FORM  10-Q

     SECURITIES  AND  EXCHANGE  COMMISSION
     Washington,  D.C.  20549

     QUARTERLY  REPORT  PURSUANT  TO  SECTION  13  OR  15(d)
     OF  THE  SECURITIES  EXCHANGE  ACT  OF  1934

     For  The  Quarterly  Period  Ended  September  30,  1998

     Commission  File  Number  000-19235

     SUMMIT  FINANCIAL  CORPORATION
     (Exact  name  of  registrant  as  specified  in  its  charter)


SOUTH  CAROLINA                                                57-0892056
(State  or  other  jurisdiction                         (I.R.S.  Employer
of  incorporation  or                                  Identification  No.)
organization)

     Post  Office  Box  1087
     937  North  Pleasantburg  Drive
     Greenville,  South  Carolina  29602
     (Address,  including  zip  code,  of  principal  executive  offices)

     (864)  242-2265
     (Registrant's  telephone  number,  including  area  code)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities 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.

As  of  October  30, 1998, 2,894,155 shares of $1.00 par value common stock were
outstanding.




<TABLE>
<CAPTION>

                            SUMMIT FINANCIAL CORPORATION
                             CONSOLIDATED BALANCE SHEETS
                               (Dollars in Thousands)
                                     (Unaudited)


                                                      September 30,    December 31,
                                                          1998             1997
                                                     ---------------  --------------
<S>                                                  <C>              <C>
ASSETS
Cash and short-term interest-bearing deposits        $        7,027   $       6,441 
Federal funds sold                                            5,070           2,920 
Investments available for sale (amortized cost of
 $27,806 and $28,007)                                        28,255          28,213 
Investments in stock of Federal Reserve Bank,
Federal Home Loan Bank and other stock, at cost                 792             708 
Loans, net of unearned income and net of allowance
 for loan losses of $1,779 and $1,728                       119,530         117,027 
Property and equipment, net                                   2,837           2,360 
Accrued interest receivable                                   1,119           1,168 
Other assets                                                  3,072           1,442 
                                                     ---------------  --------------
                                                     $      167,702   $     160,279 
                                                     ===============  ==============
  LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
 Demand                                              $       19,240   $      17,679 
 Interest-bearing demand                                      6,330           6,249 
 Savings and money market                                    47,933          37,355 
 Time deposits, $100,000 and over                            24,201          29,495 
 Other time deposits                                         44,911          50,150 
                                                     ---------------  --------------
                                                            142,615         140,928 
Securities sold under repurchase agreements                     836             803 
Other borrowings                                              7,000           3,000 
Accrued interest payable                                      1,038           1,370 
Other liabilities                                             1,138             809 
                                                     ---------------  --------------
                                                            152,627         146,910 
                                                     ---------------  --------------
Shareholders' equity:
 Common stock, $1.00 par value; 20,000,000 shares
  authorized; issued and outstanding 2,888,598
  and 2,876,848                                               2,888           2,877 
 Additional paid-in capital                                  10,948          10,907 
 Retained earnings                                            1,370               - 
 Nonvested restricted stock                                    (429)           (505)
 Accumulated other comprehensive income                         298              90 
                                                     ---------------  --------------
     Total shareholders' equity                              15,075          13,369 
                                                     ---------------  --------------
                                                     $      167,702   $     160,279 
                                                     ===============  ==============
<FN>

SEE  NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS
</TABLE>



<TABLE>
<CAPTION>

                            SUMMIT FINANCIAL CORPORATION
              CONSOLIDATED INCOME AND COMPREHENSIVE INCOME STATEMENTS
                   (Dollars, except per share data, in Thousands)
                                    (Unaudited)



                                                     For the Three Months Ended
                                                           September 30,
                                                    ------------------------------
                                                         1998             1997
                                                    ---------------  --------------
<S>                                                 <C>              <C>
Interest Income:
 Loans                                              $        3,102   $       2,953 
 Taxable investment securities                                 270             299 
 Nontaxable investment securities                              108              34 
 Federal funds sold                                            161             149 
 Other                                                          50              39 
                                                    ---------------  --------------
                                                             3,691           3,474 
                                                    ---------------  --------------
Interest Expense:
 Deposits                                                    1,632           1,660 
 Other                                                         115              71 
                                                    ---------------  --------------
                                                             1,747           1,731 
                                                    ---------------  --------------
     Net interest income                                     1,944           1,743 
Provision for loan losses                                      (40)            (45)
                                                    ---------------  --------------
     Net interest income after
      provision for loan losses                              1,904           1,698 
                                                    ---------------  --------------
Other Income:
 Service charges and fees on deposit accounts                   62              47 
 Credit card service fees and income                            70              59 
 Insurance commission fee income                                58              53 
 Other income                                                  149             100 
                                                    ---------------  --------------
                                                               339             259 
                                                    ---------------  --------------
Other Operating Expenses:
 Salaries, wages and benefits                                  773             669 
 Occupancy                                                     119             113 
 Furniture, fixtures and equipment                             140             112 
 Other operating expenses                                      427             387 
                                                    ---------------  --------------
                                                             1,459           1,281 
                                                    ---------------  --------------
Income before income taxes                                     784             676 
Provision for income taxes                                    (284)           (244)
                                                    ---------------  --------------
Net income                                                     500             432 
                                                    ---------------  --------------

Other comprehensive income, net of tax:
  Unrealized net gain on investments available for
   sale, net of income taxes of $75 and $31                    163              60 
                                                    ---------------  --------------
Comprehensive income                                $          663   $         492 
                                                    ===============  ==============

Net income per share
   Basic                                            $          .17   $         .16 
   Diluted                                          $          .15   $         .14 
Average shares outstanding:
   Basic                                                 2,887,936       2,823,794 
   Diluted                                               3,434,705       3,074,276 

<FN>

SEE  NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS
</TABLE>




<TABLE>
<CAPTION>

                            SUMMIT FINANCIAL CORPORATION
              CONSOLIDATED INCOME AND COMPREHENSIVE INCOME STATEMENTS
                   (Dollars, except per share data, in Thousands)
                                    (Unaudited)


                                                     For the Nine Months Ended
                                                            September 30,
                                                    -------------------------------
                                                         1998             1997
                                                    ---------------  --------------
<S>                                                 <C>              <C>
Interest Income:
 Loans                                              $        9,134   $       8,497 
 Taxable investment securities                                 906             853 
 Nontaxable investment securities                              289              62 
 Federal funds sold                                            351             273 
 Other                                                         148             118 
                                                    ---------------  --------------
                                                            10,828           9,803 
                                                    ---------------  --------------
Interest Expense:
 Deposits                                                    4,906           4,446 
 Other                                                         259             198 
                                                    ---------------  --------------
                                                             5,165           4,644 
                                                    ---------------  --------------
     Net interest income                                     5,663           5,159 
Provision for loan losses                                     (141)           (256)
                                                    ---------------  --------------
     Net interest income after
      provision for loan losses                              5,522           4,903 
                                                    ---------------  --------------

Other Income:
 Service charges and fees on deposit accounts                  160             148 
 Credit card service fees and income                           223             180 
 Insurance commission fee income                               239             149 
 Other income                                                  484             275 
                                                    ---------------  --------------
                                                             1,106             752 
                                                    ---------------  --------------
Other Operating Expenses:
 Salaries, wages and benefits                                2,417           2,010 
 Occupancy                                                     339             344 
 Furniture, fixtures and equipment                             414             325 
 Other operating expenses                                    1,299           1,131 
                                                    ---------------  --------------
                                                             4,469           3,810 
                                                    ---------------  --------------
Income before income taxes                                   2,159           1,845 
Provision for income taxes                                    (789)           (674)
                                                    ---------------  --------------
Net income                                                   1,370           1,171 
                                                    ---------------  --------------

Other comprehensive income, net of tax:
  Unrealized net gain on investments available for
   sale, net of income taxes of $105 and $28                   208              53 
                                                    ---------------  --------------
Comprehensive income                                $        1,578   $       1,224 
                                                    ===============  ==============

Per share data:
   Basic                                            $          .47   $         .42 
   Diluted                                          $          .40   $         .38 
Average shares outstanding:
   Basic                                                 2,884,296       2,820,940 
   Diluted                                               3,415,733       3,071,422 

<FN>

SEE  NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS
</TABLE>



<TABLE>
<CAPTION>

                                     SUMMIT FINANCIAL CORPORATION
                           CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                        FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                                             (Unaudited)
                                        (Dollars in Thousands)


                                                                     Accum-
                                                                     ulated
                                       Addi-                         other       Non-        Total
                                      tional                        compre-     vested       share-
                                      Common   paid-in   Retained   hensive    restricted   holders'
                                       stock   capital   earnings    income      stock       equity
                                      -------  --------  ---------  --------  ------------  ---------
<S>                                   <C>      <C>       <C>        <C>       <C>           <C>
Balance at December 31, 1996          $ 2,670  $  8,919  $      49         -            -   $  11,638
Net income for the nine months
 ended September 30, 1997                   -         -      1,171         -            -       1,171
Change in unrealized net gain
 on investment securities available
 for sale                                   -         -          -        53            -          53
Employee stock options exercised           22        43          -         -            -          65
                                      -------  --------  ---------  --------  ------------  ---------
Balance at September 30, 1997         $ 2,692  $  8,962  $   1,220  $     53  $         0   $  12,927
                                      =======  ========  =========  ========  ============  =========


Balance at December 31, 1997          $ 2,877  $ 10,907          -  $     90        ($505)  $  13,369
Net income for the nine months
 ended September 30, 1998                   -         -      1,370         -            -       1,370
Amortization of nonvested restricted
 stock                                      -         -          -         -           76          76
Change in unrealized net gain
 on investment securities available
 for sale                                   -         -          -       208            -         208
Employee stock options exercised           11        41          -         -           52 
                                      -------  --------  ---------  --------  ------------  ---------         
Balance at September 30, 1998         $ 2,888  $ 10,948  $   1,370  $    298        ($429)  $  15,075
                                      =======  ========  =========  ========  ============  =========

<FN>

SEE  NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS
</TABLE>




<TABLE>
<CAPTION>

                                SUMMIT FINANCIAL CORPORATION
                            CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Dollars in Thousands)
                                         (Unaudited)


                                                              For the Nine Months Ended
                                                                    September 30,
                                                             -----------------------------
                                                                  1998             1997
                                                             ---------------  --------------
<S>                                                          <C>              <C>
Cash flows from operating activities:
Net income                                                   $        1,370   $       1,171 
Adjustments to reconcile net income to net cash
 provided by operating activities:
    Provision for loan losses                                           141             256 
    Depreciation and amortization                                       325             250 
    Gain on sale of fixed assets                                          -             (29)
    Net amortization of net premium on investments                       26               5 
    Amortization of deferred compensation on
     restricted stock                                                    76               - 
    Decrease (increase) in other assets                                 143            (299)
    (Decrease) increase in other liabilities                           (108)            224 
                                                             ---------------  --------------
Net cash provided by operating activities                             1,973           1,578 
                                                             ---------------  --------------

Cash flows from investing activities:
  Purchases of securities available for sale                         (9,524)        (10,832)
  Proceeds from maturities of securities available for sale           8,817           2,809 
  Proceeds from sales of securities available for sale                  951           2,991 
  Purchases of Federal Home Bank Stock                                  (84)            (59)
  Net increase in loans                                              (2,644)        (10,299)
  Purchases of net finance loans receivable                               -            (499)
  Purchase of company-owned life insurance                           (1,725)              - 
  Purchases of fixed assets                                            (801)           (147)
  Proceeds from sale of fixed assets                                      -              41 
                                                             ---------------  --------------
Net cash used in investing activities                                (5,010)        (15,995)
                                                             ---------------  --------------

Cash flows from financing activities:
  Net increase in deposit accounts                                    1,688          24,798 
  Net increase in securities sold under
   repurchase agreements                                                 33              30 
  Advances from other borrowings                                      6,500           1,500 
  Repayment of other borrowings                                      (2,500)            (50)
  Proceeds from stock issuance pursuant
    to employee stock option plan                                        52              66 
                                                             ---------------  --------------
Net cash provided by financing activities                             5,773          26,344 
                                                             ---------------  --------------
Net increase in cash and cash equivalents                             2,736          11,927 
Cash and cash equivalents, beginning of period                        9,361           9,026 
                                                             ---------------  --------------
Cash and cash equivalents, end of period                     $       12,097   $      20,953 
                                                             ===============  ==============

SUPPLEMENTAL INFORMATION:
Cash paid during the period for interest                     $        5,497   $       4,474 
Cash paid during the period for income taxes                 $          595   $         775 
Change in market value of investment securities
 available for sale, net of income taxes                     $          208   $          53 

<FN>

SEE  NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS
</TABLE>




                      SUMMIT FINANCIAL CORPORATION
     CONDENSED  NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS
                               SEPTEMBER 30, 1998

NOTE  1  -  BASIS  OF  PRESENTATION:
     Summit  Financial  Corporation (the Company), a South Carolina corporation,
is  the parent holding company for Summit National Bank (the Bank), a nationally
chartered  bank,  and  Freedom  Finance,  Inc. (the Finance Company), a consumer
finance  company.

     Through  its  bank subsidiary, which commenced operations in July 1990, the
Company  provides  a  full  range  of  banking services, including the taking of
demand  and  time deposits and the making of commercial and consumer loans.  The
Bank  currently  has  two  full  service  branch  locations in Greenville, South
Carolina.  The  Bank is currently in process of renovating a leased facility for
a third branch location also in Greenville, South Carolina.  The third branch is
expected  to  commence  operations  in  the fourth quarter of 1998.  The Finance
Company  commenced  operations  in  November  1994  and makes and services small
installment  loans to individuals from its 11 offices throughout South Carolina.

     The unaudited consolidated financial statements of the Company at September
30,  1998 and for the periods ended September 30, 1998 and 1997 were prepared in
accordance  with  the  instructions  for  Form  10-Q  and,  in  the  opinion  of
management,  all  adjustments  (consisting  only  of items of a normal recurring
nature) necessary for a fair presentation of the financial position at September
30,  1998,  and  the  results of operations and cash flows for the periods ended
September  30, 1998 and 1997 have been included.  The results for the quarter or
nine month period ended September 30, 1998 are not necessarily indicative of the
results  that  may  be  expected  for the full year or any other interim period.

     These  consolidated  financial  statements  do  not include all disclosures
required  by  generally  accepted  accounting  principles  and should be read in
conjunction  with  the  Company's  audited consolidated financial statements and
related  notes  for  the  year ended December 31, 1997 included in the Company's
1997  Annual  Report  on  Form  10K.

NOTE  2  -  CASH  FLOW  INFORMATION:
     The  Company considers those amounts included in the balance sheet captions
"Cash  and  interest-bearing  deposits"  and "Federal funds sold" to be cash and
cash  equivalents,  which  totaled  $12,097,000 and $20,953,000 at September 30,
1998  and  1997,  respectively.  Cash  includes currency and coin, cash items in
process of collection and due from banks.  Included in cash and cash equivalents
are  overnight  investments.

NOTE  3  -  COMPREHENSIVE  INCOME:
     Effective  January 1, 1998, the Company adopted the provisions of Statement
of  Financial  Accounting  Standards  ("SFAS") No. 130, "Reporting Comprehensive
Income".  In  accordance  with  the  provisions  of  SFAS  No.  130, comparative
financial  statements  presented  for  earlier periods have been reclassified to
reflect the provisions of this Statement.  Comprehensive income is the change in
the  Company's  equity  during the period from transactions and other events and
circumstances.  Comprehensive  income  is  divided  into  net  income  and other
comprehensive  income.  The  Company's  "other  comprehensive  income"  for  the
quarters  and  nine  months  ended  September 30, 1998 and 1997 and "accumulated
other  comprehensive  income" as of September 30, 1998 and December 31, 1997 are
comprised  solely  of unrealized gains and losses on certain investments in debt
and  equity  securities.


NOTE  4  -  PER  SHARE  INFORMATION:
     Effective  August  24,  1998, the Company issued a two-for-one stock split.
The  split  was  issued  to all shareholders of record as of August 10, 1998 and
resulted  in  the  issuance  of 1,443,410 shares of common stock of the Company.
All  share  and per share data have been restated to reflect this stock split as
of  the  earliest  period  presented.

     The  following  is  a  reconciliation  of the denominators of the basic and
diluted  per-share  computations  for  net  income for the three months and nine
months  ended  September 30, 1999 and 1997.  There is no required reconciliation
of  the numerator from the net income reported on the accompanying statements of
income.  (Dollars,  except  per  share  data,  in  thousands).


<TABLE>
<CAPTION>



                                           Three Months Ended September 30,
                                       1998          1998       1997         1997
                                   -------------  ----------  ----------  ---------                 
                                        BASIC       DILUTED     BASIC      DILUTED
                                   -------------  ----------  ----------  ----------       
<S>                                <C>            <C>         <C>         <C>
Net Income                         $         500  $      500  $      432  $      432
                                   -------------  ----------  ----------  ----------

Weighted average shares
 outstanding                           2,887,936   2,887,936   2,823,794   2,823,794
Effective of Dilutive Securities:
    Stock options                         -          546,768      -          250,482
                                   -------------  ----------  ----------  ----------
                                       2,887,936   3,434,704   2,823,794   3,074,276
                                   -------------  ----------  ----------  ----------

Per-share amount                   $        0.17  $     0.15  $     0.16  $     0.14
                                   =============  ==========  ==========  ==========
</TABLE>



<TABLE>
<CAPTION>



                                            Nine Months Ended September 30,
                                       1998         1998       1997         1997
                                   ------------  ----------   ---------   ---------                
                                       BASIC       DILUTED      BASIC      DILUTED
                                   ------------- ----------  ----------  ----------       
<S>                                <C>           <C>         <C>         <C>
Net Income                         $      1,370  $    1,370  $    1,171  $    1,171
                                   ------------  ----------  ----------  ----------

Weighted average shares
 outstanding                          2,884,296   2,884,296   2,820,940   2,820,940
Effective of Dilutive Securities:
    Stock options                             -     531,437           -     250,482
                                   ------------  ----------  ----------  ----------
                                      2,884,296   3,415,733   2,820,940   3,071,422
                                   ------------  ----------  ----------  ----------

Per-share amount                   $       0.47  $     0.40  $     0.42  $     0.38
                                   ============  ==========  ==========  ==========
</TABLE>



                          SUMMIT FINANCIAL CORPORATION

     PART  I.  FINANCIAL  INFORMATION

     ITEM  2.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS
     OF  FINANCIAL  CONDITION  AND  RESULTS  OF  OPERATIONS


     Summit  Financial  Corporation  (the  Company)  is  a financial institution
holding  company headquartered in Greenville, South Carolina.  The Company has a
wholly-owned bank subsidiary, Summit National Bank (the Bank) and a wholly-owned
consumer  finance  company  subsidiary,  Freedom  Finance,  Inc.  (the  Finance
Company).

     During  the  quarter  ended  September  30,  1998, the Company's net income
totaled  $500,000 or $0.15 per diluted share.  This is compared to net income of
$432,000  or $0.14 per diluted share for the same quarterly period of 1997 or an
increase  of  15%.  For  the  first nine months of 1997 the Company reported net
income  of  $1.370  million  or  $0.40  per  diluted  share,  an  improvement of
approximately  $199,000  compared to the net income for the first nine months of
1997  of  $1.171  million  or  $0.38  per  diluted  share.

     Total  assets  increased approximately $7.4 million or 5% from December 31,
1997 to September 30, 1998.  Deposits increased approximately $1.7 million or 1%
during  the  period.  The  increase  in  deposits,  combined with the $4 million
(133%)  increase  in  other borrowings, funded gross loan growth of $2.6 million
(2%),  and the $2.2 million (74%) increase in federal funds sold during the same
period.

RESULTS  OF OPERATIONS - COMPARISON OF THE QUARTERS ENDED SEPTEMBER 30, 1998 AND
1997

GENERAL
     The  Company  reported  consolidated  net  income  for  the  quarter  ended
September  30,  1998  of  $500,000,  compared  to net income of $432,000 for the
quarter  ended September 30, 1997, or an improvement of approximately $68,000 or
15%.  The  increase  in  consolidated  earnings for the 1998 period is primarily
attributable  to  (1)  a  $201,000 or 12% increase in the Company's net interest
income  related to the higher level of earning assets in 1998 as compared to the
prior  year;  (2)  a  reduction  in  the provision for loan losses for the third
quarter of 1998 as compared to the prior year due to the lower loan originations
for  the  1998  quarter;  and (3) an increase of $81,000 in other income related
primarily  to  higher  insurance  and  nondeposit  product commission fees.  The
increases  are  somewhat  offset  by  higher  other  operating  expenses  of
approximately  14%.

     Summit  National  Bank  recorded  net  earnings of $511,000 for the quarter
ended September 30, 1998 which was a 17% increase from the third quarter of 1997
earnings  of  $435,000.  The increase in net income for this subsidiary resulted
primarily from a $218,000 (16%) increase in the Bank's net interest income which
was  related to the higher level of earning assets, combined with a 43% increase
in  other  income  for  the  1998  quarter  as  compared  to  the  prior  year.

     The  Company's consumer finance subsidiary, Freedom Finance, Inc., recorded
net  losses  for  both  the  third  quarter  of  1998  and 1997 of approximately
$(28,000) and $(24,000), respectively.  The lower net interest income due to the
reduction  in  earning  assets between the third quarter of 1997 and 1998 is the
primary  contributor  to  the  higher  loss  in  the  current  year's  quarter.

NET  INTEREST  INCOME
     Net interest income is the difference between the interest earned on assets
and  the  interest paid for the liabilities used to support those assets.  It is
the  largest  component  of  the  Company's  earnings and changes in it have the
greatest  impact  on net income.  Variations in the volume and mix of assets and
liabilities  and their relative sensitivity to interest rate movements determine
changes  in  net  interest income.  During the quarter ended September 30, 1998,
the  Company  recorded  consolidated  net interest income of $1.9 million, a 12%
increase  from  the  net  interest  income of $1.7 million for the quarter ended
September  30,  1997.  The increase in this amount is related to the increase in
the  average  earning asset and interest-bearing liability volume of the Company
of  8%  and  5%,  respectively, combined with the 23 basis point increase in net
interest  margin  for  the  Company.

     For  the  quarters  ended  September  30,  1998  and  1997,  the  Company's
consolidated  net  interest  margin  was 4.92% and 4.69%, respectively.  The net
interest  margin  is  calculated  as  annualized  net interest income divided by
year-to-date  average earning assets.  The increase in consolidated net interest
margin  is  related primarily to the decrease in the average cost of liabilities
of  20  basis  points.

INTEREST  INCOME
     For  the  quarter  ended  September  30, 1998, the Company's earning assets
averaged  $161.4  million  and  had an average yield of 9.21%.  This compares to
average earning assets of $149.0 million for the third quarter of 1997, yielding
9.30%.  Thus,  the  increase  in  interest  income of $217,000 or 6% between the
quarters  ended September 30, 1997 and 1998 is related to the increase in volume
of  earning assets of 8% offset by the 9 basis point reduction in average yield.

     Consolidated  loans  averaged  approximately  74%  of the Company's average
earning assets for the third quarter of 1998 compared to 77% for the prior year.
The  majority  of  the Company's loans are tied to the prime rate (approximately
63%  of the Bank's portfolio is at floating rates), which averaged 8.5% for both
the  quarters  ended  September  30, 1998 and 1997.  During the third quarter of
1998,  loans  averaged  $119.9  million,  yielding  an  average  rate of 10.26%,
compared  to  $114.2  million,  yielding an average of rate 10.25% for the third
quarter  of  1997.  The interest rate environment remained fairly stable between
the  third  quarter  of  1997  and  1998.  The  5% higher level of average loans
resulted  in an increase in consolidated interest income on loans of $149,000 or
5%.

     Investment  securities  averaged  $26.8  million  or 17% of average earning
assets  and  yielded  6.42%  (tax  equivalent basis) during the third quarter of
1998,  compared  to  average  securities  of  $21.5  million yielding 6.47% (tax
equivalent basis) for the quarter ended September 30, 1997.  The 24% increase in
average  securities  was  the  primary  contributor  to  the $45,000 increase in
interest  income  on  investment  securities.

INTEREST  EXPENSE
     The Company's interest expense for the quarter ended September 30, 1998 was
$1.7 million.  The increase of only 1% or $16,000 from the comparable quarter in
1997  was  related  to  the  average  volume  of  interest-bearing  liabilities
increasing  only  5%  between  the  two  periods,  while  the  average  rate  on
liabilities  decreased  20  basis points.  Interest-bearing liabilities averaged
$134.8  million  for  the  third  quarter of 1998 with an average rate of 5.14%.
This  compares to average interest-bearing liabilities of $128.5 million with an
average rate of 5.35% for the quarter ended September 30, 1997.  The decrease in
the average rate is related to the maturity of higher priced time deposits which
were  replaced by money market deposits, a relatively lower cost funding source.
At  September  30,  1998,  money  market deposit accounts totaled 33.6% of total
deposits  compared  to  25.8%  the  prior  year.

PROVISION  FOR  LOAN  LOSSES
     The  amount  charged  to  the provision for loan losses by the Bank and the
Finance  Company is based on management's judgment as to the amounts required to
maintain  an  allowance  adequate  to  provide  for potential losses in the loan
portfolio.  The  level  of  this  allowance is dependent upon growth in the loan
portfolios;  the total amount of past due loans; nonperforming loans; known loan
deteriorations  and/or  concentrations  of  credit;  trends in portfolio volume,
maturity  and  composition;  projected  collateral  values;  general  economic
conditions;  and management's assessment of potential losses based upon internal
credit  grading of the loans and periodic reviews and assessments of credit risk
associated  with  particular  loans.

     While  it is the Company's policy to charge-off in the current period loans
in  which  a  loss  is considered probable, there are additional risks of future
losses which cannot be quantified precisely or attributed to particular loans or
classes  of  loans.  Management  uses  the  best  information  available to make
evaluations,  however,  future  adjustments to the allowance may be necessary if
economic  conditions  differ  substantially  from the assumptions used in making
evaluations.  The  Company  is  also  subject  to  regulatory  examinations  and
determinations  as to the adequacy of the allowance, which may take into account
such  factors as the methodology used to calculate the allowance for loan losses
and  the  size  of  the  allowance  in  comparison  to a group of peer companies
identified  by  the  regulatory  agencies.

     Included  in  the  net income for the quarter ended September 30, 1998 is a
provision  for loan losses of $40,000 compared to a provision of $45,000 for the
third  quarter of 1997.  Lower loan growth for 1998 as compared to 1997 resulted
in  a  decrease  in  the  required  provision  for  the  two  quarterly periods.

     At  September 30, 1998, the consolidated allowance for loan losses was $1.8
million  or  1.47%  of  total loans net of unearned income.  This compares to an
allowance  of  $1.7  million  or  1.49% of total loans net of unearned income at
September  30,  1997.  For  the  quarter  ended  September 30, 1998, the Company
reported net charge-offs of $52,000, or 0.17% annualized of average loans.  This
is  compared  to  consolidated  net  charge-offs  of  $53,000 for the comparable
quarter  of  1997.  There were no loans on nonaccrual status at either September
30,  1998 or 1997.  Loans past due 90 days and greater totaled $365,000 or 0.30%
of  gross  loans  at  September 30, 1998 and $151,000 or 0.13% of gross loans at
September 30, 1997.  Generally loans of the Bank are placed on nonaccrual status
at  the  earlier  of  when  they  are 90 days past due or when the collection of
interest  becomes  doubtful.  Loans of the Finance Company are not classified as
nonaccrual, but are charged-off when they become 150 days contractually past due
or  earlier  if the loan is deemed uncollectible.  The allowance for loan losses
at  September  30,  1998 represents management's estimate of potential losses in
the  loan  portfolio  at  that  date.


OTHER  INCOME  AND  EXPENSES
     Other  income,  which is primarily related to service charges on customers'
deposit  accounts;  credit  card  interchange  fees;  merchant  discount  fees;
commissions  on nondeposit investment product sales and insurance product sales;
and  mortgage origination fees, was $339,000 for the quarter ended September 30,
1998  compared to $259,000 for the third quarter of 1997, or an increase of 31%.
Increases in Bank branch related income due to higher volume of transactions and
number  of  accounts ; higher mortgage loan referral fees in 1998; and increases
in  nondeposit  sale  transactions generating commission income were responsible
for  the  increase  in  other income in the third quarter of 1998 as compared to
1997.

     For  the  quarter  ended  September  30, 1998, total overhead expenses were
$1.46  million  which  is  an  increase  of 14% over the amount incurred for the
quarter  ended  September  30, 1997 of $1.28 million.  The most significant item
included  in  other  expenses  is salaries, wages and benefits which amounted to
$773,000  for  the  quarter ended September 30, 1998 as compared to $669,000 for
the  quarter  ended  September  30,  1997.  The increase of $104,000 or 16% is a
result  of  (1)  normal  annual  raises;  (2) additional staff added at the Bank
between the 1997 and 1998 comparable periods; (3) higher commission expense paid
and  associated  payroll taxes related to the higher nondeposit product sales in
the  third quarter of 1998; (4) amortization of the compensation expense related
to  restricted  stock  grants in late 1997; and (5) additional bonus and benefit
accruals  pursuant  to  the  Bank's  compensation  program.

     The  25%  ($28,000)  increase in furniture, fixtures, and equipment between
the  third quarters of 1998 and 1997 is primarily related to higher depreciation
and  associated expenses at the Bank, primarily software and hardware related to
technology  upgrades  and  furnishings  and equipment in anticipation of the new
branch  facility  opening  in  the  fourth  quarter  of  1998.

     Included  in  the  line  item  "other  operating expenses", which increased
$40,000  or  10%  from  the  comparable  quarter  of  1997,  are charges for OCC
assessments;  property and bond insurance; Relay/Cirrus switch fees; credit card
expenses;  professional services; education and seminars; advertising and public
relations;  and  other  branch  and  customer related expenses.  These items are
related  directly  to the normal operations of the Bank and increase in relation
to  the  increase  in  assets,  the  higher level of transaction volume, and the
larger  number  of  customer  accounts.  The  Bank's  activity  accounted  for a
majority  of  the  increase ($30,000), and, in addition to normal volume-related
activity  had  increases in advertising in anticipation of the new branch and in
education  related  to  the  technology  upgrades.

     Also  included  in  the line item "other operating expenses" is activity of
the  Finance  Company  which  includes charges for credit reports, license fees,
acquisition  premium amortization, and office support.  These items increased 5%
between  the  third  quarter  of 1998 and 1997 related to normal activity of the
branches.

INCOME  TAXES
     For  the quarter ended September 30, 1998, the Company reported $285,000 in
income  tax  expense,  or  an  effective tax rate of 36.3%.  This is compared to
income  tax  expense  of  $244,000 for the same quarter of the prior year, or an
effective  tax  rate  of  36%.


RESULTS  OF  OPERATIONS - COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 1998
AND  1997

GENERAL
     The  Company  reported  consolidated  net  income for the nine months ended
September  30,  1998 of $1.370 million, compared to net income of $1.171 million
for the nine months ended September 30, 1997, or an improvement of approximately
$199,000  or  17%.  The increase in consolidated earnings for the 1998 period is
primarily  attributable  to  (1) a $504,000 or 10% increase in the Company's net
interest  income  related  to  the  higher  level  of  earning assets in 1998 as
compared to the prior year; (2) a reduction in the provision for loan losses for
the  first  nine  months  of  1998 as compared to 1997 due to the lower net loan
originations in 1998; and (3) the 47% increase in other income related to higher
insurance  and  nondeposit  commission  fees  and  mortgage  referral fees.  The
increases  are  somewhat  offset  by a 17% increase in other operating expenses.

     Summit  National  Bank recorded net earnings of $1.369 million for the nine
months  ended  September  30, 1998 which was an 20% increase from the first nine
months  of 1997 earnings of $1.144 million.  The increase in net income for this
subsidiary  resulted  primarily from a $560,000 (14%) increase in the Bank's net
interest  income  which  was  primarily  related  to the higher level of average
earning  assets,  combined  with increase in other income and a reduction in the
provision  for  loan  losses.  This increase was offset somewhat by increases in
other  operating  expenses  between  the  two  periods.  The  Company's consumer
finance  subsidiary,  Freedom  Finance,  Inc.,  recorded net losses for both the
first  nine  months  of  1998 and 1997 of approximately $(38,000) and $(35,000),
respectively.

NET  INTEREST  INCOME
     Net  interest  income,  the  difference  between  the  interest  earned and
interest paid, is the largest component of the Company's earnings and changes in
it  have the greatest impact on net income.  Variations in the volume and mix of
assets and liabilities and their relative sensitivity to interest rate movements
determine  changes  in  net  interest  income.  During  the  nine  months  ended
September  30,  1998,  the  Company recorded consolidated net interest income of
$5.7  million,  a  10% increase from the net interest income of $5.1 million for
the  nine  months  ended  September  30,  1997.  The  increase in this amount is
directly  related  to  the  increase  in  the  average  earning  asset  and
interest-bearing  liability  volume of the Company of 14% and 12%, respectively,
offset  somewhat  by the 8 basis point decrease in the consolidated net interest
margin  for  the  period.

     For  the  nine  months  ended  September  30,  1998 and 1997, the Company's
consolidated  net  interest  margin  was 4.93% and 5.01%, respectively.  The net
interest  margin  is  calculated  as  annualized  net interest income divided by
year-to-date  average  earning assets. The decrease in consolidated net interest
margin  is  related  primarily  to  the  decrease in the average yield on loans,
combined  with  the shift of earning assets to lower yielding federal funds sold
and  short-term  interest-bearing  deposits.

INTEREST  INCOME
     For  the nine months ended September 30, 1998, the Company's earning assets
averaged  $157.6 million and had an average tax-equivalent yield of 9.31%.  This
compares  to  average earning assets of $138.5 million for the first nine months
of 1997, yielding approximately 9.49%.  Thus, the significant contributor to the
increase  in  interest income of $1 million or 10% between the nine months ended
September  30, 1998 and 1997 is the increase in volume of earning assets of 14%,
offset  somewhat  by  the  18  basis  point  decrease  in  yield.

     Consolidated  loans  averaged  approximately  75%  of the Company's average
earning  assets  for the first nine months of 1998 compared to 79% for the prior
year.  The  majority  of  the  Company's  loans  are  tied  to  the  prime  rate
(approximately 63% of the Bank's portfolio is at floating rates), which averaged
8.50%  and  8.42%  for  the  nine  months  ended  September  30,  1998 and 1997,
respectively.  During the first nine months of 1997, gross loans averaged $118.6
million,  yielding an average of 10.30%, compared to $109.3 million, yielding an
average  of  10.39% for the first nine months of 1997.  The decrease in yield is
primarily  related  to  the continuing competitive pricing pressures on loans of
the  Bank, combined with the decline in the average yield on the Finance Company
loans.  The  higher  level  of  average loans, offset by the decrease in average
rate,  resulted  in  an  increase  in  consolidated  interest income on loans of
$637,000  or  7.5%.

     Investment  securities  averaged  $27.5  million  or 17% of average earning
assets  and yielded 6.54% (tax equivalent basis) during the first nine months of
1998,  compared  to  average  securities  of  $19.8  million yielding 6.40% (tax
equivalent basis) for the nine months ended September 30, 1997.  The increase in
the average yield of the investment portfolio is related to the timing, maturity
distribution  and  types  of  securities  (primarily  longer  term  municipals)
purchased during the latter half of 1997 and into 1998.  The increase in average
securities  combined  with the increase in average rate resulted in the increase
of  interest  income  on  securities  of  $279,000  or  30%.

INTEREST  EXPENSE
     The Company's interest expense for the nine months ended September 30, 1998
was  $5.2  million.  The increase of 11% from the comparable nine months in 1997
of  $4.6  million  was  related  to  the  12%  increase  in  average  volume  of
interest-bearing liabilities, offset somewhat by the decrease in average rate of
4  basis  points.  Interest-bearing  liabilities averaged $132.4 million for the
first  nine  months  of 1998 with an average rate of 5.21%.  This is compared to
average  interest-bearing  liabilities of $118.2 million with an average rate of
5.25%  for  the  nine  months  ended  September  30,  1997.

PROVISION  FOR  LOAN  LOSSES
     As previously discussed under the quarterly analysis, the amount charged to
the  provision  for  loan losses by the Bank and the Finance Company is based on
management's  judgment  as  to  the  amounts  required  to maintain an allowance
adequate  to  provide  for  potential  losses  in  the  loan  portfolio.

     Included  in the net income for the nine months ended September 30, 1998 is
a  provision for loan losses of $141,000 compared to a provision of $256,000 for
the  first  nine  months  of  1997.  The  decrease  in the provision required is
related  to  the  lower  net  originations experienced by the Company during the
first  nine  months  of  1998  as  compared  to  the  same  period  of  1997.

     At  September 30, 1998, the consolidated allowance for loan losses was $1.8
million  or  1.47%  of  total loans net of unearned income.  This compares to an
allowance  of  $1.7  million  or  1.49% of total loans net of unearned income at
September  30,  1997.  For the nine months ended September 30, 1998, the Company
reported  net  charge-offs  of  $90,000.  This  is  compared to consolidated net
charge-offs  of  $79,000  for  the  comparable  period  of  1997.

OTHER  INCOME  AND  EXPENSES
     Other  income,  which is primarily related to service charges on customers'
deposit  accounts;  credit  card  interchange  fees;  merchant  discount  fees;
commissions  on nondeposit investment product sales and insurance product sales;
and  mortgage  origination  fees,  was  $1.1  million  for the nine months ended
September 30, 1998 compared to $752,000 for the first nine months of 1997, or an
increase  of  47%.  Increases in Bank branch related income due to higher volume
of  transactions  and  number of accounts; higher mortgage loan referral fees in
1998; and increases in nondeposit sale transactions generating commission income
were  responsible  for  the  increase  in other income the first half of 1998 as
compared  to  1997.

     For  the nine months ended September 30, 1998, total overhead expenses were
$4.5  million  which is an increase of 17% over the amount incurred for the nine
months  ended  September  30,  1997  of $3.8 million.  The most significant item
included  in  other  expenses  is salaries, wages and benefits which amounted to
$2.4  million  for  the  nine  months ended September 30, 1998 as compared to $2
million  for the nine months ended September 30, 1997.  The increase of $407,000
or  20%  is  a result of (1) normal annual raises; (2) additional staff added at
the  Bank  between  the  1997 and 1998 comparable periods; (3) higher commission
expense  paid  and  associated  payroll  taxes  related to the higher nondeposit
product  sales  in 1998; (4) amortization of the compensation expense related to
restricted  stock  grants  in  late  1997;  and (5) additional bonus and benefit
accruals  pursuant  to  the  Bank's  compensation  program.

     The  27%  ($88,000)  increase in furniture, fixtures, and equipment ("FFE")
between  the  first  nine months of 1998 and 1997 is primarily related to higher
depreciation  and  associated  expenses  at  the  Bank,  primarily  software and
hardware  related  to  technology  upgrades  and  furnishings  and  equipment in
anticipation  of  the  new  branch  facility  opening  later  in  1998.

     Included  in  the  line  item  "other  operating expenses", which increased
$168,000  or  15%  from  the comparable nine months of 1997, are charges for OCC
assessments;  property and bond insurance; Relay/Cirrus switch fees; credit card
expenses;  professional services; education and seminars; advertising and public
relations;  and  other  branch  and  customer related expenses.  These items are
related  directly  to the normal operations of the Bank and increase in relation
to  the  increase  in  assets,  the  higher level of transaction volume, and the
larger  number of customer accounts.  The Bank's activity accounted for $129,000
or  77%  of the increase and, in addition to normal volume-related activity, had
increases  in  advertising  in  anticipation  of  the new branch opening, higher
professional  and  outside  service  fees  related  to  additional  technology
consulting  engagements during 1998, and increases in education expenses related
to  the  software  upgrades  and  new  technology.

     Also  included  in  the line item "other operating expenses" is activity of
the  Finance  Company  which  includes charges for credit reports, license fees,
acquisition  premium amortization, and office support.  These items increased 5%
between  the  comparable  periods of 1997 and 1998 related to normal activity of
the  branches.


INCOME  TAXES
     For the nine months ended September 30, 1998, the Company reported $789,000
in  income  tax expense, or an effective tax rate of 36.5%.  This is compared to
income  tax expense of $674,000 for the same nine months of the prior year, also
for  an  effective  tax  rate  of  36.5%.


LIQUIDITY
     Liquidity  management  involves  meeting  the cash flow requirements of the
Company.  The  Company  must maintain an adequate liquidity position in order to
respond  to  the  short-term  demand  for  funds  caused by the withdrawals from
deposit  accounts, maturities of repurchase agreements, extensions of credit and
for  the  payment  of  operating  expenses.  Maintaining  an  adequate  level of
liquidity  is  accomplished  through a combination of liquid assets, those which
can  easily  be  converted into cash, and access to additional sources of funds.
The  Company's  primary liquid assets are cash and due from banks, federal funds
sold,  unpledged  investment  securities  available  for  sale, other short-term
investments  and  maturing  loans.  The  Company's  primary  liquid  assets  at
September  30,  1998  and  1997,  accounted  for  approximately  20%  and  15%,
respectively, of average assets.  In management's opinion, the Company maintains
adequate  levels  of  liquidity  by retaining liquid assets and assets which can
easily  be  converted  into cash and by maintaining access to various sources of
funds.  The  primary  sources  of  funds  available  through  the  Bank  include
borrowing  on  a  short-term  basis  from the Federal Home Loan Bank and Federal
Reserve  System, purchasing federal funds from other financial institutions, and
increasing  deposits  by  raising  rates  paid.

     The  Company's  core deposits consist of consumer non-jumbo (i.e. less than
$100,000)  time  deposits,  and  consumer  and  commercial savings accounts, NOW
accounts,  money  market  accounts,  and  checking accounts.  Although such core
deposits  are  becoming increasingly more costly and interest sensitive for both
the  Company and the industry as a whole, such core deposits continue to provide
the  Company  with  a  large  and  stable  source of funds.  The Company closely
monitors  its  reliance on certificates of deposits greater than $100,000, which
are  generally considered less stable and more interest rate sensitive than core
deposits.  Certificates  of deposit in excess of $100,000, which represented 17%
and 21% of total deposits at September 30, 1998 and 1997, respectively, are held
primarily  by  customers  in  the Company's service area who have dealt with the
Company  for  an extended period of time.  The Company has no brokered deposits.

     Summit  Financial  Corporation  ("Summit  Financial"),  the  parent holding
company,  has  limited  liquidity needs.  Summit Financial requires liquidity to
pay  limited  operating expenses, to service its debt, and to provide funding to
its  consumer  finance  subsidiary,  Freedom  Finance.  Summit  Financial  has
approximately  $1.3  million  in  available liquidity remaining from its initial
public  offering  and  the  retention  of  earnings.  All  of this liquidity was
advanced to the Finance Company to fund its operations as of September 30, 1998.
In  addition,  Summit  Financial  has  an available line of credit totaling $2.2
million  with  an unaffiliated financial institution, all of which was available
at September 30, 1998.  Finally, several individuals have provided term loans to
Summit  Financial  to  provide  liquidity for funding operating needs of Freedom
Finance.  At  September  30,  1998,  these  term loans totaled $500,000 and have
various  maturities throughout 1998.  Additional sources of liquidity for Summit
Financial  include  management  fees  and  debt  service  which  are paid by its
subsidiary  on  a  monthly  basis.

     Liquidity  needs  of  Freedom  Finance,  primarily  for the funding of loan
originations,  acquisitions,  and  operating  expenses,  have  been  met to date
through  the  initial  capital  investment of $500,000 made by Summit Financial,
borrowings  from  an  unrelated  private investor, and line of credit facilities
provided  by  Summit  Financial  and  Summit  National Bank, its sister company.

     The  Company's  management  believes  its liquidity sources are adequate to
meet  its  operating  needs  and  does  not  know  of  any  trends,  events  or
uncertainties  that  may result in a significant adverse affect on the Company's
liquidity  position.

CAPITAL  RESOURCES
     To  date,  the  capital  needs  of  the  Company  have been met through the
retention  of net income and from the proceeds of its initial offering of common
stock.  The  Company  believes that the rate of asset growth will not negatively
impact  the capital base.  Total equity at September 30, 1998 was $15.1 million.

     On  April  22,  1998,  the  Company  entered  into  an agreement to lease a
facility  for  a branch location in Greenville, South Carolina.  The facility is
approximately  8,000  square feet and has an initial term of 7 years.  The lease
requires  initial  monthly  rent  payments of $5,900 for a period of 4 years, at
which  time  the  rent  increases to $6,492 per month.  The agreement includes a
renewal  option  for an additional 7 year period at substantially the same terms
of  the  initial  lease  and for a monthly rent of $6,492 throughout the renewal
period.  The  Company  will  open  the  branch  facility  during  October  1998.
Management believes the current capital resources are adequate to meet the needs
for  the  anticipated  branch  facility  and  related furnishings and equipment.

     The Company has no other commitments or immediate plans for any significant
capital  expenditures  outside  the  normal  course  of business.  The Company's
management  does not know of any trends, events or uncertainties that may result
in  the  Company's  capital  resources  materially  increasing  or  decreasing.

     The  Company  and  the  Bank  are  subject  to  various  regulatory capital
requirements  administered  by  the  federal  banking agencies.  Failure to meet
minimum  capital  requirements  can  initiate  certain  mandatory  and  possibly
additional discretionary actions by regulators that, if undertaken, could have a
material  effect on the financial statements.  Under capital adequacy guidelines
and  the  regulatory framework for prompt corrective action, the Company and the
Bank must meet specific capital guidelines that involve quantitative measures of
the  Company's  and the Bank's assets, liabilities and certain off-balance sheet
items  as  calculated  under regulatory accounting practices.  The Company's and
the  Bank's  capital  amounts and classification 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  the  Company  and  the Bank to maintain minimum amounts and ratios (set
forth  in  the  table  below)  of  total  and  Tier 1 capital (as defined in the
regulation)  to  risk-weighted  assets  (as  defined)  and  to  total  assets.
Management  believes,  as  of  September 30, 1998, that the Company and the Bank
meet  all capital adequacy requirements to which they are subject.  At September
30,  1998  and  1997,  the  Company  and  the Bank are both categorized as "well
capitalized" under the regulatory framework for prompt corrective action.  To be
categorized  as  "well  capitalized",  the  Company  and  the Bank must maintain
minimum  total  risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set
forth  in  the  table  below.  There  are  no  current conditions or events that
management  believes  would  change  the  Company's  or  the  Bank's  category.

     The  following  table  presents the Company's and the Bank's actual capital
amounts  (dollars  in thousands) and ratios at September 30, 1998 as well as the
minimum  calculated  amounts  for  each  regulatory  defined  category.


<TABLE>
<CAPTION>

                         RISK-BASED CAPITAL CALCULATIONS


                                                                    TO BE
                                                    FOR          CATEGORIZED
                                                   CAPITAL          WELL-
                                                  ADEQUACY        CAPITALIZED
                                ACTUAL             PURPOSES    
                          -----------------    --------------   --------------
                          Amount      Ratio    Amount   Ratio   Amount   Ratio
<S>                      <C>        <C>        <C>      <C>     <C>      <C>
Total Capital to Risk-
Weighted Assets
     Company             $  16,161     12.25%  $10,556   8.00%  $13,194  10.00%
     Bank                $  14,749     11.40%  $10,350   8.00%  $12,937  10.00%

Tier I Capital to Risk-
Weighted Assets
     Company             $  14,514     11.00%  $ 5,278   4.00%  $ 7,917   6.00%
     Bank                $  13,161     10.17%  $ 5,175   4.00%  $ 7,762   6.00%

Tier I Capital to
Average Assets
     Company             $  14,514      8.76%  $ 6,625   4.00%  $ 8,281   5.00%
     Bank                $  13,161      8.06%  $ 6,528   4.00%  $ 8,160   5.00%

</TABLE>


EFFECT  OF  INFLATION  AND  CHANGING  PRICES
     The consolidated financial statements have been prepared in accordance with
generally  accepted  accounting  principles  which  require  the  measurement of
financial  position  and  results  of operations in terms of historical dollars,
without  consideration of changes in the relative purchasing power over time due
to  inflation.

     The  yield  on  a  majority  of  the  Company's  earning  assets  adjusts
simultaneously with changes in the general level of interest rates.  Over 50% of
the  Company's  liabilities are issued with fixed terms and can be repriced only
at  maturity.  During  periods of rising interest rates, as experienced in 1997,
the  Company's  assets  reprice  faster  than  the supporting liabilities.  This
causes  an  increase  in  the  net interest margin until the fixed rate deposits
mature  and  are  repriced  at  higher  current market rates, thus narrowing the
difference  between what the Company earns on its assets and what it pays on its
liabilities.  Given  the Company's current balance sheet structure, the opposite
effect  (that  is,  a  decrease in net interest income) is realized in a falling
rate  environment.  The  degree  of  interest  rate sensitivity of the Company's
assets  and  liabilities  and  the differences in timing of repricing assets and
liabilities  provides  an  indication  of  the extent to which the Company's net
interest  income  may  be  affected  by  interest  rate  movements.

     Unlike  most  other industries, virtually all of the assets and liabilities
of  a financial institution are monetary in nature.  As a result, interest rates
generally  have  a  more  significant  effect  in  a  financial  institution's
performance  than  does  the  effect  of  inflation.


ACCOUNTING,  REPORTING  AND  REGULATORY  MATTERS
     In  June  1997,  the  Financial  Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 131, "Disclosures about
Segments  of an Enterprise and Related Information".  This statement establishes
standards  for  the  way  public  enterprises  are  to  report information about
operating segments in annual financial statements and requires those enterprises
to  report  selected  information  about operating segments in interim financial
reports  issued  to  shareholders.  Statement  131  is  effective  for financial
statements  for years beginning after December 15, 1997.  In the initial year of
application, comparative information for earlier years is to be restated, unless
it  is  impractical  to  do so.  It is not anticipated that the adoption of this
statement  will  materially  effect  the  Company's  current method of financial
reporting.


YEAR  2000
     The  Company  recognizes  that  there  is  a  business risk in computerized
systems  as  the  calendar  rolls  into the next century.  The Federal Financial
Institutions  Examination  Council  ("FFIEC") issued an interagency statement on
May  5,  1997,  providing  an outline for institutions to effectively manage the
Year  2000  challenges.  The  Company  has developed an ongoing plan designed to
ensure that its operational and financial systems will not be adversely affected
by  year  2000  software  failures  due  to  processing  errors  arising  from
calculations  using  the year 2000 date.  The Company has an internal task force
assigned  to  this  project  and  the  Board  of Directors and management of the
Company  have  established  year  2000  compliance  as  a  strategic initiative.

     The Company has substantially completed the assessment phase of the project
in  which  all  critical  applications  are  identified  and  programming issues
determined.  In  conjunction with this phase, the Company inventoried all of its
hardware,  software,  and environmental or other non-computerized systems.  Each
inventory  item  (equipment,  application,  or service provider system) has been
prioritized  and  evaluated  as  to  its  Year  2000 compliance.  Currently, all
systems  identified  as  "mission  critical"  have  been  certified as Year 2000
compliant  by  the vendors providing the software applications or hardware.  The
Company  is  well  into  its  testing  phase  for  both  the  mission  critical
applications  as  well  as  other  inventoried  items.  Testing  should  be
substantially  complete  by year end for the mission critical applications.  The
Company  has  established  time-lines  for  testing all noncritical software and
ancillary  systems,  such  as  telephone  systems  and  security  devices  to be
completed  by  first  quarter  1999.  Finally,  the  Company  has developed both
remediation  and  business  resumption  contingency plans.  In these contingency
plans,  all  possible  scenarios  have  attempted to be addressed, including the
resources and procedures necessary to manually process transactions in the event
the core systems do not function on January 1, 2000.  While the Company believes
that  it  has  available resources to assure year 2000 compliance, it is to some
extent  dependent on vendor cooperation.  Accordingly, management is in constant
contact with its various vendors and is monitoring their Year 2000 efforts on an
on-going  basis.

In  addition  to  the  internal  processing  risks associated with the Year 2000
issue,  the  Company has made every attempt to address external risks, primarily
credit  and  liquidity,  associated with our major customers and their Year 2000
remediation  efforts.  The way that these material customers approach and comply
with  the Year 2000 will have a potential significant impact on the Company.  In
an effort to identify and manage the risks posed by those customers, the Company
has  (1)  identified  material  customers;  (2)  evaluated  their  Year  2000
preparedness through questionnaires and interviews; (3) assessed their Year 2000
risk  to  the  Company;  and  (4) implemented appropriate controls to manage and
mitigate  their Year 2000 related risk to the Company.  The controls implemented
may  include  ongoing  monitoring  of a customers Year 2000 remediation efforts,
review  and adjustment of credit maturities, obtaining additional collateral, or
including  specific  Year  2000  language  in  loan  agreements, as appropriate.
Management  is  also  addressing  all  new  relationships  for  Year  2000 risk.
Currently,  there  are no significant customers which are rated as a "High" Year
2000  risk  and  which  the  Company  believes  a  risk  of  loss  is  present.

     At  this  time,  the  Company  believes the cost of making modifications to
correct  any  year  2000  problems  will be nominal.  Corrections and "fixes" to
software  provided  by  third-party vendors is covered in the annual maintenance
fees  paid  by  the  Company  on  a  regular  basis.  In addition, equipment and
software  acquisition  expenses  are  not  expected  to  materially  differ from
historical  levels  as  the  Company  routinely  upgrades  and  purchases
technologically  advanced software and hardware on a continual basis and expects
to  specifically  evaluate  and  test  such  purchases for year 2000 compliance.
There  has been no significant change to the Company's existing technology plans
due  to  any  Year  2000  issues.

     The Company's management believes it has adequately addressed the Year 2000
issue  and  has  adequate resources and personnel executing the Year 2000 Action
Plan  to  ensure compliance in accordance with the timeframes established in the
plan  and  as  mandated by the regulatory agencies which oversee the Company and
its subsidiaries.  The Company's bank subsidiary has already been subject to and
will  undergo  additional  examinations  of  its Year 2000 initiatives to ensure
compliance  with  all  regulatory requirements.  Management does not know of any
trends,  events,  or  uncertainities  related  to  the  Year 2000 issues that it
believes  may  result in a significant adverse affect on the Company's financial
position.


       ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



     Market  risk  is the risk of loss from adverse changes in market prices and
rates.  The  Company's  market  risk  arises principally from interest rate risk
inherent  in its lending, deposit and borrowing activities.  Management actively
monitors  and  manages  its  interest  rate risk exposure.  Although the Company
manages  other  risks,  as  in  credit quality and liquidity risk, in the normal
course  of  business,  management  considers  interest  rate risk to be its most
significant  market risk and change in interest rates could potentially have the
largest  material  effect  on  the  Company's financial condition and results of
operations.  Other types of market risks, such as foreign currency exchange rate
risk  and  commodity  price  risk,  do  not  arise  in  the normal course of the
Company's  business  activities.

     The  Company's profitability is affected by fluctuations in interest rates.
Management's  goal  is  to  maintain  a  reasonable  balance between exposure to
interest  rate  fluctuations and earnings.  A sudden and substantial increase in
interest  rates  may  adversely impact the Company's earnings to the extent that
the  interest  rates on interest-earning assets and interest-bearing liabilities
do  not  change  at  the  same  speed,  to the same extent or on the same basis.

     The  Bank's  Asset  Liability  Management  Committee  ("ALCO") monitors and
considers methods of managing the rate and sensitivity repricing characteristics
of the balance sheet components consistent with maintaining acceptable levels of
changes  in  net portfolio value ("NPV") and net interest income.  Net portfolio
value represents the market value of portfolio equity and is equal to the market
value of assets minus the market value of liabilities, with adjustments made for
off-balance  sheet  items  over  a  range  of assumed changes in market interest
rates.  A  primary purpose of the Company's asset and liability management is to
manage  interest  rate  risk  to effectively invest the Company's capital and to
preserve  the  value  created by its core business operations.  As such, certain
management  monitoring  processes  are designed to minimize the impact of sudden
and  sustained  changes  in  interest  rates  on  NPV  and  net interest income.

     The  Company's  exposure  to  interest  rate risk is reviewed on a periodic
basis  by  the  Board of Directors and the ALCO.  Interest rate risk exposure is
measured  using  interest  rate  sensitivity analysis to determine the Company's
change  in NPV in the event of hypothetical changes in interest rates.  Further,
interest  rate  sensitivity  gap  analysis  is  used  to determine the repricing
characteristics  of the Bank's assets and liabilities.  The ALCO is charged with
the  responsibility  to  maintain  the  level  of  sensitivity of the Bank's net
portfolio  value  within  Board  approved  limits.

     Interest  rate  sensitivity  analysis  is  used  to  measure  the Company's
interest  rate risk by computing estimated changes in NPV of its cash flows from
assets,  liabilities,  and  off-balance  sheet  items in the event of a range of
assumed  changes  in  market interest rates.  This analysis assesses the risk of
loss in market risk sensitive instruments in the event of a sudden and sustained
100  -  400 basis points increase or decrease in the market interest rates.  The
Company's  Board  of  Directors  has  adopted an interest rate risk policy which
establishes  maximum  allowable  decreases  in  NPV in the event of a sudden and
sustained  increase  or  decrease  in  market  interest  rates.

     As of September 30, 1998, there was no substantial change from the interest
rate  sensitivity  analysis  or the market value of portfolio equity for various
changes  in  interest  rates  calculated as of December 31, 1997.  The foregoing
disclosures  related  to  the  market  risk  of  the  Company  should be read in
conjunction  with  the  Company's  audited  consolidated  financial  statements,
related  notes  and  management's discussion and analysis of financial condition
and  results  of operations for the year ended December 31, 1997 included in the
Company's  1997  Annual  Report  on  Form  10K.



<PAGE>


                          SUMMIT FINANCIAL CORPORATION

     PART  II.  OTHER  INFORMATION



Item  1.     Legal  Proceedings.

The  Corporation  and  its  subsidiaries  from  time  to  time and currently are
involved  as  plaintiff  or  defendant  in various legal actions incident to its
business.  There  are  no  material  actions  currently  pending.

Item  2.     Changes  in  Securities.

     None.

Item  3.     Defaults  Upon  Senior  Securities.

     None.

Item  4.     Submission  of  Matters  to  a  Vote  of  Security  Holders.

No  matters were submitted to the shareholders for a vote at any time during the
quarter.

Item  5.     Other  Information.

     None.

Item  6.     Exhibits  and  Reports  on  Form  8-K.

(a)     Exhibits:

     		27.1  Financial  Data  Schedule

     (b)     Reports  on  Form  8-K:

     		None.


<PAGE>

     SUMMIT  FINANCIAL  CORPORATION

     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  CORPORATION


Dated:  November  12,  1998

/s/  J.  Randolph  Potter
-------------------------
J.  Randolph  Potter,  President
and  Chief  Executive  Officer


Dated:  November  12,  1998

/s/  Blaise  B.  Bettendorf
---------------------------
Blaise  B.  Bettendorf,  Senior  Vice  President
and  Chief  Financial  Officer