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,  2002

                 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  November  8, 2002, 3,810,712 shares of $1.00 par value common stock were
outstanding.

1

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<CAPTION>

                               SUMMIT FINANCIAL COPORATION
                      FORM 10-Q FOR QUARTER ENDED SEPTEMBER 30, 2002
                   TABLE OF CONTENTS OF INFORMATION REQUIRED IN REPORT




<S>                                                                                    <C>
PART I. FINANCIAL INFORMATION
Item 1.
Consolidated Balance Sheets
     September 30, 2002 and December 31, 2001 . . . . . . . . . . . . . . . . . . . .   3
Consolidated Statements of Income
     Three months and nine months ended September 30, 2002 and 2001 . . . . . . . . .   4
Consolidated Statements of Changes in Shareholders' Equity and Comprehensive Income
     nine months ended September 30, 2002 and 2001. . . . . . . . . . . . . . . . . .   5
Consolidated Statements of Cash Flows
     nine months ended September 30, 2002 and 2001. . . . . . . . . . . . . . . . . .   6
Condensed Notes to Consolidated Financial Statements September 30, 2002 . . . . . . .   7

Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations  10

Item 3.
Quantitative and Qualitative Disclosures About Market Risk. . . . . . . . . . . . . .  25

Item 4.
Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  26


PART II. OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  27


SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  28

CERTIFICATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  29


</TABLE>
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<TABLE>
<CAPTION>

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


                                                       September 30,    December 31,
                                                           2002             2001
                                                      ---------------  --------------
<S>                                                   <C>              <C>
ASSETS
Cash and due from banks. . . . . . . . . . . . . . .  $        9,235   $       8,579
Interest-bearing bank balances . . . . . . . . . . .           5,366             945
Federal funds sold . . . . . . . . . . . . . . . . .          10,074             925
Investments available for sale . . . . . . . . . . .          55,560          47,400
Investment in Federal Home Loan Bank and other stock           2,083           1,733
Loans, net of unearned income and net of
 allowance for loan losses of $3,153 and $2,937. . .         206,802         204,104
Premises and equipment, net. . . . . . . . . . . . .           4,274           4,447
Accrued interest receivable. . . . . . . . . . . . .           1,399           1,393
Other assets . . . . . . . . . . . . . . . . . . . .           3,713           3,571
                                                      ---------------  --------------
                                                      $      298,506   $     273,097
                                                      ===============  ==============
  LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
 Noninterest-bearing demand. . . . . . . . . . . . .  $       32,648   $      29,372
 Interest-bearing demand . . . . . . . . . . . . . .          20,490          21,807
 Savings and money market. . . . . . . . . . . . . .          71,131          85,388
 Time deposits, $100,000 and over. . . . . . . . . .          53,576          41,798
 Other time deposits . . . . . . . . . . . . . . . .          57,914          40,413
                                                      ---------------  --------------
                                                             235,759         218,778
FHLB advances. . . . . . . . . . . . . . . . . . . .          32,400          26,900
Other short-term borrowings. . . . . . . . . . . . .               -             500
Accrued interest payable . . . . . . . . . . . . . .             807           1,194
Other liabilities. . . . . . . . . . . . . . . . . .           1,736           1,124
                                                      ---------------  --------------
                                                             270,702         248,496
                                                      ---------------  --------------
Shareholders' equity:
 Common stock, $1.00 par value; 20,000,000
  shares authorized; issued and
  outstanding 3,810,638 and 3,793,032 shares . . . .           3,811           3,793
 Additional paid-in capital. . . . . . . . . . . . .          18,482          18,409
 Retained earnings . . . . . . . . . . . . . . . . .           4,860           2,379
 Accumulated other comprehensive income, net of tax.             738             203
 Nonvested resticted stock . . . . . . . . . . . . .             (87)           (183)
                                                      ---------------  --------------
     Total shareholders' equity. . . . . . . . . . .          27,804          24,601
                                                      ---------------  --------------
                                                      $      298,506   $     273,097
                                                      ===============  ==============
<FN>

SEE  NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS
</TABLE>
3
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<TABLE>
<CAPTION>

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

                                                 For  the  Quarters      For the Nine Months
                                                        Ended                   Ended
                                                    September 30,           September 30,
                                               ----------------------  ----------------------
                                                  2002        2001        2002        2001
                                               ----------  ----------  ----------  ----------
<S>                                            <C>         <C>         <C>         <C>
Interest Income:
 Loans. . . . . . . . . . . . . . . . . . . .  $    3,791  $    4,383  $   11,325  $   13,365
 Taxable investment securities. . . . . . . .         473         427       1,380       1,262
 Nontaxable investment securities . . . . . .         180         138         534         399
 Federal funds sold . . . . . . . . . . . . .          26          64          67         283
 Other. . . . . . . . . . . . . . . . . . . .          45          59         126         224
                                               ----------  ----------  ----------  ----------
                                                    4,515       5,071      13,432      15,533
                                               ----------  ----------  ----------  ----------
Interest Expense:
 Deposits . . . . . . . . . . . . . . . . . .       1,175       2,144       3,532       6,938
 Other. . . . . . . . . . . . . . . . . . . .         387         325       1,180         830
                                               ----------  ----------  ----------  ----------
                                                    1,562       2,469       4,712       7,768
                                               ----------  ----------  ----------  ----------
     Net interest income. . . . . . . . . . .       2,953       2,602       8,720       7,765
Provision for loan losses . . . . . . . . . .         196         148         546         485
                                               ----------  ----------  ----------  ----------
     Net interest income after
      provision for loan losses . . . . . . .       2,757       2,454       8,174       7,280
                                               ----------  ----------  ----------  ----------
Noninterest income:
 Service charges and fees on deposit accounts         136         107         407         310
 Credit card service fees and income. . . . .         107         117         343         342
 Insurance commission fee income. . . . . . .         119         122         479         370
 Gain on sale of securities . . . . . . . . .          39         103          85         193
 Other income . . . . . . . . . . . . . . . .         281         201         711         707
                                               ----------  ----------  ----------  ----------
                                                      682         650       2,025       1,922
                                               ----------  ----------  ----------  ----------
Noninterest expenses:
 Salaries, wages and benefits . . . . . . . .       1,281       1,200       3,982       3,632
 Occupancy. . . . . . . . . . . . . . . . . .         164         158         483         497
 Furniture, fixtures and equipment. . . . . .         176         171         524         513
 Other expenses . . . . . . . . . . . . . . .         485         556       1,568       1,563
                                               ----------  ----------  ----------  ----------
                                                    2,106       2,085       6,557       6,205
                                               ----------  ----------  ----------  ----------
Income before income taxes. . . . . . . . . .       1,333       1,019       3,642       2,997
Provision for income taxes. . . . . . . . . .         424         329       1,161         970
                                               ----------  ----------  ----------  ----------
Net income. . . . . . . . . . . . . . . . . .  $      909  $      690  $    2,481  $    2,027
                                               ==========  ==========  ==========  ==========

Net income per share:
   Basic. . . . . . . . . . . . . . . . . . .  $      .24  $      .18  $      .66  $      .54
   Diluted. . . . . . . . . . . . . . . . . .  $      .21  $      .17  $      .58  $      .49
Average shares outstanding:
   Basic. . . . . . . . . . . . . . . . . . .   3,787,000   3,741,000   3,782,000   3,742,000
   Diluted. . . . . . . . . . . . . . . . . .   4,339,000   4,118,000   4,288,000   4,106,000
<FN>

SEE  NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS
</TABLE>
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<TABLE>
<CAPTION>

                                    SUMMIT FINANCIAL CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME
                                FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
                                               (Dollars in Thousands)
                                                     (Unaudited)

                                                                          Accumulated
                                                                             other
                                                Additional               comprehensive    Nonvested       Total
                                      Common     paid-in     Retained     income, net    restricted   shareholders'
                                      stock      capital     earnings       of tax          stock         equity
                                     --------  ------------  ---------  ---------------  -----------  --------------
<S>                                  <C>       <C>           <C>        <C>              <C>          <C>
Balance at December 31, 2000. . . .  $ 3,598   $    16,803   $   1,425  $           32        ($330)  $       21,528
Net income for the nine months
 ended September 30, 2001 . . . . .        -             -       2,027               -            -            2,027
Other comprehensive income:
Unrealized gain on securities:
 Unrealized holding gains arising
  during the period, net
  of tax of $258. . . . . . . . . .        -             -           -             501            -                -
 Less: reclassification adjustment
  for gains included in net
  income, net of tax of ($66) . . .        -             -           -            (127)           -                -
                                                                        ---------------
 Other comprehensive income . . . .        -             -           -             374            -              374
                                                                        ---------------               --------------
Comprehensive income. . . . . . . .        -             -           -               -            -            2,401
                                                                                                      --------------
Employee stock options exercised. .       15            32           -               -            -               47
Forfeiture of common stock issued
 pursuant to restricted stock plan.       (2)          (19)          -               -           21                -
Amortization of deferred
 compensation on restricted stock .        -             -           -               -           94               94
                                     --------  ------------  ---------  ---------------  -----------  --------------
Balance at September 30, 2001 . . .  $ 3,611   $    16,816   $   3,452  $          406        ($215)  $       24,070
                                     ========  ============  =========  ===============  ===========  ==============

Balance at December 31, 2001. . . .  $ 3,793   $    18,409   $   2,379  $          203        ($183)  $       24,601
Net income for the nine months
 ended September 30, 2002 . . . . .        -             -       2,481               -            -            2,481
Other comprehensive income:
Unrealized gain on securities:
 Unrealized holding gains arising
  during the period, net
  of tax of $359. . . . . . . . . .        -             -           -             588            -                -
 Less: reclassification adjustment
  for gains included in net
  income, net of tax of ($32) . . .        -             -           -             (53)           -                -
                                                                        ---------------
 Other comprehensive income . . . .        -             -           -             535            -              535
                                                                        ---------------               --------------
Comprehensive income. . . . . . . .        -             -           -               -            -            3,016
                                                                                                      --------------
Employee stock options exercised. .       18            73           -               -            -               91
Amortization of deferred
 compensation on restricted stock .        -             -           -               -           96               96
                                     --------  ------------  ---------  ---------------  -----------  --------------
Balance at September 30, 2002 . . .  $ 3,811   $    18,482   $   4,860  $          738         ($87)  $       27,804
                                     ========  ============  =========  ===============  ===========  ==============
<FN>

SEE  NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS
</TABLE>
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<TABLE>
<CAPTION>

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

                                                          For the Nine Months Ended
                                                                 September 30,
                                                               --------------------
                                                                 2002       2001
                                                               ---------  ---------
<S>                                                            <C>        <C>
Cash flows from operating activities:
 Net income . . . . . . . . . . . . . . . . . . . . . . . . .  $  2,481   $  2,027
Adjustments to reconcile net income to net cash
 provided by operating activities:
    Provision for loan losses . . . . . . . . . . . . . . . .       546        485
    Depreciation and amortization . . . . . . . . . . . . . .       385        363
    Gain on sale of equipment and vehicles. . . . . . . . . .         -        (28)
    Gain on sale securities available for sale. . . . . . . .       (85)      (193)
    Net amortization of net premium on investments. . . . . .       131         94
    Amortization of deferred compensation on restricted stock        96         94
    (Increase) decrease in other assets . . . . . . . . . . .      (254)        15
    Increase (decrease) in other liabilities. . . . . . . . .       225       (269)
    Deferred income taxes . . . . . . . . . . . . . . . . . .      (221)      (168)
                                                               ---------  ---------
Net cash provided by operating activities . . . . . . . . . .     3,304      2,420
                                                               ---------  ---------

Cash flows from investing activities:
  Purchases of securities available for sale. . . . . . . . .   (25,717)   (24,623)
  Proceeds from maturities of securities available for sale .     8,299      6,736
  Proceeds from sales of securities available for sale. . . .    10,074      5,728
  Purchases of investments in FHLB and other stock. . . . . .      (350)      (250)
  Net increase in loans . . . . . . . . . . . . . . . . . . .    (3,244)   (24,424)
  Purchases of premises and equipment . . . . . . . . . . . .      (212)    (1,437)
  Proceeds from sale of equipment and vehicles. . . . . . . .         -         57
                                                               ---------  ---------
Net cash used in investing activities . . . . . . . . . . . .   (11,150)   (38,213)
                                                               ---------  ---------

Cash flows from financing activities:
  Net increase in deposit accounts. . . . . . . . . . . . . .    16,981     18,571
  Net decrease in other short-term borrowings . . . . . . . .      (500)         -
  Proceeds from FHLB advances . . . . . . . . . . . . . . . .    13,000     15,000
  Repayments of FHLB advances . . . . . . . . . . . . . . . .    (7,500)    (6,000)
  Proceeds from employee stock options exercised. . . . . . .        91         47
                                                               ---------  ---------
Net cash provided by financing activities . . . . . . . . . .    22,072     27,618
                                                               ---------  ---------
Net increase (decrease) in cash and cash equivalents. . . . .    14,226     (8,175)
Cash and cash equivalents, beginning of period. . . . . . . .    10,449     29,395
                                                               ---------  ---------
Cash and cash equivalents, end of period. . . . . . . . . . .  $ 24,675   $ 21,220
                                                               =========  =========

SUPPLEMENTAL INFORMATION:
Cash paid during the period for interest. . . . . . . . . . .  $  5,099   $  8,265
Cash paid during the period for income taxes. . . . . . . . .  $  1,132   $  1,153
Change in fair market value of investment securities
 available for sale, net of income taxes. . . . . . . . . . .  $    535   $    374
<FN>

SEE  NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS
</TABLE>
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                          SUMMIT FINANCIAL CORPORATION
              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2002


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  four  full  service  branch  locations  in  Greenville and
Spartanburg,  South  Carolina.  In 1997, the Bank incorporated Summit Investment
Services,  Inc.  as  a  wholly-owned subsidiary to offer nondeposit products and
financial  management  services.  The  Finance  Company  commenced operations in
November 1994 and makes and services small installment loans to individuals from
its  eleven  offices  throughout  South  Carolina.

     The  accompanying consolidated financial statements include the accounts of
the  Company  and  its  subsidiaries.  All significant intercompany accounts and
transactions  have  been eliminated in consolidation. The unaudited consolidated
financial  statements  of  the  Company  at September 30, 2002 and for the three
month  and nine month periods ended September 30, 2002 and 2001 were prepared in
accordance  with  the instructions for Form 10-Q.  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,
2002,  and  the  results  of  operations  and  cash  flows for the periods ended
September 30, 2002 and 2001 have been included.  The results for the three month
or nine month periods ended September 30, 2002 are not necessarily indicative of
the  results that may be expected for the full year or any other interim period.

          The  consolidated financial statements are prepared in conformity with
accounting  principles  generally  accepted  in  the  United  States  of America
("GAAP")  which  requires  management  to make estimates and assumptions.  These
estimates  and assumptions affect the reported amounts of assets and liabilities
and  the  disclosure  of  contingent  assets  and liabilities at the date of the
financial statements.  In addition, the estimates affect the reported income and
expense  during  the  reporting  period.  Actual results could differ from these
estimates  and  assumptions.

     These  consolidated  financial  statements  do  not include all disclosures
required  by  GAAP  and should be read in conjunction with the Company's audited
consolidated  financial statements and related notes for the year ended December
31,  2001  included  in  the  Company's  2001  Annual  Report  on  Form  10-K.

NOTE  2  -  CASH  FLOW  INFORMATION:
     For  the purposes of reporting cash flows, cash includes currency and coin,
cash  items  in  process of collection and due from banks.  Included in cash and
cash  equivalents are federal funds sold and overnight investments.  The Company
considers  the  amounts  included in the balance sheet line items, "Cash and due
from  banks",  "Interest-bearing  bank  balances" and "Federal funds sold" to be
cash  and  cash equivalents.  These accounts totaled $24,675,000 and $21,220,000
at  September  30,  2002  and  2001,  respectively.

7
<PAGE>
NOTE  3  -  NONPERFORMING  ASSETS:
     Loans past due in excess of 90 days and still accruing interest amounted to
approximately $216,000 and $153,000 at September 30, 2002 and December 31, 2001,
respectively.  At  September  30,  2002  and  December  31, 2001 the Company had
approximately  $203,000  and  $1.2  million,  respectively, in nonaccrual loans.
There  were no impaired loans at September 30, 2002.  Approximately $1.0 million
of  the  nonaccrual  loans  at  December 31, 2001 were considered to be impaired
under  Statement  of Financial Accounting Standards 114.  The average balance of
impaired loans was $1,099,000 for the year ended December 31, 2001 and there was
no  impairment  allowance  required at that date.  Interest income recognized on
impaired  loans  during 2001 was approximately $35,000.  There was no other real
estate  owned  at  September  30,  2002  or  December  31,  2001.

NOTE  4  -  PER  SHARE  INFORMATION:
     The  following  is  a  reconciliation  of the denominators of the basic and
diluted  per  share  computations  for  net  income for the quarter and the nine
months  ended  September 30, 2002 and 2001.  There is no required reconciliation
of  the numerator from the net income reported on the accompanying statements of
income.  All  average share and per share data have been restated to reflect all
stock  dividends  as of the earliest period presented.  (All numbers, except per
share  data,  in  thousands).

<TABLE>
<CAPTION>

                                      For the Quarter Ended September 30,
                                   2002        2002        2001        2001
                                ----------  ----------  ----------  ----------
                                  BASIC      DILUTED      BASIC      DILUTED
                                ----------  ----------  ----------  ----------
<S>                             <C>         <C>         <C>         <C>
Net Income . . . . . . . . . .  $  909,000  $  909,000  $  690,000  $  690,000
                                ----------  ----------  ----------  ----------

Average shares outstanding . .   3,787,269   3,787,269   3,741,111   3,741,111
Effect of Dilutive Securities:
    Stock options. . . . . . .           -     531,835           -     341,559
    Unvested restricted stock.           -      20,190           -      35,089
                                 3,787,269   4,339,294   3,741,111   4,117,759
                                ==========  ==========  ==========  ==========
Per-share amount . . . . . . .  $     0.24  $     0.21  $     0.18  $     0.17
                                ==========  ==========  ==========  ==========
</TABLE>



<TABLE>
<CAPTION>

                                    For the Nine Months Ended September 30,
                                   2002        2002        2001        2001
                                ----------  ----------  ----------  ----------
                                  BASIC      DILUTED      BASIC      DILUTED
                                ----------  ----------  ----------  ----------
<S>                             <C>         <C>         <C>         <C>
Net Income . . . . . . . . . .  $2,481,000  $2,481,000  $2,027,000  $2,027,000
                                ----------  ----------  ----------  ----------

Average shares outstanding . .   3,781,784   3,781,784   3,741,609   3,741,609
Effect of Dilutive Securities:
    Stock options. . . . . . .           -     485,615           -     329,008
    Unvested restricted stock.           -      20,190           -      35,089
                                 3,781,784   4,287,589   3,741,609   4,105,706
                                ==========  ==========  ==========  ==========
Per-share amount . . . . . . .  $     0.66  $     0.58  $     0.54  $     0.49
                                ==========  ==========  ==========  ==========
</TABLE>

8
<PAGE>

NOTE  5  -  SEGMENT  INFORMATION:
     The  Company reports information about its operating segments in accordance
with  SFAS  131,  "Disclosures  about  Segments  of  an  Enterprise  and Related
Information".  Summit  Financial  Corporation  is the parent holding company for
Summit National Bank ("Bank"), a nationally chartered bank, and Freedom Finance,
Inc.  ("Finance"),  a  consumer finance company.  The Company considers the Bank
and  the  Finance  Company  separate  business  segments.

     Financial performance for each segment is detailed in the following tables.
Included  in the "Corporate" column are amounts for general corporate activities
and  eliminations  of  intersegment  transactions.

<TABLE>
<CAPTION>

                                 For  the  quarter  ended              At and for the nine months ended
                                   September  30, 2002                         September  30,  2002
                           -------------------------------------  -----------------------------------------
                            Bank   Finance    Corporate   Total     Bank    Finance    Corporate    Total
                           ------  --------  -----------  ------  --------  --------  -----------  --------
<S>                        <C>     <C>       <C>          <C>     <C>       <C>       <C>          <C>
Interest income . . . . .  $4,050  $    476        ($11)  $4,515  $ 12,001  $  1,456        ($25)  $ 13,432
Interest expense. . . . .   1,562        48         (48)   1,562     4,705       139        (132)     4,712
                           ------  --------  -----------  ------  --------  --------  -----------  --------
Net interest income . . .   2,488       428          37    2,953     7,296     1,317         107      8,720
Provision for loan losses     140        56           -      196       335       211           -        546
Other income. . . . . . .     611        86         (15)     682     1,816       254         (45)     2,025
Other expenses. . . . . .   1,764       337           5    2,106     5,500     1,045          12      6,557
                           ------  --------  -----------  ------  --------  --------  -----------  --------
Income before taxes . . .   1,195       121          17    1,333     3,277       315          50      3,642
Income taxes. . . . . . .     372        46           6      424     1,025       118          18      1,161
                           ------  --------  -----------  ------  --------  --------  -----------  --------
Net income. . . . . . . .  $  823  $     75  $       11   $  909  $  2,252  $    197  $       32   $  2,481
                           ======  ========  ===========  ======  ========  ========  ===========  ========
Net loans . . . . . . . .                                         $204,694  $  3,207     ($1,099)  $206,802
                                                                  ========  ========  ===========  ========
Total assets. . . . . . .                                         $294,811  $  3,849       ($154)  $298,506
                                                                  ========  ========  ===========  ========
</TABLE>



<TABLE>
<CAPTION>

                               For  the  quarter  ended                At and for the nine months ended
                                September  30,  2001                         September  30, 2001
                           ------------------------------------  ------------------------------------------
                            Bank   Finance    Corporate   Total     Bank    Finance    Corporate    Total
                           ------  --------  -----------  ------  --------  --------  -----------  --------
<S>                        <C>     <C>       <C>          <C>     <C>       <C>       <C>          <C>
Interest income . . . . .  $4,633  $    445         ($7)  $5,071  $ 14,226  $  1,349        ($42)  $ 15,533
Interest expense. . . . .   2,460        66         (57)   2,469     7,742       215        (189)     7,768
                           ------  --------  -----------  ------  --------  --------  -----------  --------
Net interest income . . .   2,173       379          50    2,602     6,484     1,134         147      7,765
Provision for loan losses      80        68           -      148       330       155           -        485
Other income. . . . . . .     581        81         (12)     650     1,704       254         (36)     1,922
Other expenses. . . . . .   1,710       370           5    2,085     5,091     1,104          10      6,205
                           ------  --------  -----------  ------  --------  --------  -----------  --------
Income before taxes . . .     964        22          33    1,019     2,767       129         101      2,997
Income taxes. . . . . . .     306         8          15      329       882        50          38        970
                           ------  --------  -----------  ------  --------  --------  -----------  --------
Net income. . . . . . . .  $  658  $     14  $       18   $  690  $  1,885  $     79  $       63   $  2,027
                           ======  ========  ===========  ======  ========  ========  ===========  ========
Net loans . . . . . . . .                                         $199,503  $  3,185       ($788)  $201,900
                                                                  ========  ========  ===========  ========
Total assets. . . . . . .                                         $276,707  $  3,794       ($842)  $279,659
                                                                  ========  ========  ===========  ========
</TABLE>

9
<PAGE>


                          SUMMIT FINANCIAL CORPORATION

                          PART I. FINANCIAL INFORMATION

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


     The  following  discussion  and analysis should be read in conjunction with
the consolidated financial statements and related notes and with the statistical
information  and  financial  data appearing in this report as well as the Annual
Report  of Summit Financial Corporation (the "Company") on Form 10K for the year
ended  December  31,  2001.  Results  of operations for the three month and nine
month periods ended September 30, 2002 are not necessarily indicative of results
to  be  attained  for  any  other  period.

FORWARD-LOOKING  STATEMENTS
     Summit  Financial  Corporation's  ("the  Company")  Report  on  Form  10-Q,
specifically  certain of the statements set forth under "Management's Discussion
and  Analysis  of  Financial Condition and Results of Operations", "Quantitative
and Qualitative Disclosures about Market Risk", and elsewhere in this Form 10-Q,
contains forward-looking statements, identified as such for purposes of the safe
harbor  provided  in  Section 27A of the Securities Act of 1933, as amended, and
Section  21E  of  the  Securities  Exchange  Act  of  1934,  as  amended.  Such
forward-looking  statements  are  based  on  current expectations, estimates and
projections  about  the  Company's  industry,  management's  beliefs and certain
assumptions  made  by  the  Company's  management.  Words such as "anticipates",
"expects",  "intends",  "plans",  "believes", "estimates", or variations of such
words  and  similar  expressions,  are intended to identify such forward-looking
statements.  Readers  are cautioned that any such forward-looking statements are
not  guarantees  of  future  performance  and  involve  a  number  of  risks and
uncertainties,  and  that  actual  results  could  differ  materially from those
indicated  by  such  forward-looking  statements.  Important  factors that could
cause  actual  results  to  differ  materially  from  those  indicated  by  such
forward-looking  statements include, but are not limited to, the following:  (1)
that  the  information  is of a preliminary nature and may be subject to further
and/or  continuing  review and adjustment; (2) changes in the financial industry
regulatory  environment;  (3)  changes  in  the  economy  in areas served by the
Company  and its subsidiaries; (4) the impact of competition; (5) the management
of the Company's operations; (6) changes in the market interest rate environment
and/or the Federal Reserve's monetary policies; (7) loan prepayments and deposit
decay  rates;  and  (8) the other risks and uncertainties described from time to
time  in  the  Company's  periodic  reports  filed  with  the  SEC.  The Company
disclaims  any  obligation  to  update  any  forward-looking  statements.

OVERVIEW
     Summit  Financial  Corporation  is  a financial institution holding company
headquartered  in  Greenville, South Carolina.  The Company offers a broad range
of  financial services through its wholly-owned subsidiary, Summit National Bank
(the  "Bank,"  or "Summit").  The Bank is a nationally chartered commercial bank
which  operates principally in the Upstate of South Carolina.  The Bank received
its  charter  and  commenced  operations  in  July  1990.  In  1997,  the  Bank
incorporated  Summit  Investment  Services, Inc. as a wholly-owned subsidiary to
provide  a  wider  range of investment products and financial planning services.
The  Bank currently has four full service offices in Greenville and Spartanburg,
South Carolina.  Summit provides a full range of banking services to individuals
and  businesses, including the taking of time and demand deposits, making loans,
and offering nondeposit investment services.  The Bank emphasizes close personal
contact  with  its customers and strives to provide a consistently high level of
service  to  both  individual  and  corporate  customers.

          Freedom  Finance,  Inc.  (the  "Finance  Company"  or "Freedom,") is a
wholly-owned  subsidiary of the Company which is operating as a consumer finance
company  headquartered  in  Greenville,  South  Carolina.  The  Finance  Company
primarily  makes  and  services  installment  loans  to  individuals  with  loan
principal  amounts  generally  not  exceeding $2,000 and with maturities ranging
from  three  to  eighteen  months.  Freedom  operates eleven branches throughout
South  Carolina.

     During  the  quarter  ended  September  30,  2002, the Company's net income
totaled  $909,000 or $0.21 per diluted share.  This is compared to net income of
$690,000  or $0.17 per diluted share for the same quarterly period of 2001.  For
the  first nine months of 2002, the Company reported net income of $2,481,000 or
$0.58  per  diluted  share, an improvement of approximately $454,000 or 22% from
the  net  income  for  the  first nine months of 2001 of $2,027,000 or $0.49 per
diluted  share.

BALANCE  SHEET  ACTIVITY
     Total  assets  increased  $25.4  million  or  9%  from December 31, 2001 to
September  30,  2002.  Gross  loans  grew  $2.9  million during the same period.
Deposits  increased  approximately $17.0 million or 8% from December 31, 2001 to
September  30, 2002.  Increases in time deposits of $29.3 million resulting from
promotional  offerings  during  the period were offset by decreases in the money
market deposit category of $14.3 million.  Increases in deposits and higher FHLB
advances,  which  increased $5.5 million, funded increases in federal funds sold
of  $9.1 million and  investment securities which increased 17% to $55.6 million
between  the  2001  year  end  and  September  30,  3002.

ALLOWANCE  FOR  LOAN  LOSSES
     The allowance for loan losses is established through charges in the form of
a  provision  for  loan  losses based on management's periodic evaluation of the
loan  portfolio.  Loan losses and recoveries are charged or credited directly to
the  allowance.  The amount of the allowance reflects management's opinion of an
adequate  level  to  absorb  probable  losses  inherent in the loan portfolio at
September  30,  2002.  The  amount charged to the provision and the level of the
allowance  is based on management's judgment and is dependent upon growth in the
loan  portfolio,  the  total  amount  of past due loans and nonperforming loans,
known  loan  deteriorations,  and  concentrations  of  credit.  Other  factors
affecting  the  allowance  are  trends  in  portfolio  volume,  maturity  and
composition,  collateral  values,  and  general  economic  conditions.  Finally,
management's assessment of probable losses based upon internal credit grading of
the  loans  and  periodic reviews and assessments of credit risk associated with
particular  loans  is  considered  in  establishing  the  allowance amount.  The
Company considers its policies regarding the allowance for loan losses to be its
most  critical  accounting  policy  due  to the significant degree of management
judgment  involved.

     Management  maintains  an  allowance  for  loan  losses  which  it believes
adequate to cover probable losses in the loan portfolio.  It must be emphasized,
however,  that  the  determination  of  the  allowance for loan losses using the
Company's  procedures  and  methods rests upon various judgments and assumptions
about  future  economic  conditions,  events,  and other factors affecting loans
which  are  believed  to  be  reasonable,  but which may or may not prove valid.
While  it  is the Company's policy to provide for the loan losses in the current
period  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.  Because  these  risks  include  the state of the
economy,  industry  trends,  and  conditions  affecting  individual  borrowers,
management's judgment of the allowance is necessarily approximate and imprecise.
No  assurance  can  be  given that the Company will not in any particular period
sustain  loan  losses  which  would  be  sizable  in  relationship to the amount
reserved  or  that  subsequent  evaluation  of  the  loan portfolio, in light of
conditions  and factors then prevailing, will not require significant changes in
the  allowance for loan losses or future charges to earnings.  The allowance for
loan  losses  is  also  subject to review by various regulatory agencies through
their  periodic  examinations  of  the  Company's subsidiaries. Such examination
could  result  in  required  changes  to  the  allowance  for  loan  losses.  No
adjustment  in  the  allowance or significant adjustments to the Bank's internal
classified  loans  were  made  as a result of the Bank's most recent examination
performed  by  the  Office  of  the  Comptroller  of  the  Currency.

     In assessing the adequacy of the allowance, management relies predominately
on  its  ongoing  review  of  the  loan  portfolio,  which is undertaken both to
ascertain  whether  there are losses which must be charged-off and to assess the
risk  characteristics  of  the portfolio in the aggregate.  The Bank attempts to
deal  with credit risks through the establishment of, and adherence to, internal
credit  policies.  These  policies  include  loan  officer  and  credit  limits,
periodic  documentation examination, and follow-up procedures for any exceptions
to  credit  policies.  Loans  that  are  determined to involve any more than the
normal  risk  are  placed in a special review status.  The Company's methodology
for  evaluating  the  adequacy  of  the  allowance  for loan losses incorporates
management's  current  judgments  about the credit quality of the loan portfolio
through  a  disciplined  and  consistently  applied  process.  The  methodology
includes  segmentation  of  the  loan  portfolio  into reasonable components for
calculation  of  the  most  accurate  possible  reserve.  The  loan portfolio is
grouped  into  commercial  real  estate,  residential  mortgages,  construction,
commercial  and  industrial,  and consumer loans.  The loan segments are further
grouped  into  performing  loans,  past  due loans, nonaccrual loans, internally
classified  loans  and loans considered impaired.  Appropriate reserve estimates
are  determined  for  each  segment  based  on  a  review  of  individual loans,
application  of historical loss factors for each segment, and adjustment factors
applied  as  considered  necessary.  The  adjustment  factors  are  applied
consistently and are quantified for consideration of national and local economic
conditions,  exposure  to concentrations that may exist in the portfolio, impact
of  off-balance  sheet  risk,  alterations  of  lending policies and procedures,
changes  in  trends of past due loans, problem loans and charge-offs, variations
in  the  nature  and  volume  of  the  loan  portfolio, modification of director
oversight,  entry  into  new  markets,  and  other  factors which may impact the
current  credit  quality  of  the  loan  portfolio.

     The  allowance  for  loan  losses  totaled  $3.2 million, or 1.50% of total
loans,  at September 30, 2002. This is compared to an allowance of $2.9 million,
or  1.42% of total loans, at December 31, 2001.  For the quarter ended September
30, 2002, the Company reported net charge-offs of $69,000, or 0.13% (annualized)
of  average  loans.  This  is  compared  to net charge-offs of $63,000, or 0.12%
(annualized)  of average loans, for the comparable quarter of 2001. For the nine
months  ended  September  30,  2002,  the  Company  reported  net charge-offs of
$332,000,  or  0.21%  (annualized)  of  average  loans.  This is compared to net
charge-offs  of  $217,000,  or 0.15% (annualized) of average loans, for the nine
months  ended  September  30,  2001.


NONPERFORMING  ASSETS  AND  POTENTIAL  PROBLEM  LOANS
          The  Company's  nonperforming  assets  consist  of loans on nonaccrual
basis,  loans which are contractually past due 90 days or more on which interest
is still being accrued, and other real estate owned.  Loans past due 90 days and
greater  totaled  $216,000,  or  0.10%  of  gross  loans,  at September 30, 2002
compared  to  $153,000, or 0.07% of gross loans, at December 31, 2001.  Loans on
non-accrual totaled $203,000 and $1.2 million at September 30, 2002 and December
31, 2001, respectively.  The decrease was related to collections and pay-offs of
nonaccrual loans.  Generally, loans of the Bank are placed on non-accrual status
at  the  earlier of when they are 90 days past due or when the collection of the
loan  becomes  doubtful.  Loans  of  the  Finance  Company are not classified as
non-accrual,  but  are  charged-off when such become 150 days contractually past
due  or  earlier  if  the  loan  is  deemed  uncollectible.

     There  were no loans considered to be impaired under Statement of Financial
Accounting  Standards  114 and no other real estate owned acquired in partial or
total  satisfaction  of  problem loans ("OREO") at September 30, 2002.  Impaired
loans,  which  were  on  non-accrual  status, at December 31, 2001, totaled $1.0
million.  There  was  no  OREO  at  December  31,  2001.

     Management  maintains  a  list  of  potential  problem loans which includes
nonaccrual  loans,  loans past due in excess of 90 days which are still accruing
interest,  and  other  loans  which  are  credit  graded  (either internally, by
external  audits  or  regulatory  examinations) as "substandard", "doubtful", or
"loss".  A  loan  is  added  to  the  list  when  management  becomes  aware  of
information about possible credit problems of borrowers that causes doubts as to
the  ability  of such borrowers to comply with the current loan repayment terms.
The  total  amount  of loans determined to be potential problem loans based upon
management's  internal designations at September 30, 2002 and December 31, 2001,
was $2.3 million or 1.1% of the total loans outstanding and $2.5 million or 1.2%
of  the  loan portfolio, respectively.  The amount of potential problem loans at
September  30, 2002 does not represent management's estimate of potential losses
since  the  majority  of  such  loans  are considered adequately secured by real
estate  or  other  collateral.  Management  believes that the allowance for loan
losses as of September 30, 2002 was adequate to absorb any losses related to the
nonperforming  loans  and  problem  loans  as  of  that  date.

     Management  continues  to  monitor  closely the levels on nonperforming and
problem  loans  and  will address the weaknesses in these credits to enhance the
amount  of ultimate collection or recovery on these assets.  Should increases in
the  overall  level of nonperforming and potential problem loans accelerate from
the  current  trend,  management will adjust the methodology for determining the
allowance  for  loan  losses  and  will  increase  the provision for loan losses
accordingly.  This  would  likely  decrease  net  income.


RESULTS  OF OPERATIONS - COMPARISON OF THE QUARTERS ENDED SEPTEMBER 30, 2002 AND
2001

GENERAL
     The  Company  reported  consolidated  net  income  for  the  quarter  ended
September  30,  2002  of  $909,000,  compared  to net income of $690,000 for the
quarter ended September 30, 2001, or an improvement of approximately $219,000 or
32%.  The  primary  factor in the increased earnings was a significant reduction
in  the interest expense due to lower cost of funds as higher priced promotional
time  deposits  have  matured  and  renewed  at  lower current market rates. The
reduction  in  interest  expense  more  than  offset  the  lower interest income
resulting  from  the  drop in short-term market interest rates.  Another primary
contributor  to  the  higher net income for the third quarter of 2002 was the 8%
growth  in  average  earning  assets. The Company also reported a 5% increase in
other  income, which was somewhat offset by the higher provision for loan losses
and  increase  in  overhead  associated  with the greater number of accounts and
higher  level  of  activity  at  the  Bank.

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 quarter ended September
30, 2002, the Company recorded consolidated net interest income of $3.0 million,
a  13%  increase  from  the  net interest income of $2.6 million for the quarter
ended  September  30,  2001.  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  6%,  respectively,  combined  with the 21 basis point
increase in the net interest margin for the Company between the third quarter of
2001  and  2002.

     For  the  quarters  ended  September  30,  2002  and  2001,  the  Company's
consolidated  net  interest  margin  was 4.35% and 4.14%, 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 primarily related to the 180 basis point reduction in the average cost
of  funds  resulting from the decreasing interest rate environment and repricing
of  maturing  time  deposits.  The cost of funds decrease was offset somewhat by
the  137  basis  point  decrease  in the average yield on assets during the same
period  related  primarily  to  the  lower  prime  interest rate.  For the third
quarter  of  2002, the average prime rate was 182 basis points lower compared to
the  third  quarter of 2001, resulting in an average prime rate of 4.75% for the
third  quarter  of  2002  compared  to 6.57% for the quarter ended September 30,
2001.

INTEREST  INCOME
     For  the  quarter  ended  September  30, 2002, the Company's earning assets
averaged  $277.8 million and had an average tax-equivalent yield of 6.58%.  This
compares  to  average  earning assets of $256.5 million for the third quarter of
2001,  yielding approximately 7.95%.  Thus, the 8% increase in volume of average
earning  assets,  offset  by  the  137  basis  point  decrease in average yield,
accounts  for  the  $556,000 (11%) decrease in interest income between the third
quarter  of  2002  and  2001.

     Average  loans  comprised  approximately  77% and 80%, respectively, of the
Company's  average  earning  assets for the third quarter of 2002 and 2001.  The
majority  of  the  Company's  loans  are tied to the prime rate (over 60% of the
Bank's  portfolio  is  at  floating rates at September 30, 2002), which averaged
4.75%  and  6.57%  for  the  quarters  ended  September  30,  2002  and  2001,
respectively.  During  the  third  quarter  of 2002, consolidated loans averaged
$214.4  million,  yielding  an  average  of  7.02%,  compared to $204.5 million,
yielding an average of 8.50% for the third quarter of 2001.  The 148 basis point
decrease  in  the  average yield on loans is directly related to the lower prime
lending  rate  and  the  general  decline in interest rates. The higher level of
average  loans  (which  increased  5%),  was more than offset by the decrease in
average rate, and resulted in the lower consolidated interest income on loans of
$592,000  or  14%.

     Investment  securities  averaged  $51.0  million  or 18% of average earning
assets  and  yielded  5.79%  (tax  equivalent basis) during the third quarter of
2002,  compared  to  average  securities  of  $39.5  million yielding 6.39% (tax
equivalent basis) for the quarter ended September 30, 2001.  The decrease in the
average  yield  of the investment portfolio is related to the general decline in
market  interest  rates  during  2001, portfolio mix, and the timing of security
maturities,  calls, and sales which were reinvested in lower current market rate
instruments.  The  29%  increase  in  average securities, offset somewhat by the
reduction  in  average  rate  of  60  basis  points, resulted in the increase of
interest  income  on  securities  of  $88,000  or  16%.

INTEREST  EXPENSE
     The Company's interest expense for the quarter ended September 30, 2002 was
$1.6  million.  The  decrease of 37% from the comparable quarter in 2001 of $2.5
million was directly related to the 180 basis point decrease in the average rate
on  liabilities,  which  was  offset  somewhat  by  the 6% increase in volume of
average  interest-bearing  liabilities.  Interest-bearing  liabilities  averaged
$233.3 million for the third quarter of 2002 with an average rate of 2.66%. This
is  compared  to  average interest-bearing liabilities of $219.3 million with an
average rate of 4.46% for the quarter ended September 30, 2001.  The decrease in
average  rate  on  liabilities  is  directly  related  to the general decreasing
interest  rate environment and the repricing of deposits at lower current market
rates.

PROVISION  FOR  LOAN  LOSSES
     The  provision  for loan losses was $196,000 for the third quarter of 2002,
compared  to  $148,000  for  the  comparable  period  of  2001.  Changes  in the
provision  each  year  are generally related to the level of net originations in
each period.  As discussed further under the "Allowance for Loan Losses" section
above,  other  factors influencing the amount charged to the provision each year
include  (1)  trends  in  and  the  total  amount  of  past  due, classified and
nonperforming loans and net chargeoffs, (2) concentrations of credit risk in the
loan  portfolio,  (3)  local  and  national  economic conditions and anticipated
trends,  and  (4)  the  total  outstanding  loans and charge-off activity of the
Finance  Company  which  have  higher  inherent  risk than do loans of the Bank.
Although  the  net  originations  were  lower  in  the  third quarter of 2002 as
compared  to  the  prior  year,  the higher provision in 2002 was related to the
increase  in  net  charge-off activity of both the Bank and the Finance Company,
which  increased  slightly between the two quarterly periods, and the increasing
trends  in  past  due  and  potential  problem  loans.  Estimates charged to the
provision  for  loan  losses are based on management's judgment as to the amount
required  to  cover  probable  losses  in the loan portfolio and are adjusted as
necessary.

NONINTEREST  INCOME  AND  EXPENSES
     Noninterest  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  $682,000  for  the quarter ended
September  30,  2002  compared  to $650,000 for the third quarter of 2001, or an
increase  of  5%.  Increases  in  service  charges  ($29,000 increase), mortgage
referral  fee income ($68,000 increase), and nondeposit product sale commissions
($17,000  increase)  were  related  to  higher  levels of activity and number of
accounts  at  the Bank. These increases were offset primarily by lower levels of
credit  card/merchant  activity  fees  ($10,000  decrease), and decreases in the
volume  of  sales  of  investments securities generating gains on sales ($64,000
decrease)  during  the  third  quarter  of 2002 as compared with the prior year.

     For  the quarter ended September 30, 2002, noninterest expenses were $2.1
million  which  is  an  increase  of 1% over the amount incurred for the quarter
ended  September 30, 2001 of $2.1 million.  The most significant item included
in other expenses is salaries, wages and benefits which amounted to $1.3 million
for  the  quarter  ended  September 30, 2002 as compared to $1.2 million for the
quarter  ended September 30, 2001.  The increase of $81,000 or 7% is a result of
normal  annual raises, timing of turnover and new staff additions, and increases
in  group  insurance  and  other  benefit  costs.

     Occupancy and furniture, fixtures, and equipment ("FFE") expenses increased
$11,000  or  3%  between  the  third  quarter  of  2002  and 2001. There were no
significant  changes  in  or  additions to property and premises between the two
quarterly  periods.

     Included  in the line item "other expenses", which decreased $71,000 or 13%
from  the  comparable  period of 2001, are charges for OCC assessments; property
and  bond  insurance;  ATM  switch  fees;  credit  card  expenses;  professional
services;  education  and  seminars; advertising and public relations; and other
branch  and  customer  related  expenses. Increases, primarily related to higher
level of activity and the number of accounts, were more than offset by decreases
in amortization of goodwill discontinued in January 2002 ($39,000 decrease), and
reductions  in  advertising  costs,  legal  fees,  internet banking charges, and
courier  expenses.

INCOME  TAXES
     For  the quarter ended September 30, 2002, the Company reported $424,000 in
income  tax  expense,  or  an  effective tax rate of 31.8%.  This is compared to
income  tax  expense  of  $329,000  for the same period of the prior year, or an
effective  tax  rate  of  32.3%.


RESULTS  OF  OPERATIONS - COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 2002
AND  2001

GENERAL
     The  Company  reported  consolidated  net  income for the nine months ended
September  30,  2002 of $2,481,000, compared to net income of $2,027,000 for the
nine  months  ended  September  30,  2001,  or  an  improvement of approximately
$454,000  or  22%.  The  primary  factor in the increased earnings from the same
period  of  the prior year was the significant reduction in interest expense due
to  the  lower  cost  of  funds  as higher priced promotional time deposits have
matured  and  renewed  at  lower  current  market  rates.  The  other  primary
contributors  to  higher net income for the nine months ended September 30, 2002
as compared with the prior year was the 11% growth in average earning assets and
the  5%  increase  in  other income. These increases were somewhat offset by the
higher provision for loan losses and the 6% increase in overhead associated with
the  greater  number  of  accounts  and  higher  level  of activity at the Bank.

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,  2002,  the  Company recorded consolidated net interest income of
$8.7  million,  a  12% increase from the net interest income of $7.8 million for
the  nine  months  ended  September  30,  2001.  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 11% and 10%, respectively.

     For  the  nine  months ended September 30, 2002, the Company's consolidated
net  interest  margin  was  4.45%.  This is compared to 4.37% for the comparable
period  of  2001.  The  net  interest  margin  is  calculated  as annualized net
interest  income divided by year-to-date average earning assets. The increase in
net  interest margin is a result of the decreases in the average yield on assets
due  to  a lower prime interest rate being more than offset by reductions in the
cost  of  funds  related  to  the  declining  interest  rate environment and the
repricing  of  maturing  time  deposits.

INTEREST  INCOME
     For  the nine months ended September 30, 2002, the Company's earning assets
averaged  $270.5  million  and  had an average yield of 6.78%.  This compares to
average  earning  assets  of  $244.0  million for the first nine months of 2001,
yielding  approximately  8.63%.  Thus,  the  11%  increase  in volume of average
earning  assets,  which  was more than offset by the 185 basis point decrease in
average  yield,  accounts for the $2.1 million (14%) decrease in interest income
between  2002  and  2001.

     Consolidated  loans  averaged  approximately  78%  and 79% of the Company's
average earning assets for the first nine months of 2002 and 2001, respectively.
The  majority of the Company's loans are tied to the prime rate (over 60% of the
Bank's  portfolio  is  at  floating rates at September 30, 2002), which averaged
4.75%  and  7.50%  for  the  nine  months  ended  September  30,  2002 and 2001,
respectively.  During the first nine months of 2002, consolidated loans averaged
$211.3  million,  yielding  an  average  of  7.17%,  compared to $192.5 million,
yielding  an  average of 9.28% for the first nine months of 2001.  The 211 basis
point  decrease  in the average yield on loans is primarily related to the lower
prime  lending  rate which decreased 275 basis points between 2001 and 2002. The
higher  level  of average loans (which increased 10%), offset by the decrease in
average rate, resulted in a decrease in consolidated interest income on loans of
$2.0  million  or  15%.

     Investment  securities  averaged  $48.3  million  or 18% of average earning
assets  and yielded 6.06% (tax equivalent basis) during the first nine months of
2002,  compared  to  average  securities  of  $37.6  million yielding 6.64% (tax
equivalent basis) for the nine months ended September 30, 2001.  The decrease in
average  yield  on the investment portfolio of 58 basis points is related to the
general  decline  in  market  interest rates during 2001, portfolio mix, and the
timing  of  security maturities, calls, and sales which were reinvested in lower
current  market  rate  instruments.  The  28%  increase  in volume of investment
securities,  offset  somewhat  by the reduction in average rate, resulted in the
increase  in  interest  income  on  securities  of  $253,000  or  15%.

INTEREST  EXPENSE
     The Company's interest expense for the nine months ended September 30, 2002
was  $4.7  million.  The decrease of 39% from the comparable nine months in 2001
of  $7.8  million  was  related  to  the  10%  increase in the volume of average
interest-bearing  liabilities, which was more than offset by the 226 basis point
decrease  in  the  average  rate  on  liabilities.  Interest-bearing liabilities
averaged  $227.6  million for the first nine months of 2002 with an average rate
of  2.77%.  This  is  compared to average interest-bearing liabilities of $206.5
million  with  an  average rate of 5.03% for the nine months ended September 30,
2001.  The  decrease  in  average rate on liabilities is directly related to the
general  decreasing  interest  rate environment and the repricing of deposits at
lower  current  market  rates.

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  probable  losses  inherent  in  the  loan portfolio.

     Included  in the net income for the nine months ended September 30, 2002 is
a  provision for loan losses of $546,000 compared to a provision of $485,000 for
the  same  period of 2001. Factors impacting the amount charged to the provision
each  period, in addition to the level of net originations, are the increases in
past  due,  classified  and  problem loans; concentrations of credit risk in the
loan  portfolio;  local and national economic conditions and anticipated trends;
and  the  total outstanding loans and charge-off activity of the Finance Company
which  generally  have  higher inherent risk than do loans of the Bank. Although
the net originations were lower for the first nine months of 2002 as compared to
the  prior year, the higher provision in 2002 was related to the increase in net
charge-off  activity  of  both  the Bank and the Finance Company which increased
$115,000  between  the  comparable  periods of 2002 and 2001, and the increasing
trends  in  past  due  and  potential  problem  loans.  Estimates charged to the
provision  for  loan  losses are based on management's judgment as to the amount
required  to  cover  probable  losses  inherent  in  the  loan portfolio and are
adjusted  as  necessary.

NONINTEREST  INCOME  AND  EXPENSES
     Noninterest  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 $2.0 million for the nine months ended
September  30,  2002 compared to $1.9 million for the first nine months of 2001,
or  an  increase  of  5%.  Increases  in  service charges ($97,000 increase) and
insurance  commission  fees  from  nondeposit  product sales ($109,000 increase)
accounted for a majority of the higher other income. The increases are primarily
related to the higher levels of activity and transactions of the Bank generating
other  income  in  the normal course of business.  These increases were somewhat
offset  by decreases in the volume of investment security sales generating gains
on  sales  during  2002.

     For  the  nine  months ended September 30, 2002, total noninterest expenses
were  $6.6  million  which is an increase of 6% over the amount incurred for the
nine months ended September 30, 2001 of $6.2 million.  The most significant item
included  in  other  expenses  is salaries, wages and benefits which amounted to
$4.0  million  for  the nine months ended September 30, 2002 as compared to $3.6
million  for the nine months ended September 30, 2001.  The increase of $350,000
or  10%  is  a  result of normal annual raises, timing of staff turnover and new
staff  additions  (approximately  4  full-time equivalents added between the two
periods),  higher  commissions  on  nondeposit  sales,  and  increases  in group
insurance  and  other  benefit  costs.

     Occupancy and furniture, fixtures, and equipment ("FFE") expenses decreased
a  total  of  $3,000  or  less than 1% between the first nine months of 2002 and
2001. There were no significant changes in or additions to property and premises
between  the  two  periods  and  increase  in  depreciation  and other occupancy
expenses  were  offset  by  the  reduction  in expenses related to the temporary
mobile  branch  facility.

     Included  in the line item "other expenses", which increased $5,000 or less
than  1%  from  the  comparable period of 2001, are charges for OCC assessments;
property and bond insurance; ATM switch fees; credit card expenses; professional
services;  education  and  seminars; advertising and public relations; and other
branch  and  customer  related  expenses.  Increases related to higher levels of
activity  and  numbers  of  accounts  at  the  Bank, higher legal and collection
expenses,  and higher consultant fees are offset by decreases in amortization of
goodwill  discontinued  in  January  2002  ($118,000  decrease).

INCOME  TAXES
     For  the  nine  months  ended  September  30,  2002,  the  Company reported
$1,161,000  in  income  tax expense, or an effective tax rate of 31.9%.  This is
compared  to  income  tax  expense  of $970,000 for the same period of the prior
year,  or  an  effective  tax  rate  of  32.4%.


LIQUIDITY
     Liquidity  management  involves  meeting  the cash flow requirements of the
Company  both at the holding company level as well as the subsidiary level.  The
Company's  bank subsidiary 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 short-term borrowings, extensions of credit and
for  the  payment  of  operating  expenses.  Maintaining  an  adequate  level of
liquidity  is  accomplished through a combination of liquid assets, assets which
can  be  easily  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.  These primary liquidity sources (exclusive of
cash  flow  on loans) accounted for approximately 15% of average assets for both
the  nine  month  periods  ended  September  30, 2002 and 2001.  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 advances from the Federal Home Loan Bank, purchasing
federal  funds  from  other  financial institutions, lines of credit through the
Federal  Reserve  Bank,  and  increasing  deposits  by  raising  rates paid.  At
September  30,  2002,  the  Company had approximately $43.1 million in available
credit under its FHLB and correspondent bank federal funds borrowing facilities.

     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  $3.4  million  in  available liquidity remaining from its initial
public  offering and the retention of earnings.  A total of $2.2 million of this
liquidity  was  advanced  to  the Finance Company in the form of an intercompany
loan  to  fund  its  operations  as  of September 30, 2002.  In addition, Summit
Financial  has  an  available  line  of  credit  totaling  $2.5  million with an
unaffiliated  financial institution, all of which was available at September 30,
2002.  Additional  sources  of  liquidity for Summit Financial include borrowing
funds from unrelated correspondent banks, unsecured borrowings from individuals,
and  management  fees  and  debt  service  which  are  paid by its subsidiaries.

     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,
line of credit facilities provided by Summit Financial and Summit National Bank,
its  sister  company, and as needed from time to time, borrowings from unrelated
private  investors.

     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 effect on the Company's
liquidity  position.


OFF-BALANCE  SHEET  COMMITMENTS
     The  Company  is party to financial instruments with off-balance sheet risk
in  the  normal course of business to meet the financing needs of its customers.
These  financial  instruments  include  commitments to extend credit and standby
letters  of  credit  and  involve,  to  varying  degrees, elements of credit and
interest rate risk in excess of the amount recognized in the balance sheet.  The
Company's  exposure  to  credit loss in the event of nonperformance by the other
party  to  the financial instrument for commitments to extend credit and standby
letters  of  credit  is  represented  by  the  contractual  amounts  of  those
instruments.

     The  Company  uses  the  same  credit  and  collateral  policies  in making
commitments  and  conditional  obligations  as  it  does  for  on-balance  sheet
instruments.  The  Company  evaluates  each  customer's  creditworthiness  on  a
case-by-case  basis.  The  amount  of collateral obtained if deemed necessary by
the Company upon extension of credit is based on management's credit evaluation.
Commitments  to  extend  credit  are agreements to lend to a customer as long as
there is no violation of any condition established in the contract.  Commitments
generally  have  fixed  expiration  dates  or  other termination clauses and may
require  payment  of  a  fee.  Since  many of the commitments may expire without
being  drawn  upon,  the  total  commitment amounts do not necessarily represent
future  cash  requirements.

     At  September  30,  2002 and December 31, 2001 the Company's commitments to
extend  additional credit totaled approximately $51.3 million and $47.2 million,
respectively.  Included in the total commitments were approximately $1.7 million
and  $2.8  million  at  September  30, 2002 and December 31, 2001, respectively,
which  represent  commitments  to  extend  credit  at  fixed  rates of interest.
Commitments to extend credit at fixed rates expose the Company to some degree of
interest  rate  risk.  Included  in  the Company's total commitments are standby
letters  of  credit.  Letters of credit are commitments issued by the Company to
guarantee  the  performance  of  a  customer  to  a third party and totaled $4.8
million  at  both  September  30,  2002  and December 31, 2001.  The credit risk
involved  in  the  underwriting  of letters of credit is essentially the same as
that  involved  in  extending  loan  facilities  to  customers.


EFFECT  OF  INFLATION  AND  CHANGING  PRICES
     The consolidated financial statements have been prepared in accordance with
accounting  principles  generally accepted in the United States of America 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.  Unlike most 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
the  financial  institution's  performance  than  does  the effect of inflation.

     The  yield  on  a  majority  of  the  Company's  earning  assets  adjusts
simultaneously  with  changes in the general level of interest rates.  Given the
Company's  asset-sensitive  balance  sheet  position, assets reprice faster than
liabilities,  which generally results in decreases in net interest income during
periods  of  declining interest rates, as experienced in 2001.  This may cause a
decrease in the net interest margin until the fixed rate deposits mature and are
repriced  at  lower  current market rates, thus narrowing the difference between
what  the  Company earns on its assets and what it pays on its liabilities.  The
opposite  effect  (that  is,  an  increase  in net interest income) is generally
realized  in a rising 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.


INTEREST  RATE  SENSITIVITY
     Achieving  consistent  growth  in net interest income, which is affected by
fluctuations  in  interest  rates,  is  the  primary  goal  of  the  Company's
asset/liability  function.  The  Company  attempts  to  control  the  mix  and
maturities  of  assets  and liabilities to maintain a reasonable balance between
exposure  to  interest  rate fluctuations and earnings and to achieve consistent
growth in net interest income, while maintaining adequate liquidity and capital.
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  Company's  asset/liability  mix is
sufficiently  balanced  so  that  the  effect of interest rates moving in either
direction  is  not  expected  to  be  significant  over  time.

     The  Company's  Asset/Liability Committee ("ALCO") uses a simulation model,
among other techniques, to assist in achieving consistent growth in net interest
income  while  managing interest rate risk. The model takes into account, over a
12 month period or longer if necessary, interest rate changes as well as changes
in  the  mix  and  volume  of  assets  and liabilities.  The model simulates the
Company's  balance  sheet  and  income  statement  under  several different rate
scenarios  and  rate  shocks.  The  model's  inputs  (such as interest rates and
levels  of  loans  and deposits) are updated as necessary throughout the year in
order  to  maintain  a current forecast as assumptions change.  According to the
model,  the  Company  is  presently  positioned so that net interest income will
increase  in  the  short-term  if  interest  rates rise and will decrease in the
short-term  if  interest  rates  decline.

     The Company also uses interest rate sensitivity gap analysis to monitor the
relationship  between  the maturity and repricing of its interest-earning assets
and  interest-bearing  liabilities.  Interest rate sensitivity gap is defined as
the  difference  between  the  amount  of  interest-earning  assets  maturing or
repricing  within  a  specific  time  period  and the amount of interest-bearing
liabilities  maturing  or  repricing  within  the  same time period.  The static
interest  sensitivity  gap  position,  while  not a complete measure of interest
sensitivity, is also reviewed periodically to provide insights related to static
repricing  structure  of  assets  and  liabilities.  At September 30, 2002, on a
cumulative  basis  through  12  months,  rate-sensitive  liabilities  exceed
rate-sensitive  assets,  resulting  in  a  12  month  period liability-sensitive
position  of  $39.2  million.  When  the  effective change ratio (the historical
relative  movement  of  each  asset's and liability's rates in relation to a 100
basis  point  change in the prime rate) is applied to the interest gap position,
the  Company  is  actually in an asset-sensitive position over a 12 month period
and the entire repricing lives of the assets and liabilities.  This is primarily
due  to  the  fact  that  over  60% of the loan portfolio moves immediately on a
one-to-one  ratio with a change in the prime rate, while the deposit accounts do
not  increase  or  decrease  as  much  relative  to  a prime rate movement.  The
Company's  asset-sensitive  position  means  that assets reprice faster than the
liabilities, which generally results in short-term increases in the net interest
income  during  periods of rising rates and short-term decreases in net interest
income  when  market  rates  decline.


CAPITAL  RESOURCES
     Total  shareholders' equity at September 30, 2002 was $27.8 million or 9.3%
of  total  assets.  This is compared to $24.6 million or 9.0% of total assets at
December  31,  2001.  The  $3.2  million  increase in total shareholders' equity
resulted  principally  from  the  retention  of  earnings,  increases  in  other
comprehensive  income  related  to  the  unrealized  gain  on available for sale
investment  securities, and proceeds from employees' exercises of stock options.

     Book  value per share at September 30, 2002 and December 31, 2001 was $7.30
and $6.49, respectively. Tangible book value per share at September 30, 2002 and
December  31,  2001  was  $7.25 and $6.44, respectively. Tangible book value was
below  book  value  as  a result of the purchase premiums associated with branch
acquisitions  of  Freedom  Finance  which  were  accounted  for  as  purchases.

     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  has  no 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.

     The  Company  and  the  Bank  are  required to maintain minimum amounts and
ratios  of total risk-based capital, Tier 1 capital, and Tier 1 leverage capital
as  set  forth in the table following.  Management believes, as of September 30,
2002,  that  the  Company and the Bank meet all capital adequacy requirements to
which  they  are  subject.  At  September  30,  2002  and  2001,  the  Bank  was
categorized  as  "well  capitalized"  under  the regulatory framework for prompt
corrective  action.  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, 2002 and 2001 as well
as  the  minimum  calculated  amounts  for  each  regulatory  defined  category.

<TABLE>
<CAPTION>

                              RISK-BASED CAPITAL CALCULATION

                                                                               TO BE
                                                            FOR CAPITAL     CATEGORIZED
                                                             ADEQUACY         "WELL-
                                            ACTUAL           PURPOSES       CAPITALIZED"
                                        ---------------  ---------------  ---------------
                                        AMOUNT   RATIO   AMOUNT   RATIO   AMOUNT   RATIO
                                        -------  ------  -------  ------  -------  ------
<S>                                     <C>      <C>     <C>      <C>     <C>      <C>
AS OF SEPTEMBER 30, 2002
THE COMPANY
Total capital to risk-weighted assets.  $29,813  13.09%  $18,220   8.00%  N.A.
Tier 1 capital to risk-weighted assets  $26,966  11.84%  $ 9,110   4.00%  N.A.
Tier 1 capital to average assets . . .  $26,966   9.47%  $11,396   4.00%  N.A.

THE BANK
Total capital to risk-weighted assets.  $26,095  11.61%  $17,988   8.00%  $22,485  10.00%
Tier 1 capital to risk-weighted assets  $23,284  10.36%  $ 8,994   4.00%  $13,491   6.00%
Tier 1 capital to average assets . . .  $23,284   8.28%  $11,252   4.00%  $14,065   5.00%

AS OF SEPTEMBER 30, 2001
THE COMPANY
Total capital to risk-weighted assets.  $26,382  12.09%  $17,452   8.00%  N.A.
Tier 1 capital to risk-weighted assets  $23,655  10.84%  $ 8,726   4.00%  N.A.
Tier 1 capital to average assets . . .  $23,655   9.16%  $10,334   4.00%  N.A.

THE BANK
Total capital to risk-weighted assets.  $22,986  10.68%  $17,218   8.00%  $21,523  10.00%
Tier 1 capital to risk-weighted assets  $20,374   9.47%  $ 8,609   4.00%  $12,914   6.00%
Tier 1 capital to average assets . . .  $20,374   7.97%  $10,219   4.00%  $12,774   5.00%
</TABLE>

<PAGE>

ACCOUNTING,  REPORTING  AND  REGULATORY  MATTERS
     In July 2001, SFAS 141, "Business Combinations" and SFAS 142, "Goodwill and
Other  Intangible  Assets"  were  issued.  SFAS  141  requires that the purchase
method  of accounting be used for all business combinations initiated after June
30,  2001.  SFAS 141 also specifies criteria which intangible assets acquired in
a  purchase  method business combination must meet to be recognized and reported
apart from goodwill.  SFAS 142 requires that goodwill and intangible assets with
indefinite  useful  lives  no  longer  be  amortized,  but instead be tested for
impairment  at  least  annually  in  accordance with the provisions of SFAS 142.
SFAS  142  also  requires  that intangible assets with estimable useful lives be
amortized  over  their  respective  estimated  useful  lives  to their estimated
residual  values,  and  reviewed  for  impairment  in  accordance with SFAS 144,
"Accounting  for  the  Impairment  and  Disposal  of  Long-Lived  Assets".

The Company was required to adopt the provisions of SFAS 141 immediately and has
adopted  SFAS  142  effective  January  1,  2002.  SFAS  141  requires that upon
adoption  of  SFAS  142, the Company evaluate its existing intangible assets and
goodwill  that were acquired in any prior purchase business combination and make
any  necessary  reclassifications  in  order to conform with the new criteria in
SFAS  141  for  recognition apart from goodwill.  Upon adoption of SFAS 142, the
Company  was  required  to  reassess the useful lives and residual values of all
intangible  assets  acquired,  and  make  any  necessary  amortization  period
adjustments by the end of the first interim period after adoption.  In addition,
to  the  extent an intangible asset is identified as having an indefinite useful
life,  the  Company  was required to test the intangible asset for impairment in
accordance with the provisions of SFAS 142 within the first interim period.  Any
impairment  loss  was  measured as of the date of adoption and recognized as the
cumulative  effect  of  a  change  in accounting principles in the first interim
period.

     In  connection with SFAS 142's transitional goodwill impairment evaluation,
the  statement requires the Company to perform an assessment of whether there is
an  indication  that  goodwill  is  impaired  as  of  the  date of adoption.  To
accomplish this, the Company must identify its reporting units and determine the
carrying value and the fair value of each reporting unit by assigning the assets
and liabilities, including the existing goodwill and intangible assets, to those
reporting  units  as  of the date of adoption.  To the extent a reporting unit's
carrying  amount exceeds its fair value, an indication exists that the reporting
unit's  goodwill may be impaired and the Company must perform the second step of
the  transitional impairment test.  In the second step, the Company must compare
the  implied fair value of the reporting unit's goodwill to its carrying amount,
both of which would be measured as of the date of adoption.  This second step is
required  to  be completed as soon as possible, but no later than the end of the
year  of  adoption.  Any  transitional impairment loss will be recognized as the
cumulative effect of a change in accounting principle in the Company's statement
of  operations.

     The Company adopted SFAS No. 142 effective January 1, 2002.  As of the date
of  adoption,  the  Company's gross carrying amount for goodwill associated with
its  previous  acquisitions  totaled  $184,000, net of accumulated amortization.
For  the year ended December 31, 2001, the amortization of goodwill was $157,000
and  for the quarter ended September 30, 2001, amortization totaled $39,000, and
for  the nine months ended September 30, 2001 amortization totaled $118,000. The
amortization  of  goodwill  ceased  effective  January  1,  2002.

     Information  regarding the effect of amortization expense and net income of
the  Company  for  the quarters and the nine months ended September 30, 2002 and
September  30,  2001  follows:


<TABLE>
<CAPTION>

                                           For the         For the
                                          Quarters       Nine Months
                                            Ended           Ended
                                        September 30,   September 30,
                                         ------------  --------------
                                         2002   2001    2002    2001
                                         -----  -----  ------  ------
<S>                                      <C>    <C>    <C>     <C>
Net income as reported. . . . . . . . .  $ 909  $ 690  $2,481  $2,027
Goodwill amortization, net of taxes . .      -     26       -      80
                                         -----  -----  ------  ------
Adjusted net income . . . . . . . . . .  $ 909  $ 716  $2,481  $2,107
                                         =====  =====  ======  ======

Basic earnings per share, as reported .  $0.24  $0.18  $ 0.66  $ 0.54
Goodwill amortization, net of taxes . .      -   0.01       -    0.02
                                         -----  -----  ------  ------
Adjusted basic earnings per share . . .  $0.24  $0.19  $ 0.66  $ 0.56
                                         =====  =====  ======  ======

Diluted earnings per share, as reported  $0.21  $0.17  $ 0.58  $ 0.49
Goodwill amortization, net of taxes . .      -   0.01       -    0.02
                                         -----  -----  ------  ------
Adjusted diluted earnings per share . .  $0.21  $0.18  $ 0.58  $ 0.51
                                         =====  =====  ======  ======
</TABLE>


     In  August  2001,  SFAS 144, "Accounting for the Impairment and Disposal of
Long-Lived  Assets"  was  issued  which  addresses  the financial accounting and
reporting  for  the impairment or disposal of long-lived assets.  While SFAS 144
supercedes  SFAS 121, "Accounting for the Impaiment of Long-Lived Assets and for
Long-Lived  Assets  to  Be  Disposed  Of",  it  retains  many of the fundamental
provisions  of SFAS 121.  The provisions of SFAS 144 are effective for financial
statements  issued  for  fiscal  years  beginning  after  December 15, 2001, and
interim  periods  within  those  fiscal  years.  The Company adopted SFAS 144 on
January  1,  2002  with  no  material  effect  on  the  Company.

     In  April 2002, SFAS 145, "Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical Corrections" was issued.  This
statement  rescinds  SFAS  4, "Reporting Gains and Losses from Extinguishment of
Debt",  SFAS  64,  "Extinguishment  of  Debt  Made  to  Satisfy  Sinking-Fund
Requirements",  and  SFAS  44,  "Accounting  for  Intangible  Assets  of  Motor
Carriers".  SFAS  145  amends  SFAS 13, "Accounting for Leases", to eliminate an
inconsistency  between  the  required accounting for sale-leaseback transactions
and  the  required accounting for certain lease modifications that have economic
effects  that  are similar to sale-leaseback transactions.  SFAS 145 also amends
other  existing  authoritative  pronouncements  to  make  various  technical
corrections,  clarify  meanings,  or  describe their applicability under changed
conditions.  SFAS  145  has  no  material  effect  on  the  Company.

     In  September 2002, SFAS 146, "Accounting for Costs Associated with Exit or
Disposal  Activities,"  was  issued  which  addresses  financial  accounting and
reporting  for  costs  associated with exit or disposal activities and nullifies
Emerging  Issues  Task  Force  (EITF) Issue No. 94-3, "Liability Recognition for
Certain  Employee  Termination  Benefits  and  Other  Costs  to Exit an Activity
(including  Certain  Costs  Incurred  in a Restructuring)".  SFAS 146 applies to
costs  associated  with  an  exit activity that does not involve an entity newly
acquired  in  a business combination or with a disposal activity covered by SFAS
144,  "Accounting  for  the Impairment or Disposal of Long-Lived Assets".  Those
costs  include,  but are not limited to, the following:  a) termination benefits
provided  to current employees that are involuntarily terminated under the terms
of  a  benefit  arrangement  that,  in  substance,  is  not  an  ongoing benefit
arrangement  or  an  individual  deferred  compensation  contract  (hereinafter
referred  to as one-time termination benefits); b) costs to terminate a contract
that  is not a capital lease; and c) costs to consolidate facilities or relocate
employees.  SFAS 146 does not apply to costs associated with the retirement of a
long-lived  asset  covered  by  SFAS  143,  "Accounting  for  Asset  Retirement
Obligations".  A  liability  for  a  cost  associated  with  an exit or disposal
activity  shall  be  recognized  and measured initially at its fair value in the
period  in  which  the liability is incurred.  A liability for a cost associated
with an exit or disposal activity is incurred when the definition of a liability
is  met.  The  provisions  of  SFAS  146  are  effective  for  exit  or disposal
activities  that  are  initiated after December 31, 2002, with early application
encouraged.  The  impact  of  adoption on the Company is not known at this time.

     In  October  2002,  the  FASB  issued  SFAS  147,  "Acquisitions of Certain
Financial  Institutions  an amendment of FASB Statements No. 72 and 144 and FASB
Interpretation  No. 9".  SFAS 147 removes acquisitions of financial institutions
from  the scope of both FASB Statements No. 72 (SFAS 72) and FASB Interpretation
No.  9  and requires that those transactions be accounted for in accordance with
SFAS  141, "Business Combinations," and SFAS 142, "Goodwill and Other Intangible
Assets,"  except for transactions between two or more mutual enterprises.  Thus,
the  requirement  in SFAS 72 to recognize (and subsequently amortize) any excess
of  the  fair  value  of liabilities assumed over the fair value of tangible and
identifiable  assets  acquired  as  an unidentifiable intangible asset no longer
applies  to acquisitions within the scope of the scope of SFAS 72.  In addition,
SFAS  147  amends  SFAS  144,  "Accounting  for  the  Impairment  or Disposal of
Long-Lived  Assets"  to  include  in  its  scope long-term customer-relationship
intangible  assets  of  financial  institutions  such  as  depositor-  and
borrower-relationship intangible assets and credit cardholder intangible assets.
Consequently,  those intangible assets are subject to the same undiscounted cash
flow  recoverability  test  and  impairment  loss  recognition  and  measurement
provisions  that SFAS 144 requires for other long-lived assets that are held and
used.  The  provisions  of  SFAS  147 are effective on or after October 1, 2002.
Management does not expect the adoption of SFAS 147 to have a material effect on
the  Company.


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  it  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  Bank's  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  which  is charged with the
responsibility  to maintain the level of sensitivity of the Bank's net portfolio
value  within  Board  approved  limits.  Interest rate risk exposure is measured
using  interest  rate sensitivity analysis 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 - 300 basis points increase or decrease in the market
interest rates.  The 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, 2002, 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, 2001.  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, 2001 included in the
Company's  2001  Annual  Report  on  Form  10-K.


ITEM  4.  CONTROLS  AND  PROCEDURES

     Within  the  90  days prior to the date of filing this Quarterly Reports on
Form  10-Q,  an  evaluation  was  performed  under  the supervision and with the
participation of the Company's management, including the Chief Executive Officer
(CEO)  and Chief Financial Officer (CFO), of the effectiveness of the design and
operation  of  the  Company's  disclosure  controls  and  procedures pursuant to
Exchange  Act  Rule 13a-14.  Based on that evaluation, the Company's management,
including  the CEO and CFO, concluded that the Company's disclosure controls and
procedures  were  effective  in  timely  alerting  management  to  the  material
information  relating  to  the Company (including its consolidated subsidiaries)
required  to  be  included  in  the  Company's  periodic  SEC  filings.

     Subsequent  to  the date of that evaluation, there have been no significant
changes  in  the  Company's  internal controls or, to management's knowledge, in
other  factors that could significantly affect internal controls.  There were no
significant deficiencies or material weaknesses identified in the evaluation and
therefore,  no  corrective  actions  were  necessary.


26
<PAGE>

                          SUMMIT FINANCIAL CORPORATION

                           PART II. OTHER INFORMATION



Item  1.     Legal  Proceedings.

The  Corporation  and  its  subsidiaries  from  time  to time may be 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.

None.

Item  5.     Other  Information.

     None.

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

(a)     Exhibits:

None

     (b)     Reports  on  Form  8-K:

     None.


27
<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  8,  2002

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


Dated:  November  8,  2002

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


28
<PAGE>

                          SUMMIT FINANCIAL CORPORATION

                                 CERTIFICATIONS


I,  J.  Randolph  Potter,  certify  that:

1.  I  have  reviewed  this  quarterly  report  on Form 10-Q of Summit Financial
Corporation;
2.  Based  on  my  knowledge,  this quarterly report does not contain any untrue
statement  of a material fact or omit to state a material fact necessary to make
the  statements  made, in light of the circumstances under which such statements
were  made,  not misleading with respect to the period covered by this quarterly
report;
3.  Based  on  my  knowledge,  the  financial  statements,  and  other financial
information  included  in  this quarterly report, fairly present in all material
respects  the  financial  condition, results of operations and cash flows of the
registrant  as  of,  and  for,  the  periods presented in this quarterly report;
4.  The  registrant's  other  certifying  officers  and  I  are  responsible for
establishing  and  maintaining disclosure controls and procedures (as defined in
Exchange  Act  Rules  13a-14  and  15d-14)  for  the  registrant  and  we  have:
a)  designed  such  disclosure  controls  and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is  made  known  to  us by others within those entities, particularly during the
period  in  which  this  quarterly  report  is  being  prepared;
b)  evaluated  the  effectiveness  of  the  registrant's disclosure controls and
procedures  as  of  a  date  within  90  days  prior  to the filing date of this
quarterly  report  (the  "Evaluation  Date");  and
c) presented in this quarterly report our conclusions about the effectiveness of
the  disclosure  controls  and  procedures  based  on  our  evaluation as of the
Evaluation  Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most  recent evaluation, to the registrant's auditors and the audit committee of
registrant's  board  of  directors  (or  persons  performing  the  equivalent
functions):
a)  all significant deficiencies in the design or operation of internal controls
which  could  adversely  affect  the  registrant's  ability  to record, process,
summarize  and  report  financial  data and have identified for the registrant's
auditors  any  material  weaknesses  in  internal  controls;  and
b)  any  fraud,  whether  or  not  material,  that  involves management or other
employees who have a significant role in the registrant's internal controls; and
6.  The  registrant's  other  certifying  officers  and I have indicated in this
quarterly  report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the  date  of  our most recent evaluation, including any corrective actions with
regard  to  significant  deficiencies  and  material  weaknesses.



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

Dated:  November  8,  2002


29
<PAGE>

                          SUMMIT FINANCIAL CORPORATION

                                 CERTIFICATIONS


I,  Blaise  B.  Bettendorf,  certify  that:

1.  I  have  reviewed  this  quarterly  report  on Form 10-Q of Summit Financial
Corporation;
2.  Based  on  my  knowledge,  this quarterly report does not contain any untrue
statement  of a material fact or omit to state a material fact necessary to make
the  statements  made, in light of the circumstances under which such statements
were  made,  not misleading with respect to the period covered by this quarterly
report;
3.  Based  on  my  knowledge,  the  financial  statements,  and  other financial
information  included  in  this quarterly report, fairly present in all material
respects  the  financial  condition, results of operations and cash flows of the
registrant  as  of,  and  for,  the  periods presented in this quarterly report;
4.  The  registrant's  other  certifying  officers  and  I  are  responsible for
establishing  and  maintaining disclosure controls and procedures (as defined in
Exchange  Act  Rules  13a-14  and  15d-14)  for  the  registrant  and  we  have:
a)  designed  such  disclosure  controls  and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is  made  known  to  us by others within those entities, particularly during the
period  in  which  this  quarterly  report  is  being  prepared;
b)  evaluated  the  effectiveness  of  the  registrant's disclosure controls and
procedures  as  of  a  date  within  90  days  prior  to the filing date of this
quarterly  report  (the  "Evaluation  Date");  and
c) presented in this quarterly report our conclusions about the effectiveness of
the  disclosure  controls  and  procedures  based  on  our  evaluation as of the
Evaluation  Date;
5.  The  registrant's  other  certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of  registrant's  board  of  directors  (or  persons  performing  the equivalent
functions):
a)  all significant deficiencies in the design or operation of internal controls
which  could  adversely  affect  the  registrant's  ability  to record, process,
summarize  and  report  financial  data and have identified for the registrant's
auditors  any  material  weaknesses  in  internal  controls;  and
b)  any  fraud,  whether  or  not  material,  that  involves management or other
employees who have a significant role in the registrant's internal controls; and
6.  The  registrant's  other  certifying  officers  and I have indicated in this
quarterly  report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the  date  of  our most recent evaluation, including any corrective actions with
regard  to  significant  deficiencies  and  material  weaknesses.



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

Dated:  November  8,  2002


30