U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-Q

     [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                      For the quarterly period ended March
                                   31, 2001.

                                       or

    [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
 EXCHANGE ACT OF 1934 For the transition period from ___________ to __________.

                         Commission File Number 0-16587

                          Summit Financial Group, Inc.
             (Exact name of registrant as specified in its charter)

                            West Virginia 55-0672148
                  (State or other jurisdiction of (IRS Employer
               incorporation or organization) Identification No.)

                              223 North Main Street
                         Moorefield, West Virginia 26836
               (Address of principal executive offices) (Zip Code)

                                 (304) 538-7233
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
 to be filed by Sections 13 or 15(d) of the Securities and Exchange Act of 1934
 during the preceding 12 months (or for such shorter period that the registrant
  was required to file such reports), and (2) has been subject to such filing
               requirements for the past 90 days. Yes |X| No |_|

  Indicate the number of shares outstanding of each of the issuer's classes of
                Common Stock as of the latest practicable date.

                          Common Stock, $2.50 par value
                 877,155 shares outstanding as of April 17, 2001

Summit Financial Group, Inc. and Subsidiaries
- - --------------------------------------------------------------------------------
Table of Contents

                                                                            Page

PART  I.    FINANCIAL INFORMATION

    Item 1.    Financial Statements

         Consolidated balance sheets
         March 31, 2001 (unaudited) and December 31, 2000......................3

         Consolidated statements of  income
         for the three months ended March 31, 2001
         and 2000 (unaudited)..................................................4

         Consolidated statements of shareholders' equity
         for the three months ended
         March 31, 2001 and 2000 (unaudited)...................................5

         Consolidated statements of cash flows
         for the three months ended
         March 31, 2001 and 2000 (unaudited).................................6-7

         Notes to consolidated financial statements (unaudited).............8-16

    Item 2.    Management's Discussion and Analysis of Financial Condition
             and Results of Operations.....................................17-22

PART  II.    OTHER INFORMATION

    Item 1.  Legal Proceedings..............................................None

    Item 2.  Changes in Securities and Use of Proceeds......................None

    Item 3.  Defaults upon Senior Securities................................None

    Item 4. Submission of Matters to a Vote of Security Holders.............None

    Item 5.  Other Information..............................................None

    Item 6.  Exhibits and Reports on Form 8-K

             Exhibits

               Exhibit 11.    Statement re:  Computation of Earnings per Share -
                              Information   contained   in   Note   2   to   the
                              Consolidated  Financial  Statements  on  page 8 of
                              this Quarterly  Report is  incorporated  herein by
                              reference.

               Reports on Form 8-K..........................................None

SIGNATURES....................................................................23

                                       2

Summit Financial Group, Inc. and Subsidiaries
- - --------------------------------------------------------------------------------
Consolidated Balance Sheets

                                                      March 31,     December 31,
                                                        2001             2000
                                                     (unaudited)         (*)
                                                     -----------    -----------
 ASSETS
Cash and due from banks                             $   8,743,887  $   7,091,871
Interest bearing deposits with other banks                166,008        473,000
Federal funds sold                                      9,799,000      1,811,000
Securities available for sale                         180,414,361    176,340,410
Securities held to maturity                               400,685        400,835
Loans, net                                            282,147,175    271,582,652
Premises and equipment, net                            12,381,734     12,246,821
Accrued interest receivable                             4,020,875      3,760,701
Intangible assets                                       3,563,924      3,634,472
Other assets                                            4,073,333      3,897,339
                                                    -------------  -------------
                          Total assets              $ 505,710,982  $ 481,239,101
                                                    =============  =============

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
    Deposits
        Non interest bearing                        $  33,993,217  $  30,031,409
        Interest bearing                              329,399,022    315,930,441
                                                    -------------  -------------
                         Total deposits               363,392,239    345,961,850
                                                    -------------  -------------
    Short-term borrowings                               9,161,349      9,390,814
    Long-term borrowings                               87,493,471     81,085,929
    Other liabilities                                   3,973,366      5,027,307
                                                    -------------  -------------
                       Total liabilities              464,020,425    441,465,900
                                                    -------------  -------------
Commitments and Contingencies

Shareholders' Equity
    Common stock, $2.50 par value; authorized
       5,000,000 shares; issued 890,390 shares          2,225,978      2,225,978
    Capital surplus                                    10,482,873     10,482,873
    Retained earnings                                  27,774,111     26,765,097
    Less cost of shares acquired for the treasury
      2001 - 13,235 shares; 2000 - 12,835 shares        (532,479)      (517,725)
    Accumulated other comprehensive income              1,740,074        816,978
                                                    -------------  -------------
                   Total shareholders' equity          41,690,557     39,773,201
                                                    -------------  -------------

       Total liabilities and shareholders' equity   $ 505,710,982  $ 481,239,101
                                                    =============  =============

(*)- December 31, 2000  financial  information  has been  extracted from audited
     consolidated financial statements

                                       3

Summit Financial Group, Inc. and Subsidiaries
- - --------------------------------------------------------------------------------
Consolidated Statements of Income (unaudited)

                                                                    Three Months Ended
                                                                  ----------------------
                                                                  March 31,    March 31,
                                                                     2001        2000
                                                                  ----------   ----------
                                                                         
 Interest income
     Interest and fees on loans
        Taxable                                                   $5,969,383   $5,075,650
        Tax-exempt                                                    39,916       36,462
    Interest and dividends on securities
        Taxable                                                    2,845,899    1,902,097
        Tax-exempt                                                   220,511      173,398
    Interest on interest bearing deposits with other banks             3,760       48,951
    Interest on Federal funds sold                                    46,957       54,427
                                                                  ----------   ----------
                           Total interest income                   9,126,426    7,290,985
                                                                  ----------   ----------
Interest expense
    Interest on deposits                                           3,960,775    2,972,164
    Interest on short-term borrowings                                171,150      522,526
    Interest on long-term borrowings                               1,171,620      254,203
                                                                  ----------   ----------
                           Total interest expense                  5,303,545    3,748,893
                                                                  ----------   ----------
                            Net interest income                    3,822,881    3,542,092
Provision for loan losses                                            145,000      127,501
                                                                  ----------   ----------
            Net interest income after provision for loan losses    3,677,881    3,414,591
                                                                  ----------   ----------
Other income
    Insurance commissions                                             15,158       21,195
    Service fees                                                     222,273      206,391
    Securities gains (losses)                                         84,142            -
    Other                                                             43,030       32,190
                                                                  ----------   ----------
                             Total other income                      364,603      259,776
                                                                  ----------   ----------
Other expense
    Salaries and employee benefits                                 1,325,042    1,212,410
    Net occupancy expense                                            194,335      147,548
    Equipment expense                                                284,073      196,421
    Supplies                                                          51,906       47,844
    Amortization of intangibles                                       70,548       80,736
    Other                                                            595,661      622,122
                                                                  ----------   ----------
                            Total other expense                    2,521,565    2,307,081
                                                                  ----------   ----------
                         Income before income taxes                1,520,919    1,367,286
Income tax expense                                                   511,905      438,055
                                                                  ----------   ----------
                                 Net income                       $1,009,014   $  929,231
                                                                  ==========   ==========

Basic earnings per common share                                   $     1.15   $     1.05
                                                                  ==========   ==========
Diluted earnings per common share                                 $     1.15   $     1.05
                                                                  ==========   ==========

Average common shares outstanding
    Basic                                                            877,436      881,275
                                                                  ==========   ==========
    Diluted                                                          877,436      881,275
                                                                  ==========   ==========

Dividends per common share                                        $        -   $        -
                                                                  ==========   ==========

See Notes to Consolidated Financial Statements

                                       4

Summit Financial Group, Inc. and Subsidiaries
- - --------------------------------------------------------------------------------
Consolidated Statements of Shareholders' Equity (unaudited)

                                                                                                      Accumulated
                                                                                                           Other           Total
                                                                                                          Compre-          Share-
                                               Common        Capital       Retained       Treasury        hensive         holders'
                                               Stock         Surplus       Earnings         Stock          Income          Equity
                                           ------------   ------------   ------------   -------------   ------------   ------------

Balance, December 31, 2000                 $  2,225,978   $ 10,482,873   $ 26,765,097   $   (517,725)   $    816,978   $ 39,773,201
Three Months Ended March 31, 2001
    Comprehensive income:
      Net income                                      -              -      1,009,014              -               -      1,009,014
      Other comprehensive income,
        net of deferred taxes
        of $1,066,484:
        Net unrealized gain on
          securities of $870,928, net
          of reclassification adjustment
          for gains included in net
          income of $52,168                           -              -              -              -         923,096        923,096
                                                                                                                       ------------
    Total comprehensive income                        -              -              -              -               -      1,932,110
                                                                                                                       ------------
    Cost of 400 shares of common
     stock acquired for the treasury                  -              -              -        (14,754)              -        (14,754)
                                           ------------   ------------   ------------   ------------    ------------   ------------

Balance, March 31, 2001                    $  2,225,978   $ 10,482,873   $ 27,774,111   $   (532,479)   $  1,740,074   $ 41,690,557
                                           ============   ============   ============   ============    ============   ============

Balance, December 31, 1999                 $  2,226,293   $ 10,533,674   $ 24,570,174   $   (384,724)   $ (1,862,797)  $ 35,082,620
Three Months Ended March 31, 2000
    Comprehensive income:
      Net income                                      -              -        929,231              -               -        929,231
      Other comprehensive income,
        net of deferred taxes
        of $171,048:
        Net unrealized (loss) on
         securities of ($285,080), net
         of reclassification adjustment
         for gains (losses) included
        in net income of $                           -               -              -              -        (402,766)     (402,766)
                                                                                                                       ------------
    Total comprehensive income                                                                                              526,465
                                                                                                                       ------------
    Purchase of fractional shares                (318)         (4,566)              -              -               -        (4,884)
                                           -----------    ------------   ------------   ------------    ------------   ------------

Balance, March 31, 2000                   $  2,225,975    $ 10,529,108   $ 25,499,405   $  (384,724)    $ (2,265,563)  $ 35,604,201
                                          ============    ============   ============   ============    =============  ============

 See Notes to Consolidated Financial Statements

                                       5

Summit Financial Group, Inc. and Subsidiaries
- - --------------------------------------------------------------------------------
Consolidated Statements of Cash Flows (unaudited)

                                                                               Three Months Ended
                                                                          ----------------------------
                                                                            March 31,       March 31,
                                                                              2001            2000
                                                                          ------------    ------------
                                                                                    
 Cash Flows from Operating Activities
    Net income                                                            $  1,009,014    $    929,231
    Adjustments to reconcile net earnings to net cash
        provided by operating activities:
        Depreciation                                                           223,069         124,526
        Provision for loan losses                                              145,000         127,501
        Deferred income tax (benefit) expense                                  (11,970)        (52,145)
        Securities (gains) losses                                              (84,142)
        (Gain) loss on disposal of other assets                                    716          16,153
        Amortization of securities premiums (accretion
            of discounts) net                                                 (127,891)        (34,807)
        Amortization of goodwill and purchase accounting
            adjustments, net                                                    69,549          31,381
        (Increase) decrease in accrued interest receivable                    (260,174)       (596,566)
        (Increase) decrease in other assets                                   (270,266)       (157,021)
        Increase (decrease) in other liabilities                               670,408         358,603
                                                                          ------------    ------------
               Net cash provided by operating activities                     1,363,313         746,856
                                                                          ------------    ------------
Cash Flows from Investing Activities
    Net (increase) decrease in interest bearing deposits
       with other banks                                                        306,992       4,882,019
    Proceeds from maturities and calls of securities available for sale     19,078,810       1,262,125
    Proceeds from sales of securities available for sale                     4,793,107       9,355,259
    Principal payments received on securities available for sale             2,800,650         899,717
    Principal payments received on securities held to maturity                       -          58,759
    Purchases of securities available for sale                             (31,069,852)    (39,772,597)
    Net (increase) decrease in Federal funds sold                           (7,988,000)        319,959
    Net loans made to customers                                            (10,707,523)     (6,477,684)
    Purchases of premises and equipment                                       (359,398)       (715,537)
    Proceeds from sales of other assets                                         25,822               -
    Purchases of life insurance contracts                                      (51,200)              -
                                                                           ------------    ------------
          Net cash provided by (used in) investing activities              (23,170,592)    (30,187,980)
                                                                           ------------    ------------
Cash Flows from Financing Activities
    Net increase (decrease) in demand deposit, NOW and
        savings accounts                                                     7,882,891      (3,728,186)
    Net increase (decrease) in time deposits                                 9,413,082      17,077,208
    Net increase (decrease) in short-term borrowings                          (229,466)     20,587,838
    Proceeds from long-term borrowings                                       6,500,000               -
    Repayment of long-term borrowings                                          (92,458)     (3,087,208)
    Purchase of treasury stock                                                 (14,754)              -
    Purchase of fractional shares                                                    -          (4,884)
                                                                          ------------    ------------
               Net cash provided by financing activities                    23,459,295      30,844,768
                                                                          ------------    ------------
Increase (decrease) in cash and due from banks                               1,652,016       1,403,644
Cash and due from banks:
        Beginning                                                            7,091,871       7,010,196
                                                                          ------------    ------------
        Ending                                                            $  8,743,887    $  8,413,840
                                                                          ============    ============

                               (Continued)

See Notes to Consolidated Financial Statements

                                       6

Summit Financial Group, Inc. and Subsidiaries
- - --------------------------------------------------------------------------------
Consolidated Statements of Cash Flows - continued (unaudited)

                                                                               Three Months Ended
                                                                           ---------------------------
                                                                            March 31,        March 31,
                                                                               2001            2000
                                                                           -----------     -----------
                                                                                     
 Supplemental Disclosures of Cash Flow Information
     Cash payments for:
         Interest                                                          $ 5,294,998     $ 3,720,711
                                                                           ===========     ===========
         Income taxes                                                      $         -        $ 19,302
                                                                           ===========     ===========

See Notes to Consolidated Financial Statements

                                       7

Summit Financial Group, Inc. and Subsidiaries
- - --------------------------------------------------------------------------------
Notes to Consolidated Financial Statements (unaudited)

Note 1.  Basis of Presentation

These  consolidated  financial  statements of Summit Financial  Group,  Inc. and
Subsidiaries  ("Summit" or  "Company")  have been  prepared in  accordance  with
generally accepted accounting  principles for interim financial  information and
with  instructions  to Form 10-Q and Regulation  S-X.  Accordingly,  they do not
include  all the  information  and  footnotes  required  by  generally  accepted
accounting principles for annual year end financial  statements.  In the opinion
of management, all adjustments considered necessary for a fair presentation have
been included and are of a normal recurring nature.

The presentation of financial  statements in conformity with generally  accepted
accounting principles requires management to make estimates and assumptions that
effect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent assets and liabilities at the date of the financial  statements,  and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ materially from these estimates.

The  results of  operations  for the three  months  ended March 31, 2001 are not
necessarily  indicative  of the  results to be expected  for the full year.  The
consolidated  financial  statements and notes included  herein should be read in
conjunction  with the Company's  2000 audited  financial  statements  and Annual
Report on Form 10-K. Certain accounts in the consolidated  financial  statements
for December 31, 2000 and March 31, 2001,  as  previously  presented,  have been
reclassified to conform to current year classifications.

Note 2.  Earnings per Share

The computations of basic and diluted earnings per share follow:

                                                  Three Months Ended March 31,
                                                 -----------------------------
                                                     2001              2000
                                                     ----              ----
 Numerator:
     Net Income                                  $ 1,009,014         $ 929,231
                                                 ===========         =========

 Denominator:
     Denominator for basic earnings
         per share - weighted average
         common shares outstanding                   877,436           881,275

     Effect of dilutive securities:
         Stock options                                     -                 -
                                                 -----------         ---------
     Denominator for diluted earnings
         per share - weighted average
         common shares outstanding and
         assumed conversions                         877,436           881,275
                                                 ===========         =========

 Basic earnings per share                        $      1.15         $    1.05
                                                 ===========         =========

 Diluted earnings per share                      $      1.15         $    1.05
                                                 ===========         =========

                                       8

Note 3.  Securities

The amortized  cost,  unrealized  gains,  unrealized  losses and estimated  fair
values of securities  at March 31, 2001 and December 31, 2000 are  summarized as
follows:

                                                           March 31, 2001
                                        ---------------------------------------------------------
                                           Amortized            Unrealized             Estimated
                                                       ---------------------------
                                             Cost          Gains          Losses      Fair Value
                                        ------------   ------------    -----------   ------------
                                                                         
 Available for Sale
     Taxable:
    U. S. Treasury securities           $    499,625   $      3,032    $         -   $    502,657
    U. S. Government agencies
        and corporations                  59,813,997      1,252,953         35,552     61,031,398
    Mortgage-backed securities -
        U. S. Government agencies and
        corporations                      65,775,992        955,961        215,814     66,516,139
    State and political subdivisions       5,937,031         45,191              5      5,982,217
    Corporate debt securities             22,868,298        619,337            856     23,486,779
    Federal Reserve Bank stock               311,300              -              -        311,300
    Federal Home Loan Bank stock           5,050,400              -              -      5,050,400
    Other equity securities                  306,625              -         19,500        287,125
                                        ------------   ------------   ------------   ------------
          Total taxable                  160,563,268      2,876,474        271,727    163,168,015
                                        ------------   ------------   ------------   ------------
Tax-exempt:
    State and political subdivisions       9,942,762        274,431          3,044     10,214,149
    Federal Reserve Bank stock                 4,100              -              -          4,100
    Other equity securities                7,097,694              -         69,597      7,028,097
                                        ------------   ------------   ------------   ------------
        Total tax-exempt                  17,044,556        274,431         72,641     17,246,346
                                        ------------   ------------   ------------   ------------
              Total                     $177,607,824   $  3,150,905   $    344,368   $180,414,361
                                        ============   ============   ============   ============

                                                             March 31, 2001
                                        ---------------------------------------------------------
                                           Amortized            Unrealized             Estimated
                                                       ---------------------------
                                             Cost          Gains         Losses       Fair Value
                                        ------------   ------------   ------------   ------------
                                                                         
 Held to Maturity
  Tax-exempt:
    State and political subdivisions    $    400,685   $      3,263   $        157   $    403,791
                                        ============   ============   ============   ============

                                       9

                                                            December 31, 2000
                                        ---------------------------------------------------------
                                          Amortized            Unrealized             Estimated
                                                       ---------------------------
                                             Cost          Gains         Losses       Fair Value
                                        ------------   ------------   ------------   ------------

 Available for Sale
     Taxable:
    U. S. Treasury securities           $  1,499,026   $      2,850            $ -   $  1,501,876
    U. S. Government agencies
        and corporations                  80,847,229        805,826        262,259     81,390,796
    Mortgage-backed securities -
        U. S. Government agencies and
        corporations                      55,129,636        661,521        244,570     55,546,587
    State and political subdivisions       2,979,364         12,245              -      2,991,609
    Corporate debt securities             15,198,567        292,153            809     15,489,911
    Federal Reserve Bank stock               236,300              -              -        236,300
    Federal Home Loan Bank stock           4,375,900              -              -      4,375,900
    Other equity securities                  306,625              -        124,500        182,125
                                        ------------   ------------   ------------   ------------
          Total taxable                  160,572,647      1,774,595        632,138    161,715,104
                                        ------------   ------------   ------------   ------------
Tax-exempt:
    State and political subdivisions       9,417,015        182,014              -      9,599,029
    Federal Reserve Bank stock                 4,100              -              -          4,100
    Other equity securities                5,028,978              -          6,801      5,022,177
                                        ------------   ------------   ------------   ------------
        Total tax-exempt                  14,450,093        182,014          6,801     14,625,306
                                        ------------   ------------   ------------   ------------
              Total                     $175,022,740   $  1,956,609   $    638,939   $176,340,410
                                        ============   ============   ============   ============

                                                           December 31, 2000
                                        ---------------------------------------------------------
                                          Amortized            Unrealized             Estimated
                                                       ---------------------------
                                             Cost          Gains         Losses       Fair Value
                                        ------------   ------------   ------------   ------------

                                                                         
Held to Maturity
  Tax-exempt
    State and political subdivisions    $    400,835   $      2,213   $          -   $    403,048
                                        ============   ============   ============   ============

                                       10

The  maturites,  amortized cost and estimated fair values of securities at March
31, 2001, are summarized as follows:

                                  Available for Sale
                             ---------------------------
                                Amortized     Estimated
                                  Cost        Fair Value
                             ------------   ------------

Due in one year or less      $ 29,655,731   $ 30,051,925
Due from one to five years     82,114,034     83,780,829
Due from five to ten years     41,691,305     42,433,144
Due after ten years            11,376,635     11,467,438
Equity securities              12,770,119     12,681,025
                             ------------   ------------
                             $177,607,824   $180,414,361
                             ============   ============

                                   Held to Maturity
                             ---------------------------
                                Amortized     Estimated
                                  Cost        Fair Value
                             ------------   ------------
Due in one year or less      $    300,685   $    302,213
Due from one to five years        100,000        101,578
Due from five to ten years              -              -
Due after ten years                     -              -
Equity securities                       -              -
                             $    400,685   $    403,791
                             ============   ============

Note 4.  Loans

Loans are summarized as follows:
                                                  March 31,     December 31,
                                                    2001           2000
                                                ------------   ------------
Commerical                                      $ 27,000,918   $ 26,304,675
Commercial real estate                            88,201,645     81,809,039
Real estate - construction                         3,013,881      2,729,408
Real estate - mortgage                           126,840,174    124,326,161
Consumer                                          38,521,981     37,586,562
Other                                              1,778,551      2,000,900
                                                ------------   ------------
           Total loans                           285,357,150    274,756,745
Less unearned income                                 573,406        603,317
                                                ------------   ------------
           Total loans net of unearned income    284,783,744    274,153,428
Less allowance for loan losses                     2,636,569      2,570,776
                                                ------------   ------------
           Loans, net                           $282,147,175   $271,582,652
                                                ============   ============

                                       11

Note 5.  Allowance for Loan Losses

An analysis of the  allowance  for loan losses for the three month periods ended
March 31, 2001 and 2000, and for the year ended December 31, 2000 is as follows:

                                      Three Months Ended      Year Ended
                                           March 31,         December 31,
                                   -----------------------
                                       2001        2000         2000
                                   ----------   ----------   ----------

Balance, beginning of period       $2,570,776   $2,231,555   $2,231,555
Losses:
    Commercial                         48,995            -            -
    Real estate - mortgage                  -            -       62,839
    Consumer                           28,532       13,766      174,719
    Other                              18,857       15,405       48,521
                                   ----------   ----------   ----------
                  Total                96,384       29,171      286,079
                                   ----------   ----------   ----------
Recoveries:
    Commercial                            432          334        2,031
    Real estate - mortgage                  -            -        1,603
    Consumer                           12,735       17,710       53,165
    Other                               4,010        2,071       11,001
                                   ----------   ----------   ----------
                  Total                17,177       20,115       67,800
                                   ----------   ----------   ----------
Net losses                             79,207        9,056      218,279
Provision for loan losses             145,000      127,501      557,500
                                   ----------   ----------   ----------
Balance, end of period             $2,636,569   $2,350,000   $2,570,776
                                   ==========   ==========   ==========

Note 6.  Deposits

The following is a summary of interest  bearing deposits by type as of March 31,
2001 and December 31, 2000:

                                              March 31,    December 31,
                                                2001          2000
                                           ------------   ------------
Interest bearing demand deposits           $ 71,443,070   $ 69,038,854
Savings deposits                             39,246,665     37,729,798
Certificates of deposit                     199,414,817    190,986,834
Individual retirement accounts               19,294,470     18,174,955
                                           ------------   ------------
                      Total                $329,399,022   $315,930,441
                                           ============   ============

                                       12

The  following  is a summary of the maturity  distribution  of  certificates  of
deposit and Individual  Retirement Accounts in denominations of $100,000 or more
as of March 31, 2001:

                                         Amount      Percent
                                      -----------    -------
Three months or less                  $17,070,294      31.6%
Three through six months               11,892,813      22.0%
Six through twelve months              17,099,268      31.7%
Over twelve months                      7,918,288      14.7%
                                      -----------     ------
                      Total           $53,980,663     100.0%
                                      ===========     ======

A summary of the scheduled maturities for all time deposits as of March 31, 2001
is as follows:

                       2001                              $ 147,212,187
                       2002                                 52,130,982
                       2003                                 12,339,076
                       2004                                  5,035,876
                       2005                                  1,134,818
                    Thereafter                                 856,348
                                                        --------------
                                                        $  218,709,287
                                                        ==============

Note 7.  Borrowed Funds

Short-term borrowings: A summary of short-term borrowings is presented below:

                                                        Quarter Ended March 31, 2001
                                                 --------------------------------------
                                                 Federal Funds                 Federal
                                                  Purchased                     Home
                                                  and Other                   Loan Bank
                                                  Short-term   Repurchase    Short-term
                                                  Advances     Agreements     Advances
                                                 ----------    ----------    ----------
                                                                    
Balance at March 31                              $2,086,000    $6,225,349    $  850,000
Average balance outstanding for the quarter       1,127,980     6,212,282     5,570,730
Maximum balance outstanding at
    any month end during quarter                  4,298,000     6,225,349     7,467,100
Weighted average interest rate for the quarter        6.01%         4.77%         5.75%
Weighted average interest rate for balances
    outstanding at March 31                           6.72%         4.16%         6.55%

                                       13

                                                      Year Ended December 31, 2000
                                              -----------------------------------------
                                              Federal Funds                    Federal
                                                Purchased                       Home
                                                and Other                     Loan Bank
                                               Short-term     Repurchase     Short-term
                                                Advances      Agreements      Advances
                                              -----------    -----------    -----------
                                                                   
Balance at December 31                        $ 1,252,000    $ 6,187,914    $ 1,950,900
Average balance outstanding for the year        3,922,918      7,450,110     37,489,925
Maximum balance outstanding at
    any month end                               1,252,000     12,758,541     72,702,003
Weighted average interest rate for the year         7.03%          5.13%          7.13%
Weighted average interest rate for balances
    outstanding at December 31                      7.00%          4.95%          6.63%

Long-term  borrowings:  The Company's  long-term  borrowings of $87,493,471  and
$81,085,929 at March 31, 2001 and December 31, 2000  respectively,  consisted of
advances from the Federal Home Loan Bank ("FHLB").

These  borrowings  bear both  fixed and  variable  rates and  mature in  varying
amounts through the year 2011.

The  average  interest  rate paid on  long-term  borrowings  for the three month
period  ended  March 31,  2001 was 5.59%  compared  to 5.80% for the first three
months of 2000.

A summary of the maturities of all long-term  borrowings for the next five years
and thereafter is as follows:

                     Year Ending
                     December 31,       Amount
                     ------------    ------------
                         2001        $    285,623
                         2002           1,150,840
                         2003             424,973
                         2004             860,592
                         2005          12,323,714
                      Thereafter       72,447,729
                                     ------------
                                     $ 87,493,471
                                     ============

                                       14

Note 8.  Restrictions on Capital

Summit  and  its  subsidiaries  are  subject  to  various   regulatory   capital
requirements  administered  by the banking  regulatory  agencies.  Under capital
adequacy  guidelines and the regulatory  framework for prompt corrective action,
Summit and each of its subsidiaries  must meet specific capital  guidelines that
involve  quantitative   measures  of  Summit's  and  its  subsidiaries'  assets,
liabilities and certain  off-balance  sheet items as calculated under regulatory
accounting  practices.  Summit and each of its subsidiaries' capital amounts and
classifications  are also subject to  qualitative  judgments  by the  regulators
about components, risk weightings and other factors.

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require  Summit and each of its  subsidiaries  to maintain  minimum  amounts and
ratios  of  total  and  Tier  I  capital  (as  defined  in the  regulations)  to
risk-weighted assets (as defined), and of Tier I capital (as defined) to average
assets (as defined).  Management believes, as of March 31, 2001, that Summit and
each of its  subsidiaries  met all capital  adequacy  requirements to which they
were subject.

The most recent notifications from the banking regulatory agencies categorized
Summit and each of its subsidiaries as well capitalized under the regulatory
framework for prompt corrective action. To be categorized as well capitalized,
Summit and each of its subsidiaries must maintain minimum total risk-based, Tier
I risk-based, and Tier I leverage ratios as set forth in the table below.

Summit's and its  subsidiaries',  South Branch Valley  National  Bank's  ("South
Branch"),  Capital  State Bank,  Inc.'s  ("Capital  State"),  Shenandoah  Valley
National  Bank's  ("Shenandoah")  and Potomac Valley Bank's  ("Potomac")  actual
capital amounts and ratios are also presented in the following table.

                                       15

 (Dollars in thousands)
                                                                                       To be Well Capitalized
                                                                   Minimum Required    under Prompt Corrective
                                                 Actual           Regulatory Capital      Action Provisions
                                           -------------------     ------------------   -----------------------
                                           Amount        Ratio     Amount       Ratio     Amount        Ratio
                                           -------       -----     -------      -----     -------       -----
                                                                                      
 As of March 31, 2001
 Total Capital (to risk weighted assets)
    Summit                                 $38,934       12.2%     $25,622       8.0%     $32,027       10.0%
    South Branch                            13,222       10.9%       9,709       8.0%      12,136       10.0%
    Capital State                            7,824       10.0%       6,265       8.0%       7,832       10.0%
    Shenandoah                               7,581       15.6%       3,892       8.0%       4,865       10.0%
    Potomac                                  8,950       13.3%       5,373       8.0%       6,716       10.0%
Tier I Capital (to risk weighted assets)
    Summit                                  36,297       11.3%      12,811       4.0%      19,216        6.0%
    South Branch                            11,940        9.8%       4,855       4.0%       7,282        6.0%
    Capital State                            7,246        9.3%       3,133       4.0%       4,699        6.0%
    Shenandoah                               7,435       15.3%       1,946       4.0%       2,919        6.0%
    Potomac                                  8,319       12.4%       2,687       4.0%       4,030        6.0%
Tier I Capital (to average assets)
    Summit                                  36,297        7.4%      14,627       3.0%      24,379        5.0%
    South Branch                            11,940        7.3%       4,912       3.0%       8,186        5.0%
    Capital State                            7,246        6.1%       3,585       3.0%       5,975        5.0%
    Shenandoah                               7,435        8.4%       2,648       3.0%       4,413        5.0%
    Potomac                                  8,319        7.3%       3,405       3.0%       5,676        5.0%

As of December 31, 2000
Total Capital (to risk weighted assets)
    Summit                                 $37,900       12.8%     $23,688       8.0%     $29,586       10.0%
    South Branch                            12,751       10.6%       9,623       8.0%      12,029       10.0%
    Capital State                            7,679       11.0%       5,585       8.0%       6,981       10.0%
    Shenandoah                               6,521       17.1%       3,051       8.0%       3,813       10.0%
    Potomac                                  8,483       13.0%       5,220       8.0%       6,525       10.0%
Tier I Capital (to risk weighted assets)
    Summit                                  35,329       11.9%      11,875       4.0%      17,813        6.0%
    South Branch                            11,460        9.5%       4,825       4.0%       7,238        6.0%
    Capital State                            7,135       10.2%       2,798       4.0%       4,197        6.0%
    Shenandoah                               6,405       16.8%       1,525       4.0%       2,288        6.0%
    Potomac                                  7,863       12.0%       2,621       4.0%       3,932        6.0%
Tier I Capital (to average assets)
    Summit                                  35,329        8.2%      12,925       3.0%      21,542        5.0%
    South Branch                            11,460        7.1%       4,842       3.0%       8,070        5.0%
    Capital State                            7,135        6.2%       3,452       3.0%       5,754        5.0%
    Shenandoah                               6,405        8.3%       2,315       3.0%       3,858        5.0%
    Potomac                                  7,863        7.1%       3,322       3.0%       5,537        5.0%

                                       16

Summit Financial Group, Inc. and Subsidiaries
- - --------------------------------------------------------------------------------
Management's Discussion and Analysis of Financial Condition and
Results of Operations

INTRODUCTION

The following  discussion  and analysis  focuses on  significant  changes in the
financial  condition and results of operations of Summit Financial  Group,  Inc.
("Company" or "Summit") and its wholly owned  subsidiaries,  South Branch Valley
National Bank ("South  Branch"),  Capital State Bank,  Inc.  ("Capital  State"),
Shenandoah  Valley  National  Bank   ("Shenandoah")   and  Potomac  Valley  Bank
("Potomac")  for the periods  indicated.  This discussion and analysis should be
read in  conjunction  with the Company's 2000 audited  financial  statements and
Annual Report on Form 10-K.

The Private  Securities  Litigation Act of 1995 indicates that the disclosure of
forward-looking  information  is desirable  for investors  and  encourages  such
disclosure  by  providing  a  safe  harbor  for  forward-looking  statements  by
management.  The  following  management's  discussion  and analysis of financial
condition and results of operations contains certain forward-looking  statements
that involve risk and uncertainty. In order to comply with the terms of the safe
harbor,  the Company notes that a variety of factors could cause Summit's actual
results and  experience to differ  materially  from the  anticipated  results or
other expectations expressed in those forward-looking statements.

RESULTS OF OPERATIONS

Earnings Summary

Net income for the  quarter  ended March 31,  2001 grew 8.6% to  $1,009,000,  or
$1.15 per diluted share as compared to $929,000,  or $1.05 per diluted share for
the quarter ended March 31, 2000. Returns on average equity and assets for first
quarter 2001 were 10.13% and 0.83%, respectively, compared with 10.30% and 0.93%
for the same period of 2000.

Net Interest Income

The  Company's  net  interest  income on a fully  tax-equivalent  basis  totaled
$3,941,000  for the  three  month  period  ended  March  31,  2001  compared  to
$3,643,000 for the same period of 2000,  representing an increase of $298,000 or
8.2%. This increase  resulted from growth in interest  earning  assets.  Average
interest earning assets grew 22.4% from $376,081,000 during the first quarter of
2000 to  $460,133,000  for the first quarter of 2001,  which resulted  primarily
from the growth of Shenandoah.

Summit's  net yield on interest  earning  assets  declined to 3.4% for the three
month period ended March 31, 2001, compared to 3.9% for the same period in 2000.
Consistent  with industry  trends,  the  Company's net interest  margin has been
narrowing as competition from  nontraditional  financial  service  providers and
shifting  customer  preferences have made it difficult to attract core deposits,
the most significant and lowest cost funding source of commercial banks.

Growth in the  Company's  net  interest  income is expected  to continue  due to
anticipated continued growth in volumes of interest earning assets,  principally
loans,  over the near term.  Conversely,  the Company's  net interest  margin is
anticipated  to continue to contract over the balance of 2001,  due to continued
competitive pressures discussed above.

Further analysis of the Company's yields on interest earning assets and interest
bearing liabilities are presented in Tables I and II below:

                                       17

Table I - Average Balance Sheet and Net Interest Income Analysis
 (Dollars in thousands)
                                                            For the Quarter Ended March 31,
                                       ---------------------------------------------------------------------
                                                      2001                                 2000
                                       ----------------------------------    -------------------------------
                                        Average     Earnings/      Yield/     Average    Earnings/     Yield/
                                        Balance      Expense        Rate      Balance     Expense       Rate
                                       ---------    ---------      -----     ---------   ---------     -----
                                                                                     
 Interest earning assets
     Loans, net of unearned income
        Taxable                        $ 276,735    $   5,973       8.6%     $ 238,849   $   5,060      8.5%
        Tax-exempt (1)                     2,010           53      10.5%         2,117          64     12.1%
    Securities
        Taxable                          160,624        2,846       7.1%       114,898       1,902      6.6%
        Tax-exempt (1)                    16,913          322       7.6%        13,253         263      7.9%
    Federal funds sold and interest
        bearing deposits with other        3,851           52       5.4%         6,964         103      5.9%
                                       ---------    ---------      -----     ---------   ---------     -----
  Total interest earning assets          460,133        9,246       8.0%       376,081       7,392      7.9%
                                                    ---------      -----                 ---------     -----

Noninterest earning assets
    Cash & due from banks                  7,885                                 6,775
    Premises and equipment                12,225                                 9,671
    Other assets                          13,383                                 9,428
    Allowance for loan losses             (2,636)                               (2,281)
                                       ---------                             ---------
           Total assets                $ 490,990                             $ 399,674
                                       =========                             =========

Interest bearing liabilities
    Interest bearing demand deposits   $  65,817    $     539       3.3%     $  60,357   $     476      3.2%
    Savings deposits                      37,671          254       2.7%        41,137         274      2.7%
    Time deposits                        215,198        3,169       5.9%       173,989       2,223      5.1%
    Short-term borrowings                 12,910          171       5.3%        39,015         522      5.4%
    Long-term borrowings                  83,058        1,172       5.6%        17,511         254      5.8%
                                       ---------    ---------      -----     ---------   ---------     -----
Total interest bearing liabilities       414,654        5,305       5.1%       332,009       3,749      4.5%
                                                    ---------      -----                 ---------     -----

Noninterest bearing liabilities
    and shareholders' equity
    Demand deposits                       31,855                                26,898
    Other liabilities                      4,117                                 4,706
    Shareholders' equity                  40,364                                36,061
                                       ---------                             ---------
      Total liabilities and
        shareholders' equity           $ 490,990                             $ 399,674
                                       =========                             =========
 Net interest earnings                              $   3,941                              $   3,643
                                                    =========                              =========
 Net yield on interest earning assets                               3.4%                                3.9%
                                                                   =====                               =====

(1)- Interest  income on tax-exempt  securities  has been  adjusted  assuming an
     effective tax rate of 34% for both periods  presented.  The tax  equivalent
     adjustment  resulted  in an  increase  in  interest  income of $89,000  and
     $70,000 for the periods ended March 31, 2000 and 1999, respectively.

                                       18

Table II - Changes in Interest Margin Attributable to Rate and Volume
(Dollars in thousands)
                                            For the Quarter Ended
                                      March 31, 2001 versus March 31, 2000
                                      ------------------------------------
                                               Increase (Decrease)
                                                Due to Change in:
                                      ------------------------------------
                                       Volume         Rate           Net
                                      -------       -------        -------
Interest earned on:
Loans                                 $   814       $    88        $   902
Securities
  Taxable                                 802           142            944
  Tax-exempt                               70           (11)            59
Federal funds sold and interest
  bearing deposits with other banks       (43)           (8)           (51)
                                      -------       -------        -------
Total interest earned on
  interest earning assets               1,643           211          1,854
                                      -------       -------        -------

Interest paid on:
Interest bearing demand
  deposits                                 44            19             63
Savings deposits                          (23)            3            (20)
Time deposits                             576           370            946
Short-term borrowings                    (347)           (4)          (351)
Long-term borrowings                      926            (8)           918
                                      -------       -------        -------
  Total interest paid on
    interest bearing liabilities        1,176           380          1,556
                                      -------       -------        -------

          Net interest income         $   467       $  (169)       $   298
                                      =======       =======        =======

Credit Experience

The  provision  for loan  losses  represents  charges to earnings  necessary  to
maintain an adequate  allowance for potential  future loan losses.  Management's
determination  of the appropriate  level of the allowance is based on an ongoing
analysis of credit quality and loss potential in the loan  portfolio,  change in
the  composition  and  risk  characteristics  of the  loan  portfolio,  and  the
anticipated influence of national and local economic conditions. The adequacy of
the allowance for loan losses is reviewed  quarterly and adjustments are made as
considered necessary.

The Company  recorded a $145,000  provision  for loan losses for the first three
months of 2001,  compared to $128,000 for the same period in 2000. This increase
represents continued growth of the loan portfolio.  Net loan charge offs for the
first quarter of 2001 were  $79,000,  as compared to $9,000 over the same period
of 2000. At March 31, 2001, the allowance for loan losses totaled  $2,637,000 or
0.93% of loans,  net of  unearned  income,  compared to  $2,571,000  or 0.94% of
loans, net of unearned income at December 31, 2000.

                                       19

Summit's asset quality remains sound. As illustrated in Table III below, the
Company's non-performing assets and loans past due 90 days or more and still
accruing interest have increased during the past 12 months, but remains at a
historically moderate level.

                                            (Dollars in thousands)

                                                 March 31,        December 31,
                                           -------------------
                                             2001        2000        2000
                                            ------      ------      ------
Accruing loans past due 90 days or more     $  515      $  272      $  267
Nonperforming assets:
    Nonaccrual loans                           530         103         568
    Foreclosed properties                        -          27          36
    Repossessed assets                          14          30         115
                                            ------      ------      ------
                 Total                      $1,059      $  432      $  986
                                            ======      ======      ======

Percentage of total loans                      0.4%        0.2%        0.4%
                                            ======      ======      ======

Noninterest Income and Expense

Total other income increased  approximately $105,000 or 40.4% to $365,000 during
the first  quarter of 2001,  as compared to the first three months of 2000.  The
most  significant  item  contributing to this increase was  non-recurring  gains
recognized  on the sales of  securities  of $84,000 in the first three months of
2001.

Total  noninterest  expense  increased   approximately   $214,000,  or  9.3%  to
$2,522,000  during the first  quarter of 2001 as  compared to the same period in
2000.  Substantially  all of  this  increase  resulted  due to the  increase  in
occupancy and equipment expense associated with the Company's  centralization of
data  processing  for all  bank  subsidiaries  at the  company  headquarters  in
Moorefield, West Virginia.

FINANCIAL CONDITION

Total assets of the Company  were  $505,711,000  at March 31, 2001,  compared to
$481,239,000 at December 31, 2000, representing a 5.1% increase.  Table IV below
serves to illustrate  significant  changes in the Company's  financial  position
between December 31, 2000 and March 31, 2001.

                                       20

                                 December 31,   Increase (Decrease)    March 31,
                                               ---------------------
                                    2000        Amount   Percentage       2001
                                  --------     --------   ----------    --------
 Assets
  Federal funds sold              $  1,811     $  7,988      441.1%    $  9,799
  Securities available for sale    176,340        4,074        2.3%     180,414
  Loans, net of unearned income    271,583       10,564        3.9%     282,147

Liabilities
  Interest bearing deposits       $315,930     $ 13,469        4.3%    $329,399
  Short-term borrowings              9,391         (230)      -2.4%       9,161
  Long-term borrowings              81,086        6,407        7.9%      87,493

Loan growth during the first three months of 2001, occurring  principally in the
commercial and real estate  portfolios,  was funded by interest bearing deposits
and long-term borrowings from the FHLB.

Substantially  all the increase in interest  bearing deposits is attributable to
the continued growth of Shenandoah's deposit base during first quarter 2001.

Refer  to  Notes 3, 4, 5 and 6 of the  notes  to the  accompanying  consolidated
financial  statements for additional  information  with regard to changes in the
composition of the Summit's securities, loans, deposits and short-term borrowing
activity between March 31, 2001 and December 31, 2000.

LIQUIDITY

Liquidity  reflects the Company's ability to ensure the availability of adequate
funds to meet loan commitments and deposit  withdrawals,  as well as provide for
other  transactional  requirements.  Liquidity  is provided  primarily  by funds
invested in cash and due from banks, Federal funds sold, non-pledged securities,
and  available  lines of credit with the FHLB,  the total of which  approximated
$137 million,  or 27% of total assets at March 31, 2001 versus $143 million,  or
30% of total assets at December 31, 2000.

The  Company's  liquidity  position  is  monitored  continuously  to ensure that
day-to-day as well as anticipated funding needs are met. Management is not aware
of any trends, commitments, events or uncertainties that have resulted in or are
reasonably likely to result in a material change to the Summit's liquidity.

                                       21

MARKET RISK MANAGEMENT

Market risk is the risk of loss arising  from adverse  changes in the fair value
of financial  instruments due to changes in interest  rates,  exchange rates and
equity  prices.  Interest rate risk is Summit's  primary market risk and results
from timing differences in the repricing of assets,  liabilities and off-balance
sheet  instruments,  changes  in  relationships  between  rate  indices  and the
potential   exercise  of  imbedded   options.   The   principal   objective   of
asset/liability  management is to minimize  interest rate risk and the Company's
actions  in this  regard are taken  under the  guidance  of its  Asset/Liability
Management  Committee  ("ALCO"),   which  is  comprised  of  members  of  senior
management and members of the Board of Directors.  The ALCO actively  formulates
the economic  assumptions  that the Company uses in its  financial  planning and
budgeting  process  and  establishes  policies  which  control  and  monitor the
Company's sources, uses and prices of funds.

Some amount of interest  rate risk is inherent  and  appropriate  to the banking
business.  Summit's net income is affected by changes in the  absolute  level of
interest  rates.  The  Company's   interest  rate  risk  position  is  liability
sensitive;  that is,  liabilities  are likely to  reprice  faster  than  assets,
resulting in a decrease in net income in a rising rate environment.  Conversely,
net income should increase in a falling interest rate environment. Net income is
also  subject  to  changes  in the  shape of the  yield  curve.  In  general,  a
flattening  yield curve would result in a decline in Company earnings due to the
compression of earning asset yields and funding rates,  while a steepening would
result in increased earnings as margins widen.

Several  techniques  are  available to monitor and control the level of interest
rate risk.  Summit  primarily  uses  earnings  simulations  modeling  to monitor
interest rate risk. The earnings  simulation  model forecasts the effects on net
interest  income under a variety of interest  rate  scenarios  that  incorporate
changes in the absolute  level of interest rates and changes in the shape of the
yield  curve.  Assumptions  used to  project  yields and rates for new loans and
deposits are derived from historical  analysis.  Securities portfolio maturities
and  prepayments  are reinvested in like  instruments.  Mortgage loan prepayment
assumptions  are  developed  from  industry   estimates  of  prepayment  speeds.
Noncontractual deposit repricings are modeled on historical patterns.

As of March 31, 2001,  Summit's earnings  simulation model projects net interest
income would  decrease by  approximately  2.9% if rates rise evenly by 200 basis
points over the next year,  as compared to  projected  stable rate net  interest
income.  Conversely,  the model  projects that if rates fall evenly by 200 basis
points  over  the  next  year,   Company  net  interest  income  would  rise  by
approximately  1.3%, as compared to projected  stable rate net interest  income.
These projected changes are well within Summit's ALCO policy limit of +/- 10%.

CAPITAL RESOURCES

Maintenance  of a  strong  capital  position  is a  continuing  goal of  Company
management.  Through management of its capital  resources,  the Company seeks to
provide an  attractive  financial  return to its  shareholders  while  retaining
sufficient capital to support future growth.  Shareholders'  equity at March 31,
2001  totaled  $41,691,000   compared  to  $39,773,000  at  December  31,  2000,
representing  an increase of 4.8% which  resulted  primarily  from net  retained
earnings of the Company during the first quarter of 2001 and the appreciation of
the Company's available for sale securities portfolio.

Refer  to  Note  8 of  the  notes  to the  accompanying  consolidated  financial
statements for information  regarding  regulatory  restrictions on the Company's
and its subsidiaries' capital.

                                       22

                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                                 SUMMIT FINANCIAL GROUP, INC.
                                 (registrant)

                                 By:  /s/ H. Charles Maddy, III
                                      --------------------------------------
                                 H. Charles Maddy, III,
                                 President and Chief Executive Officer

                                 By:  /s/ Robert S. Tissue
                                      --------------------------------------
                                 Robert S. Tissue,
                                 Vice President and Chief Financial Officer

Date:  May 14, 2000

                                       23