (Common shareholders’ equity – Intangible assets) / Common shares outstanding.(B) – Tangible common equity to tangible assets = (Common shareholders’ equity – Intangible assets) / (Total assets – Intangible assets).

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Regulatory Capital Ratios (unaudited)
		12/31/2021		9/30/2021		6/30/2021		3/31/2021		12/31/2020
Summit Financial Group, Inc.
	CET1 Risk-based Capital	8.4	%	9.0	%	9.6	%	9.3	%	9.3	%
	Tier 1 Risk-based Capital	9.5	%	10.2	%	10.9	%	10.1	%	10.0	%
	Total Risk-based Capital	13.8	%	12.1	%	13.0	%	12.1	%	12.1	%
	Tier 1 Leverage	8.3	%	8.4	%	8.9	%	8.5	%	8.6	%
Summit Community Bank, Inc.
	CET1 Risk-based Capital	11.9	%	11.2	%	11.9	%	11.1	%	11.1	%
	Tier 1 Risk-based Capital	11.9	%	11.2	%	11.9	%	11.1	%	11.1	%
	Total Risk-based Capital	12.8	%	12.1	%	12.9	%	12.0	%	12.0	%
	Tier 1 Leverage	10.4	%	9.2	%	9.7	%	9.3	%	9.5	%

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Loan Composition (unaudited)
Dollars in thousands		12/31/2021			9/30/2021			6/30/2021			3/31/2021			12/31/2020
Commercial		$	365,301		$	317,855		$	326,468		$	348,022		$	306,885
Mortgage warehouse lines			227,869			161,628			105,288			187,995			251,810
Commercial real estate
Owner occupied			484,708			439,202			392,164			358,200			351,860
Non-owner occupied			866,031			835,071			784,415			735,594			685,565
Construction and development
Land and development			100,805			99,718			102,670			106,312			107,342
Construction			146,038			127,432			140,788			126,011			91,100
Residential real estate
Conventional			384,794			394,889			398,239			411,103			425,519
Jumbo			79,108			71,977			71,694			65,851			74,185
Home equity			72,112			71,496			72,956			77,684			81,588
Consumer			31,923			32,284			32,732			32,924			33,906
Other			2,702			2,558			2,356			2,375			2,393
Total loans, net of unearned fees			2,761,391			2,554,110			2,429,770			2,452,071			2,412,153
Less allowance for credit losses			32,298			32,406			33,885			34,042			32,246
Loans, net		$	2,729,093		$	2,521,704		$	2,395,885		$	2,418,029		$	2,379,907
Unfunded loan commitments		$	688,493		$	627,461		$	535,587		$	556,910		$	534,256

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Deposit Composition (unaudited)
Dollars in thousands		12/31/2021			9/30/2021			6/30/2021			3/31/2021			12/31/2020
Core deposits
Non-interest bearing checking		$	568,986		$	575,542		$	503,097		$	505,264		$	440,819
Interest bearing checking			1,127,298			1,121,028			1,005,725			988,204			934,185
Savings			698,156			693,686			677,000			656,514			621,168
Time deposits			451,713			467,024			441,139			456,431			460,443
Total core deposits			2,846,153			2,857,280			2,626,961			2,606,413			2,456,615
Brokered time deposits			14,677			14,671			23,521			39,125			55,454
Other non-core time deposits			82,259			83,989			78,723			79,472			83,582
Total deposits		$	2,943,089		$	2,955,940		$	2,729,205		$	2,725,010		$	2,595,651

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Asset Quality Information (unaudited)
		For the Quarter Ended
Dollars in thousands		12/31/2021			9/30/2021			6/30/2021			3/31/2021			12/31/2020
	Gross loan charge-offs	$	282		$	528		$	343		$	354		$	434
	Gross loan recoveries		(89	)		(158	)		(141	)		(165	)		(195	)
	Net loan charge-offs	$	193		$	370		$	202		$	189		$	239
	Net loan charge-offs to average loans (annualized)		0.03%			0.06%			0.03%			0.03%			0.04%
	Allowance for loan credit losses	$	32,298		$	32,406		$	33,885		$	34,042		$	32,246
	Allowance for loan credit losses as a percentage
	of period end loans		1.17%			1.27%			1.39%			1.39%			1.34%
	Allowance for credit losses on
	unfunded loan commitments ("ULC")	$	7,275		$	5,860		$	4,660		$	3,705		$	4,190
	Allowance for credit losses on ULC
	as a percentage of peiod end ULC		1.06%			0.93%			0.87%			0.67%			0.78%
	Nonperforming assets:
	Nonperforming loans
	Commercial	$	740		$	459		$	968		$	848		$	525
	Commercial real estate		4,603			4,643			14,430			17,137			14,237
	Residential construction and development		1,560			448			621			626			235
	Residential real estate		5,772			5,514			6,800			6,667			5,264
	Consumer		21			48			38			54			74
	Other		-			-			-			-			-
	Total nonperforming loans		12,696			11,112			22,857			25,332			20,335
	Foreclosed properties
	Commercial real estate		1,389			2,192			2,281			2,281			2,581
	Commercial construction and development		2,332			2,925			3,146			3,884			4,154
	Residential construction and development		5,561			6,712			6,859			7,129			7,791
	Residential real estate		576			621			884			624			1,062
	Total foreclosed properties		9,858			12,450			13,170			13,918			15,588
	Other repossessed assets		-			-			-			-			-
	Total nonperforming assets	$	22,554		$	23,562		$	36,027		$	39,250		$	35,923
	Nonperforming loans to period end loans		0.46%			0.44%			0.94%			1.03%			0.84%
	Nonperforming assets to period end assets		0.63%			0.67%			1.10%			1.21%			1.16%
	Troubled debt restructurings
	Performing	$	18,887		$	20,535		$	20,799		$	20,462		$	21,375
	Nonperforming		2,039			1,141			1,235			3,828			3,127
	Total troubled debt restructurings	$	20,926		$	21,676		$	22,034		$	24,290		$	24,502

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Loans Past Due 30-89 Days (unaudited)
Dollars in thousands		12/31/2021			9/30/2021			6/30/2021			3/31/2021			12/31/2020
	Commercial	$	751		$	304		$	414		$	335		$	1
	Commercial real estate		683			281			733			508			274
	Construction and development		45			1,215			1,911			330			47
	Residential real estate		3,552			2,643			3,594			2,146			4,405
	Consumer		190			193			404			96			233
	Other		22			1			-			3			5
	Total	$	5,243		$	4,637		$	7,056		$	3,418		$	4,965

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q4 2021 vs Q3 2021 vs Q4 2020 (unaudited)
	Q4 2021									Q3 2021									Q4 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	$	2,640,975		$	28,916		4.34	%		$	2,495,880		$	28,340		4.50	%		$	2,292,797		$	27,774		4.82	%
Tax-exempt (2)		6,888			81		4.67	%			7,871			96		4.84	%			13,062			156		4.75	%
Securities
Taxable		349,541			1,806		2.05	%			315,082			1,432		1.80	%			258,594			1,341		2.06	%
Tax-exempt (2)		177,757			1,212		2.71	%			166,285			1,159		2.77	%			147,979			1,122		3.02	%
Interest bearing deposits other banks
and Federal funds sold		132,471			75		0.22	%			248,315			118		0.19	%			87,151			51		0.23	%
Total interest earning assets		3,307,632			32,090		3.85	%			3,233,433			31,145		3.82	%			2,799,583			30,444		4.33	%
Noninterest earning assets
Cash & due from banks		21,037									20,077									16,846
Premises & equipment		56,566									55,908									52,688
Other assets		190,445									175,975									157,436
Allowance for credit losses		(32,691	)								(33,911	)								(30,778	)
Total assets	$	3,542,989								$	3,451,482								$	2,995,775
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits		1,128,637			319		0.11	%		$	1,092,392		$	325		0.12	%		$	895,325		$	357		0.16	%
Savings deposits		692,893			590		0.34	%			691,411			602		0.35	%			607,481			716		0.47	%
Time deposits		560,140			809		0.57	%			571,445			905		0.63	%			566,917			1,883		1.32	%
Short-term borrowings		140,146			365		1.03	%			140,146			470		1.33	%			140,243			467		1.32	%
Long-term borrowings and
subordinated debentures		86,509			902		4.14	%			49,724			543		4.33	%			49,637			547		4.38	%
Total interest bearing liabilities		2,608,325			2,985		0.45	%			2,545,118			2,845		0.44	%			2,259,603			3,970		0.70	%
Noninterest bearing liabilities
Demand deposits		568,764									547,627									426,441
Other liabilities		40,905									38,789									34,558
Total liabilities		3,217,994									3,131,534									2,720,602
Shareholders' equity - preferred		14,920									14,920									-
Shareholders' equity - common		310,075									305,028									275,173
Total liabilities and
shareholders' equity	$	3,542,989								$	3,451,482								$	2,995,775
NET INTEREST EARNINGS				$	29,105								$	28,300								$	26,474
NET INTEREST MARGIN							3.49	%								3.47	%								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 $273,000, $263,000, and $268,000 for Q4 2021,
Q3 2021 and Q4 2020.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
YTD 2021 vs YTD 2020 (unaudited)
	YTD 2021									YTD 2020
	Average			Earnings /			Yield /			Average			Earnings /			Yield /
Dollars in thousands	Balances			Expense			Rate			Balances			Expense			Rate
ASSETS
Interest earning assets
Loans, net of unearned interest (1)
Taxable	$	2,487,885		$	112,269		4.51	%		$	2,150,294		$	104,986		4.88	%
Tax-exempt (2)		9,681			458		4.73	%			15,352			732		4.77	%
Securities
Taxable		301,446			5,883		1.95	%			256,893			5,996		2.33	%
Tax-exempt (2)		159,266			4,541		2.85	%			122,386			4,020		3.28	%
Interest bearing deposits other banks
and Federal funds sold		175,615			315		0.18	%			56,399			266		0.47	%
Total interest earning assets		3,133,893			123,466		3.94	%			2,601,324			116,000		4.46	%
Noninterest earning assets
Cash & due from banks		19,582									16,139
Premises & equipment		54,762									50,418
Other assets		178,535									143,284
Allowance for loan losses		(33,491	)								(26,915	)
Total assets	$	3,353,281								$	2,784,250
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing
demand deposits	$	1,044,817		$	1,408		0.13	%		$	789,064		$	2,187		0.28	%
Savings deposits		673,259			2,471		0.37	%			539,625			4,178		0.77	%
Time deposits		569,420			4,302		0.76	%			598,085			9,679		1.62	%
Short-term borrowings		140,146			1,768		1.26	%			130,411			2,330		1.79	%
Long-term borrowings and
subordinated debentures		58,974			2,535		4.30	%			28,396			1,147		4.04	%
		2,486,616			12,484		0.50	%			2,085,581			19,521		0.94	%
Noninterest bearing liabilities
Demand deposits		518,311									401,502
Other liabilities		38,545									31,712
Total liabilities		3,043,472									2,518,795
Shareholders' equity - preferred		10,327									-
Shareholders' equity - common		299,482									265,455
Total liabilities and
shareholders' equity	$	3,353,281								$	2,784,250
NET INTEREST EARNINGS				$	110,982								$	96,479
NET INTEREST MARGIN							3.54	%								3.71	%
(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%.
The tax equivalent adjustment resulted in an increase in interest income of $1,050,000 and $997,000 for the
YTD 2021 and YTD 2020 periods, respectively.

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