SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C.  20549

                                    FORM 10-K

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

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001

                          Commission File No. 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.
   of  incorporation  or                                              Employer
     organization)                                              Identification
                                                                          No.)

                  P. O. Box 1087, 937 North Pleasantburg Drive
                        Greenville, South Carolina  29602
          (Address of Principal Executive Offices, including zip code)

                                 (864) 242-2265
              (Registrant's Telephone Number, Including Area Code)

           Securities Registered Pursuant to Section 12(b) of the Act:
                                      NONE

           Securities Registered Pursuant to Section 12(g) of the Act:
                 Title of Class:  COMMON STOCK, $1.00 PAR VALUE

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  by  check mark if disclosure of delinquent filers pursuant to Item 405
of  Regulation  S-K  is  not contained herein, and will not be contained, to the
best  of  registrant's  knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form  10-K.
                  ---------

The  aggregate  market  value  of  voting  and  nonvoting  common equity held by
non-affiliates  of  the Registrant computed by reference to the closing price of
such  stock  as  quoted  on the NASDAQ National Market, as of March 12, 2002 was
approximately  $34.2  million.  For  purposes of the foregoing calculation only,
all  directors  and  executive  officers  of  the  Registrant  have  been deemed
affiliates.

As  of  March  12,  2002, there were 3,796,395 shares of the Registrant's Common
Stock,  $1.00  par  value,  outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

(1)     Portions  of the Registrant's Definitive Proxy Statement for 2002 Annual
Meeting  of  Shareholders  is  incorporated  by  reference  in  Part  III.
<PAGE>

<TABLE>
<CAPTION>

                              CROSS REFERENCE INDEX


<S>                                                                   <C>
PART I
Item 1 - Business: . . . . . . . . . . . . . . . . . . . . . . . . .   2
   The Company . . . . . . . . . . . . . . . . . . . . . . . . . . .   2
   Summit National Bank. . . . . . . . . . . . . . . . . . . . . . .   3
   Summit Investment Services, Inc.. . . . . . . . . . . . . . . . .   3
   Freedom Finance, Inc. . . . . . . . . . . . . . . . . . . . . . .   3
   Territory Served and Competition. . . . . . . . . . . . . . . . .   3
   Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . .   4
   Monetary Policy . . . . . . . . . . . . . . . . . . . . . . . . .   4
   Impact of Inflation . . . . . . . . . . . . . . . . . . . . . . .   5
   Supervision and Regulation. . . . . . . . . . . . . . . . . . . .   5
Item 2 - Properties. . . . . . . . . . . . . . . . . . . . . . . . .  11
Item 3 - Legal Procedings. . . . . . . . . . . . . . . . . . . . . .  11
Item 4 - Submission of Matters to a Vote
of Security Holders. . . . . . . . . . . . . . . . . . . . . . . . .  12

PART II
Item 5 - Market for the Registrant's Common Stock
 and Related Shareholder Matters . . . . . . . . . . . . . . . . . .  12
Item 6 - Selected Financial Data . . . . . . . . . . . . . . . . . .  13
Item 7 - Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . . . . . . . . . .  14
Item 7a - Quantitative and Qualitative Disclosures About Market Risk  34
Item 8 - Financial Statements and Supplementary Data . . . . . . . .  35
Item 9 - Changes in and Disagreements with
Accountants on Accounting and Financial Disclosure . . . . . . . . .  56

PART III
Item 10 - Directors and Executive Officers of the Registrant . . . .  56
Item 11 - Executive Compensation . . . . . . . . . . . . . . . . . .  56
Item 12 - Security Ownership of Certain Beneficial
Owners and Management. . . . . . . . . . . . . . . . . . . . . . . .  56
Item 13 - Certain Relationships and Related Transactions . . . . . .  56

PART IV
Item 14 - Exhibits, Financial Statement Schedules
and Reports on Form 8-K. . . . . . . . . . . . . . . . . . . . . . .  57

</TABLE>

<PAGE>

                                     PART I


NOTE  REGARDING  FORWARD-LOOKING  STATEMENTS
     Summit  Financial Corporation's ("the Company") Annual Report on Form 10-K,
specifically  certain  of  the  statements  set forth under "Item 1 - Business",
"Item  7  -  Management's  Discussion  and  Analysis  of Financial Condition and
Results  of  Operations",  "Item  7A  - Quantitative and Qualitative Disclosures
about  Market  Risk",  and  elsewhere  in  this  Form  10-K,  and  the documents
incorporated  herein  by  reference,  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.


ITEM  1.     BUSINESS

THE  COMPANY
     Summit  Financial  Corporation  (the  "Company") was incorporated under the
laws  of the State of South Carolina on May 26, 1989. The Company, headquartered
in  Greenville,  South Carolina, is a bank holding company formed under the Bank
Holding Company Act of 1956, as amended.  Subsidiaries of the Company are Summit
National  Bank  (the  "Bank",  "Summit"), a national bank organized in 1990, and
Freedom  Finance,  Inc.  (the  "Finance Company", "Freedom"), a consumer finance
company  organized  in  1994.  In  1997  the Bank incorporated Summit Investment
Services,  Inc., an investment and financial planning company, as a wholly-owned
subsidiary.  The  Company  has  no  foreign  operations.

     The  principal  role  of  the  Company  is  to supervise and coordinate the
activities  of its subsidiaries and to provide then with capital and services of
various  kinds.  The  Company  derives  substantially  all  of  its  income from
management  fees  for  services  performed,  interest on advances and loans, and
other  intercompany  payments as appropriate from the subsidiaries.  The Company
conducts  its  business  from  four  banking offices and eleven consumer finance
offices  throughout  South  Carolina.

     At  December  31,  2001,  the  Company had total assets of $ 273.1 million,
total deposits of $218.8 million, gross loans, net of unearned income, of $207.0
million  and  shareholders'  equity  of $24.6 million.  This compares with total
assets  of  $249.8  million,  total  deposits of $209.2 million, loans of $180.5
million  and  shareholders'  equity  of $21.5 million at December 31, 2000.  The
operating results and key financial measures of the Company and its subsidiaries
are  discussed  more fully in "Management's Discussion and Analysis of Financial
Condition  and  Results  of  Operations",  included in this report under Item 7.

SUMMIT  NATIONAL  BANK
     Summit  National  Bank,  headquartered  in  Greenville,  South  Carolina,
commenced  operations  in  July  1990.  The  Bank  targets  individuals  and
small-to-medium-sized businesses in the Upstate of South Carolina that require a
full range of quality banking services typically provided by the larger regional
banking  concerns,  but  who  prefer  the  personalized  service  offered  by  a
locally-based  institution.  The  Bank  currently  has its headquarters and four
full-service  branch  locations  in  Greenville and Spartanburg, South Carolina.
Summit provides a full range of deposit services that are typically available in
most  banks  and  savings and loan associations including checking accounts, NOW
accounts,  individual  retirement  accounts,  savings and other time deposits of
various  types  ranging  from  daily  money  market  accounts  to  longer-term
certificates  of  deposit.

     Deposits  of  the  Bank  are  insured up to $100,000 by the Federal Deposit
Insurance  Corporation  (the "FDIC").  The Company has no material concentration
of  deposits  from  any  single  customer or group of customers.  Other services
which  the  Bank  offers  include  safe  deposit  boxes, bank money orders, wire
transfer  facilities,  remote  internet  banking and various cash management and
electronic  banking  programs.

     The  Bank  also  offers a full range of short to intermediate-term, secured
and  unsecured  commercial  and  personal  loans for business, real estate, home
improvement,  automobiles,  letters  of  credit,  personal  investments and home
equity  lines  of  credit.  It  is  the  Bank's  intent  to  originate  quality,
profitable  loans  which  will  benefit the area's economy, provide a reasonable
return  to  our  shareholders,  and  promote the growth of the Bank.  Management
strives  to  maintain  quality  in  the  loan portfolio and to accept only those
credit  risks  which  meet  the  Bank's  underwriting standards.  No significant
portion of the Company's loan portfolio is concentrated within a single industry
or  group  of  related  industries.

SUMMIT  INVESTMENT  SERVICES,  INC.
     Summit Investment Services, Inc. commenced operations in November 1997.  It
provides  a full range of nondeposit investment products including annuities and
mutual  funds,  full  and  discount brokerage services, and financial management
services.  Summit Investment Services has offices in Greenville and Spartanburg,
South  Carolina.

FREEDOM  FINANCE,  INC.
     The  Finance  Company  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.  The  Finance  Company,  which  is
headquartered  in  Greenville,  South  Carolina, currently has 11 branch offices
throughout  South  Carolina.  The Finance Company's loan customers are primarily
in  the  low-to-moderate  income  brackets  and  are  engaged  in widely diverse
occupations.  A  loan  investigation  and credit history review is made for each
borrower,  either  through  credit  reporting  agencies  or  directly by Company
employees.  Freedom  also makes available to borrowers credit life, accident and
health,  and  property  insurance directly related to the extension of credit to
the  individual.  The business of the Finance Company is rather seasonal and the
amount  of loans outstanding increases significantly at the end of each calendar
year  due  to  the seasonal loan demand, while the first quarter of the calendar
year  often  results  in  substantial  loan  paydowns.

TERRITORY  SERVED  AND  COMPETITION
     THE  BANK:  Summit  National  Bank  and  its  subsidiary, Summit Investment
Services,  Inc.,  are  located in the Upstate of South Carolina, with offices in
Greenville and Spartanburg.  The extended market area encompasses Greenville and
Spartanburg  Counties,  with  the principal market area being the urban areas of
these  counties.  The  Upstate  of  South  Carolina  is  a  highly  competitive
commercial  banking  market  in which all of the largest banks in the region are
represented.  The  competition among the various financial institutions is based
upon  interest  rates  offered  on  deposit  accounts, interest rates charged on
loans,  credit  and service charges, the quality and range of services rendered,
the  convenience  of  banking  facilities,  and,  in  the case of loans to large
commercial  borrowers,  relative  lending  limits.

     Many  of the competitor banks in the Bank's market area are subsidiaries of
bank  holding  companies  which  own banks in other southeastern states.  In the
conduct of certain areas of business, the Bank may also compete with savings and
loan associations, credit unions, insurance companies, securities firms, leasing
companies and other financial institutions, some of which are not subject to the
same  degree  of  regulation  and  restrictions  as the Bank.  The Bank may also
compete  with  out-of-state financial institutions which operate loan production
offices,  originate  mortgages,  accept money market deposits, and provide other
financial  services.  The  Bank's  investment  subsidiary  competes  with larger
brokerage houses and financial planners, discount brokers and internet brokerage
service  providers.

     Many  of  these  competitors  may  have substantially greater resources and
lending  abilities  than  the  Bank  due to their size and these competitors may
offer  services, such as international banking and trust services, that the Bank
is  not  currently  providing.  Moreover,  most of the competitors have multiple
branch  networks  located  throughout  the  extended market area, while the Bank
currently  has  only  four locations, which could be a competitive disadvantage.
As  a  result,  the  Bank  does not generally attempt to compete for the banking
relationships  of larger corporations, but concentrates its efforts on small and
medium-sized  businesses and individuals.  The Company believes that the Bank is
able  to  compete  effectively  in  this  market segment by offering competitive
pricing  of  services  and  quality,  experience  and  personal treatment in the
execution  of  services.

     The  Bank  and its subsidiary are not dependent upon a single or a very few
customers,  the  loss  of  which  would  have  a  material  adverse  effect.

     THE  FINANCE  COMPANY:  Freedom  Finance, Inc. serves its customers from 11
locations  throughout  South  Carolina.  Competition  between  consumer  finance
companies is not generally as intense as that among banks, however, this segment
of  the  market has become over-served in areas of South Carolina.  The amounts,
rates,  and  fees  charged  on consumer finance loans are regulated by state law
according  to  the  type of license granted by the South Carolina State Board of
Financial  Institutions.  Numerous  other  finance companies which offer similar
types  of  loans  are  located  in  the  areas  served  by  Freedom.

     The  Finance  Company  competes  directly with national, regional and local
consumer  finance  companies. The principal areas of competition in the consumer
finance  industry  are  convenience  of  services to customers, effectiveness of
advertising,  effectiveness  of administration of loans and the cost of borrowed
money.  Many  of  the  finance  companies  competing  with  Freedom  may  have
substantially  greater  resources and lending abilities than the Finance Company
and  may  have  more branches within the specific market areas in which they and
the  Finance  Company compete.  The Company believes that the Finance Company is
able  to  compete  effectively  in  its  current  markets.

EMPLOYEES
     As  of December 31, 2001, the Company and its subsidiaries employed a total
of  84  full-time  equivalent  employees.

MONETARY  POLICY
     The  earnings  of  the  Company  and  it's  bank subsidiary may be affected
significantly  by  the  monetary  policies  of  the  Federal Reserve Board which
regulates  the  money  supply in order to mitigate recessionary and inflationary
pressures.  Among  the  techniques  used  to implement these objectives are open
market  operations  in United States Government securities, changes in the rates
paid  by  banks  on bank borrowings, changes in the reserve requirements against
bank  deposits and limitations on interest rates which banks may pay on time and
savings  deposits.  These  techniques  are  used  in  varying  combinations  to
influence  overall  growth  and  distribution  of  bank  loans,  investments and
deposits,  and their use may also affect interest rates charged on loans or paid
on  deposits.


IMPACT  OF  INFLATION
     Unlike  most  industrial companies, the assets and liabilities of financial
institutions  such as the Company's subsidiary are primarily monetary in nature.
As  a  result,  interest  rates  generally have a more significant impact on the
performance  of  a  financial  institution that the effects of general levels of
inflation.  The  Company  believes  that  the effects of inflation are generally
manageable  through  asset-liability  management.

SUPERVISION  AND  REGULATION
     The  business  in  which  the  Company  and its subsidiaries are engaged is
subject  to  extensive  supervision,  regulation and examination by various bank
regulatory  authorities  and  other governmental agencies in the state where the
Company  and  its  subsidiaries  operate.  The  supervision,  regulation  and
examination  to  which the Company and its subsidiaries are subject are intended
primarily  for  the  protection of depositors or are aimed at carrying out broad
public  policy  goals,  rather  than  for  the  protection  of security holders.

     Several  of  the more significant regulatory provisions applicable to banks
and bank holding companies to which the Company and its subsidiaries are subject
are  discussed  below,  along  with  certain  regulatory  matters concerning the
Company  and  its  subsidiaries.  To  the  extent that the following information
describes statutory or regulatory provisions, it is qualified in its entirety by
reference  to  the particular statutory provisions. Any change in applicable law
or  regulation  may  have a material effect on the business and prospects of the
Company  and  its  subsidiaries.

REGULATORY  AGENCIES
     Financial  Holding  Company:  The  Company  elected  to  become a financial
holding  company  on  March  23,  2000 and continues to be subject to regulation
under  the  Bank  Holding  Company  Act of 1956, as amended (the "BHCA"), and to
inspection, examination and supervision by the Board of Governors of the Federal
Reserve  System  (the  "Federal Reserve").  As a bank holding company registered
under  the  laws  of the South Carolina Bank Holding Company Act, the Company is
also  subject  to  regulation  by  the  State  Board  of Financial Institutions.
Consequently,  the Company must receive the approval of the State Board prior to
engaging  in  the  acquisition  of banking or nonbanking institutions or assets.
The  Company  is also required to file annual reports and other information with
the Federal Reserve and the South Carolina State Board of Financial Institutions
regarding  its  financial  condition,  results  of  operations,  management  and
intercompany  relationships  and  transactions  between  the  Company  and  its
subsidiaries.

     Subsidiary  Bank:  The  Company's national bank subsidiary, Summit National
Bank  (the  "Bank"),  is  subject to regulation and examination primarily by the
Office of the Comptroller of Currency (the "OCC") and secondarily by the Federal
Reserve  and  the  FDIC.  The Bank is subject to various statutory requirements,
supervision and regulation promulgated and enforced by the OCC.  These statutes,
rules  and  regulations  relate  to  insurance  of  deposits, required reserves,
allowable  investments,  loans, mergers, consolidations, issuance of securities,
payment  of  dividends,  establishment  of  branches,  and  other aspects of the
business  of  Summit  National  Bank.

     Nonbank  Subsidiary:  The  Company's  nonbank  subsidiary  is  subject  to
regulation  by  the  Federal  Reserve  and  other  applicable  state  agencies.

THE  COMPANY

Financial  and  Bank  Holding  Company  Activities:
---------------------------------------------------
     In  November  1999,  Congress  passed  the  "Gramm-Leach-Bliley"  Financial
Services  Modernization  Act (the "GLB Act") which repeals two provisions of the
Glass-Stegall  Act  that  have  previously  separated  banking,  insurance,  and
securities  activities.  The GLB Act creates a new financial services structure,
the financial holding company, under the BHCA.  Financial holding companies will
be  able  to  engage in any activity that is deemed (1) financial in nature, (2)
incidental  to  any  such  financial  activity, or (3) complementary to any such
financial  activity  and  does  not  pose  a  substantial  risk to the safety or
soundness of depository institutions or the financial system generally.  The GLB
Act  specifies  certain  activities  that  are deemed to be financial in nature,
including  lending,  exchanging,  transferring,  investing  for  others,  or
safeguarding  money or securities; underwriting and selling insurance; providing
financial,  investment,  or economic advisory services; underwriting, dealing in
or  making a market in, securities; merchant banking, and any activity currently
permitted  for bank holding companies by the Federal Reserve Board under section
4(c)(8)  of  the Bank Holding Company Act.  The GLB Act does not authorize banks
or their affiliates to engage in commercial activities that are not financial in
nature.  A  bank  holding company may elect to be treated as a financial holding
company  only  if all depository institution subsidiaries of the holding company
are well capitalized, well managed and have at least a satisfactory rating under
the  Community  Reinvestment  Act.

     The  GLB  Act  adopts  a  system of functional regulation where the primary
regulator  is  determined  by the nature of the activity rather than the type of
institution.  Although  the  Federal  Reserve  Board (the "FRB") is the umbrella
supervisor of financial holding companies, the GLB Act limits the FRB's power to
supervise  and  conduct  examinations  of  affiliated companies of the financial
holding  company.  Rather,  under  the provisions of the GLB Act, the securities
activities  would  be  regulated  by  the  SEC  and other securities regulators,
insurance  activities by the state insurance authorities, and banking activities
by  the  appropriate  bank  regulator.

Control  Acquisitions:
----------------------
     The  BHCA  requires prior Federal Reserve approval for, among other things,
the  acquisition  by  a  bank holding company of direct or indirect ownership or
control  of more than 5% of the voting shares or substantially all of the assets
of  any  bank,  or  for a merger or consolidation of a bank holding company with
another bank holding company.  The Change in Bank Control Act prohibits a person
or  group  of persons from acquiring "control" of a bank holding company, unless
the  Federal  Reserve  Board  has  been  notified  and  has  not objected to the
transaction.  Under  a rebuttable presumption established by the Federal Reserve
Board,  the  acquisition  of  10%  or  more of a class of voting stock of a bank
holding  company  with  a class of securities registered under Section 12 of the
Exchange  Act,  such as the Company, would, under the circumstances set forth in
the  presumption, constitute acquisition of control of the bank holding company.

Liability  for  Banking  Subsidiaries
-------------------------------------
     Under  the  policy  of  the  Federal  Reserve  with respect to bank holding
company  operations,  a bank holding company is required to serve as a source of
financial  strength  to  its  subsidiary  depository  institutions and to commit
resources to support such institutions in circumstances where it might not do so
absent such policy.  This support may be required at times when the bank holding
company may not have the resources to provide it. In the event of a bank holding
company's  bankruptcy,  any  commitment  by  the  bank holding company to a U.S.
federal  bank  regulatory  agency  to  maintain the capital of a subsidiary bank
would  be assumed by the bankruptcy trustee and entitled to priority of payment.
If a default occurred with respect to a bank, any capital loans to the bank from
its  parent  holding company would be subordinate in right of payment to payment
of  the  bank's  depositors  and  certain  of  its  other  obligations.

FDICIA
------
     The  Federal  Deposit  Insurance  Corporation  Improvement  Act  of  1991
("FDICIA"),  requires  that  a  bank  holding  company  guarantee  that  any
"undercapitalized"  (as  defined  in the statute) insured depository institution
subsidiary  will  comply with the terms of any capital restoration plan filed by
such  subsidiary with its appropriate federal banking agency up to the lesser of
(i)  an  amount  equal  to  5% of the institution's total assets at the time the
institution  became  undercapitalized,  or (ii) the amount that is necessary (or
would be necessary) to bring the institution into compliance with all applicable
capital  standards  as  of  the  time  the institution fails to comply with such
capital  restoration  plan.

     Under  Section  5(e)  of the BHCA, the Federal Reserve has the authority to
terminate any activity of a bank holding company that constitutes a serious risk
to the financial soundness or stability of any subsidiary depository institution
or  to terminate its control of such subsidiary.  Further, FDICIA grants federal
bank  regulatory  authorities  additional  discretion  to require a bank holding
company  to  devest  itself  of  any  bank  or  nonbank subsidiary if the agency
determines  that  divesture  may  aid  the  depository  institution's  financial
condition.

Interstate  Banking  and  Branching
-----------------------------------
     The  passage of the Riegle-Neal Interstate Banking and Branching Efficiency
Act  of  1994  (the "Riegle-Neal Act") has increased the ability of bank holding
companies  and  banks to operate across state lines.  Under the Riegle-Neal Act,
with  the  approval of the Board of Governors of the Federal Reserve System, and
subject  to  nationwide  and statewide concentration limits, the Company and any
other bank holding company located in South Carolina may acquire or merge with a
bank  located  in  any other state and a bank holding company located outside of
South Carolina may acquire or merge with any South Carolina-based bank, provided
the acquirer is adequately capitalized and adequately managed, as defined in the
Riegle-Neal  Act.  The  Interstate  Banking  Act  also permits de novo branching
provisions.  The  legislation preserves the state laws which require that a bank
must be in existence for a minimum period of time before being acquired, as long
as  the  requirement  is  five  years  or  less.
     In  July  1996,  South  Carolina  enacted  the  South  Carolina Banking and
Branching  Efficiency  Act  (the "Act") which provides that, except as otherwise
expressly permitted by federal law and in limited circumstances specified in the
Act, a company may not acquire a South Carolina bank holding company (as defined
in  the  Act)  or  a  bank chartered under the laws of South Carolina unless the
company  obtains  prior  approval from the State Board of Financial Institutions
(the  "State  Board").  The  company proposing to make the acquisition must file
with  the  State  Board  a notice or application that the company filed with the
responsible  federal bank supervisory agency and pay the fee, if any, prescribed
by  the  State Board.  In addition, the company must publish prior notice of the
application  once  in a daily newspaper of general circulation in South Carolina
and provide an opportunity for public comment.  If the company proposing to make
the  acquisition  is an out-of-state bank holding company, it must qualify to do
business  in  South Carolina or appoint an agent for service of process in South
Carolina.  The  Act  also  provides  that  approval  of  the State Board must be
obtained before an interstate bank merger involving a South Carolina bank may be
consummated.

Affiliate  Transactions
-----------------------
     The Company is an "affiliate" of the Bank within the meaning of the Federal
Reserve  Act, which imposes restrictions on loans by the Bank to the Company, on
investments  by  the  Bank in the stock or securities of the Company, and on the
use  of  such  stock  or  securities  as collateral for loans by the Bank to any
borrower.  The  Company  and  the Bank are subject to Section 23A of the Federal
Reserve  Act.  Section  23A  defines  "covered  transactions",  which  includes
extensions  of  credit,  and  limits  a  bank's  covered  transactions  with any
affiliate  to  10% of such bank's capital and surplus.  All covered transactions
with  all  affiliates cannot in the aggregate exceed 20% of a bank's capital and
surplus.  All  covered and exempt transactions between a bank and its affiliates
must  be  on  terms  and  conditions  consistent  with  safe  and  sound banking
practices,  and  banks  and  their  subsidiaries  are prohibited from purchasing
low-quality  assets  from  the bank's affiliates.  Finally, Section 23A requires
that  all  of  a  bank's  extensions  of credit to an affiliate be appropriately
secured  by  acceptable  and  adequate collateral, as defined in the regulation.
The  Company and the Bank are also subject to Section 23B of the Federal Reserve
Act,  which  generally limits covered and other transactions among affiliates to
terms  and circumstances, including credit standards, that are substantially the
same  or at least as favorable to a bank holding company, a bank or a subsidiary
of  either  as  prevailing  at  the  time  for  transactions  with  unaffiliated
companies.

THE  BANK

General
-------
     The OCC is responsible for overseeing the affairs of all national banks and
periodically  examines national banks to determine their compliance with law and
regulations.  The  OCC  monitors  all  areas of the Bank's operations, including
loans,  mortgages,  issuance  of  securities, capital adequacy, risk management,
payment  of  dividends, and establishment of branches.  In addition, the OCC has
authority  to  issue  cease  and  desist orders against national banks which are
engaged in unsafe or unsound practice in the conduct of their business.  Federal
banking  laws  applicable  to all depository financial institutions, among other
things,  (i)  afford  federal  bank  regulatory  agencies with powers to prevent
unsafe  and unsound banking practices; (ii) restrict preferential loans by banks
to  "insiders"  of  banks;  (iii)  require banks to keep information on loans to
major  shareholders  and  executive  officers, and (iv) bar certain director and
officer  interlocks  between  financial  institutions.

     National  banks are authorized by the GLB Act to engage, through "financial
subsidiaries,"  in  any  activity  that  is  permissible for a financial holding
company  (as  described  above)  and  any  activity  that  the  Secretary of the
Treasury,  in  consultation  with  the  Federal  Reserve  Board,  determines  is
financial  in  nature  or  incidental to any such financial activity, except (1)
insurance  underwriting,  (2)  real estate development or real estate investment
activities  (unless otherwise permitted by law), (3) insurance company portfolio
investments  and  (4)  merchant  banking.  The  authority  of a national bank to
invest  in  a  financial  subsidiary  is  subject  to  a  number  of conditions,
including,  among  other things, requirements that the bank must be well managed
and  well  capitalized  (after  deducting  from  the  bank's capital outstanding
investments  in  financial  subsidiaries).

Community  Reinvestment  Act
----------------------------
     Summit  National  Bank  is  subject  to  the  requirements of the Community
Reinvestment  Act  of 1977 ("CRA").  CRA requires that, in connection with their
examinations  of  financial  institutions,  the  Comptroller  shall evaluate the
record of the Bank in meeting the credit needs of the local community, including
low  and  moderate  income  neighborhoods,  consistent  with  the safe and sound
operation of the Bank.  These factors are also considered in evaluating mergers,
acquisitions,  and  applications to open a branch facility.  The federal banking
agencies,  including  the  Comptroller,  issued  a  new  joint rule which became
effective  for  the  Bank  in  1997  related  to evaluating an institution's CRA
performance.  The  new  rule  evaluates  institutions  based  on  their  actual
performance (rather than efforts) in meeting community credit needs.  Subject to
certain  exceptions,  the  Comptroller assesses the CRA performance of a bank by
applying  lending,  investment,  and  service  tests.  The Comptroller assigns a
rating  to  a bank based on the bank's performance under the tests.  To evaluate
compliance  with  the  lending, investment and service tests, subject to certain
exceptions,  banks  are  required  to  collect  and  report  to  the Comptroller
extensive  demographic  and  loan  data.  Summit  National  Bank  received  a
"satisfactory"  rating  in  its  most  recent  CRA  examination.

Federal  Home  Loan  Bank  Membership
-------------------------------------
     The  Bank  is  a  member  of the Federal Home Loan Bank of Atlanta ("FHLB")
which  provides  a  central  credit  facility primarily for member institutions.
Members of the FHLB are required to acquire and hold shares of capital stock in,
and  may  obtain advances from, the FHLB.  The amount of stock owned is based on
the  Bank's  balance  of  residential  mortgages  and the balance of outstanding
advances  from  the FHLB.  The FHLB makes advances to members in accordance with
policies  and  procedures  established  by  its Board of Directors.  The Bank is
authorized  to  borrow  funds  from  the FHLB to meet demands for withdrawals of
deposit  accounts,  to meet seasonal requirements, to fund expansion of the loan
portfolio,  or  for  general asset/liability management.  Advances are generally
made  on  a secured basis.  Collateral on secured advances may be in the form of
first  mortgages on 1-4 family real estate or commercial real estate, government
securities,  or other assets acceptable to the FHLB.  Interest rates charged for
advances  vary  depending  upon  maturity,  the  cost  of funds to the FHLB, and
general  market  conditions.

Deposit  Insurance  Assessments
-------------------------------
     The Bank is also a member of the FDIC, which currently insures the deposits
of  each  member  bank  to  a  maximum  of  $100,000  per  depositor.  For  this
protection,  each  bank pays a semiannual statutory deposit insurance assessment
to  maintain the Bank Insurance Fund and is subject to the rules and regulations
of  the  FDIC.  Further,  the  FDIC  is authorized to impose one or more special
assessments  in  any  amount  deemed  necessary  to  enable repayment of amounts
borrowed  by  the  FDIC  from the United Stated Department of the Treasury.  The
FDIC  has  broad  authority  to  prohibit  Summit National Bank from engaging in
unsafe  or  unsound  banking  practices  and  may  remove or suspend officers or
directors  of  a bank to protect its soundness.  The FDIC requires insured banks
to  maintain  specified levels of capital, maintain certain security devices and
procedures  and  to  file  quarterly reports and other information regarding its
operations.  The  FDIC  requires  assessment  to  be  paid  by each FDIC-insured
institution  based on the institution's assessment risk classification, which is
determined  based  on  whether the institution is considered "well capitalized",
"adequately  capitalized",  or "undercapitalized", as terms have been defined in
applicable federal regulations adopted to implement the prompt corrective action
provisions  of  the  Federal  Deposit  Insurance  Corporation  Improvement  Act
("FDICIA"), and whether such institution is considered by its supervisory agency
to  be  financially  sound  or  to  have  supervisory  concerns.

Prompt  Corrective  Action
--------------------------
     Pursuant  to  the  authority  granted  under  FDICIA,  U.S. bank regulatory
agencies  were empowered to take prompt corrective action to resolve problems of
insured  depository  institutions  and  impose  progressively  more  restrictive
constraints  on  the  operations,  management  and capital.  The extent of these
powers  depends  upon whether the institution is "well capitalized", "adequately
capitalized",  "under  capitalized",  "significantly  undercapitalized",  or
"critically  undercapitalized".  Under uniform regulations defining such capital
levels  issued  by  each  of  the federal banking agencies, a bank is considered
"well  capitalized"  if  it  has  (1) a total risk-based capital ratio of 10% or
greater;  (2) a Tier I risk-based capital ratio of 6% or greater; (3) a leverage
ratio of 5% or greater; and (4) is not subject to any order or written directive
to  meet  and  maintain  a  specific  capital  level  for  any  capital measure.

     Unless  a  banking  institution  is  well  capitalized,  it  is  subject to
restrictions  on certain aspects of its operations.  An undercapitalized banking
institution  must develop a capital restoration plan and its parent bank holding
company  must  guarantee the bank's compliance with the plan up to the lesser of
5%  of  the  bank's assets at the time it became undercapitalized and the amount
needed  to  comply  with  the plan.  As of December 31, 2001, the Company's bank
subsidiary  was  well  capitalized,  based  on  the  prompt  corrective  action
guidelines.  It  should  be  noted,  however,  that a bank's capital category is
determined solely for the purpose of applying the OCC's prompt corrective action
regulations  and  that  the  capital  category  may  not  constitute an accurate
representation  of  the  bank's  overall  financial  condition  or  prospects.

Brokered  Deposits
------------------
     Current  federal  law  regulates  the  acceptance  of  brokered deposits by
insured  depository  institutions  to  permit only "well capitalized" depository
institutions  to  accept  brokered  deposits  without prior regulatory approval.

Consumer  Privacy
-----------------
     The  deposit  operations  of  the  Bank  are  also  subject to the Right to
Financial  Privacy  Act  which  imposes  a  duty  to maintain confidentiality of
consumer  financial  records  and  prescribes  procedures  for  complying  with
administrative subpoenas of financial records, and the Electronic Funds Transfer
Act  and  Regulation E issued by the Federal Reserve to implement that act which
governs  automatic  deposits  to  and  withdrawals  from  deposit  accounts  and
customers'  rights  and  liabilities  arising  from  the use of automated teller
machines  and  other  electronic  banking  services.

     The GLB Act also contains a number of other provisions that will affect the
Company's  operations  and the operations of all financial institutions.  One of
the  new  provisions,  which  became  effective  on July 1, 2000, relates to the
financial  privacy  of  consumers.  Federal  banking  regulators  issued  final
regulations in November 2000 related to consumer privacy which limit the ability
of  banks  and other financial entities to disclose non-public information about
consumers  to  non-affiliated  entities.  These  limitations  will  require more
disclosure  to  consumers,  and in some circumstances, to require consent by the
consumer  before  information  is  allowed  to  be  provided  to  a third party.

Other  Regulations
------------------
     Interest  and certain other charges collected or contracted for by the Bank
is  subject  to  state  usury  laws and certain federal laws concerning interest
rates.  The  Bank's  operations  are  also  subject  to  certain  federal  laws
applicable  to  credit  transactions,  such  as the federal Truth-In-Lending Act
governing  disclosures  of  credit  terms  to  consumer borrowers; CRA requiring
financial institutions to meet their obligations to provide for the total credit
needs  of  the  community;  the  Home  Mortgage Disclosure Act of 1975 requiring
financial  institutions to provide information to enable the public to determine
whether  it  is  fulfilling  its  obligation  to  meet  the housing needs of the
community it serves; the Equal Credit Opportunity Act prohibiting discrimination
on  the  basis  of race, creed, or other prohibited factors in extending credit;
the  Fair  Credit  Reporting  Act  of  1978  governing the use and provisions of
information to credit reporting agencies; the Fair Debt Collection Act governing
the  manner  in  which  consumer  debts  may  be  collected;  and  the rules and
regulations  of  the various federal agencies charged with the responsibility of
implementing  such  federal  laws.

THE  FINANCE  COMPANY
     The  Company's  subsidiary  finance  company,  Freedom  Finance, Inc., is a
consumer  finance company licensed and regulated by the State Board of Financial
Institutions for South Carolina.  Accordingly, the Finance Company is subject to
annual  examinations  by  the  State  Board and various regulatory requirements,
including  annual  reporting,  annual  license  renewal,  and  other regulations
pertaining to the extension of credit.  Specifically, state laws and regulations
apply  to  maximum  loan amounts, terms, interest rates and credit insurance and
other  fee  charges.  These  laws and regulations are subject to both repeal and
revision  from  time to time, often in response to pressures exerted by consumer
rights  groups.

CAPITAL  REQUIREMENTS
     Pursuant to the general supervisory authority conferred by the BHCA and the
directives  set  forth in the International Lending Supervision Act of 1983, the
Federal  Reserve  and  Comptroller  have  adopted  risk-based  capital  adequacy
guidelines for banks and bank holding companies subject to their regulation as a
means  for  determining  the  adequacy of capital based on the risks inherent in
carrying various classes of assets and off-balance sheet items.  Failure to meet
minimum  capital  requirements  can  initiate  certain  mandatory  and  possibly
additional discretionary actions by regulators that, if undertaken, could have a
material  effect on the financial statements.  Under capital adequacy guidelines
and  the  regulatory framework for prompt corrective action, the Company and the
Bank must meet specific capital guidelines that involve quantitative measures of
the  Company's  and the Bank's assets, liabilities and certain off-balance sheet
items  as  calculated  under regulatory accounting practices.  The Company's and
the  Bank's  capital  amounts and classification are also subject to qualitative
judgments  by  the  regulators  about  components,  risk  weightings,  and other
factors.

     Quantitative  measures established by regulation to ensure capital adequacy
require the Company and the Bank to maintain minimum amounts and ratios of total
and  Tier  I  capital (as defined in the regulation) to risk-weighted assets (as
defined)  and  to  total  assets.  Management believes, as of December 31, 2001,
that  the  Company  and the Bank meet all capital adequacy requirements to which
they  are  subject.  At  December  31, 2001 and 2000, the Bank is categorized as
"well  capitalized"  under the regulatory framework for prompt corrective action
as  described  above.  There are no current conditions or events that management
believes  would  change  the  Company's  or  the  Bank's  category.

     The  Company's and the Bank's actual capital amounts and ratios at December
31,  2001 and 2000 as well as the minimum calculated amounts for each regulatory
defined  category  are included in this report under Part II, Item 8. "Financial
Statements  and  Supplemental  Data"  as  Note  14  to the Notes to Consolidated
Financial  Statements.

DIVIDENDS
     The  holders  of  the  Company's  common stock are entitled to receive cash
dividends  when  and  if  declared  by  the  Board of Directors out of the funds
legally available therefor.  The Company is a legal entity separate and distinct
from  its  subsidiaries  and  depends  in large part for its income available to
distribute  to  shareholders  on  the  payment  of  cash  dividends  from  its
subsidiaries.  While  the  Company  is  not  presently subject to any regulatory
restrictions  on dividends, the Bank is subject to such regulatory cash dividend
restrictions.

     Specifically, approval of the OCC will be required for any cash dividend to
be paid to the Company by the Bank if the total of all cash dividends, including
any  proposed  cash  dividend, declared by the Bank in any calendar year exceeds
the  total  of  its  net  profits  for  that year combined with its retained net
profits  for  the  preceding  two years, less any required transfers to surplus.
Additionally,  the  National  Bank  Act provides that a national bank cannot pay
cash  dividends or other distributions to shareholders out of any portion of its
common  stock  or  preferred  stock  accounts  and that a bank shall pay no cash
dividend in an amount greater than its net profits then on hand, after deduction
of  its  losses  and bad debts.  As of December 31, 2001, no cash dividends have
been declared or paid by the Bank.  At December 31, 2001, the Bank had available
retained  earnings  of  $12.5  million.

FUTURE  LEGISLATION
     Changes  to the laws and regulations in the state where the Company and its
subsidiaries  do  business can affect the operating environment of financial and
bank  holding  companies and their subsidiaries in substantial and unpredictable
ways.  The Company cannot accurately predict whether legislation will ultimately
be  enacted,  and,  if  enacted,  the  ultimate  effect that it, or implementing
regulations,  would  have  upon  its or its subsidiaries' financial condition or
results  of  operations.

ITEM  2.  PROPERTIES

     The  operations  of the Company and the Bank do not require any substantial
investment  in  fixed  assets.  The principal executive offices for the Company,
the  Bank  and  the Finance Company are located at 937 North Pleasantburg Drive,
Greenville,  South  Carolina.  In  addition, this site serves as the Bank's main
branch.  The  building  at  this  location is approximately 7,500 square feet in
area  and  is  situated on a one-acre lot.  The Company executed a lease for the
land  and  building  and  assigned the lease to the Bank effective on the Bank's
commencement  of  operations.  The  initial term of the lease commenced April 1,
1990  and  renewal options were exercised in April 1995 and September 1998.  The
term  on  the  renewal  of  the lease is five years under substantially the same
terms.  The  lease  provides  that  the  Company  will  be  responsible for real
property  taxes,  insurance,  utilities  and  maintenance  with  respect  to the
premises.  During  1995,  the  Bank  completed construction on approximately .63
acres  of  land  at  2201 Augusta Road, Greenville, South Carolina of its second
full  service  bank branch.  The facility is approximately 6,500 square feet and
is  fully  owned  and  occupied  by the Bank.  During April of 1998, the Company
entered  into  an agreement to lease a facility for a branch located at 800 East
North  Street, Greenville, South Carolina.  This facility, which was occupied in
October  1998,  serves  as  the third full service bank branch and as the Bank's
operations facility.  The facility is approximately 8,000 square feet and has an
initial lease term of seven years.  This agreement includes a renewal option for
an  additional  seven  year  period.  During 2000, the Bank purchased a 1.1 acre
land  parcel for construction of a fourth branch in Spartanburg, South Carolina.
The  branch  facility  was  completed in May 2001 and totals approximately 7,500
square  feet.

     The eleven Finance Company branches throughout South Carolina are housed in
leased  facilities  averaging 1,200 square feet each with lease terms from three
to  ten  years.  The  lease  agreements  have  various  renewal  options  under
substantially  the  same  terms  as  the  original  agreements.

ITEM  3.  LEGAL  PROCEEDINGS

     Although  the  Company  is  from  time  to  time  a  party to various legal
proceedings  arising out of the ordinary course of business, management believes
there  is  no litigation or proceeding threatened or pending against the Company
that  could  reasonably  be expected to result in a materially adverse change in
the  business  or  financial  condition  of  the  Company.

<PAGE>

ITEM  4.  SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS

     There were no matters submitted to a vote of the shareholders in the fourth
quarter  of  the  Company's  fiscal  year  ending  December  31,  2001.


                                     PART II

ITEM  5.     MARKET  FOR  THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

     Summit  Financial  Corporation's  common  stock  is traded in the Small-Cap
market  on  the NASDAQ system under the symbol SUMM.  As of March 12, 2002 there
were  approximately  390 shareholders of record of the common stock.  The number
of  shareholders  does  not  reflect  the number of persons or entities who hold
their  stock  in  nominee  or  "street"  name  through  various brokerage firms.

     The following table presents the high, low and closing sales prices for the
Company's common stock for each full quarterly period within the two most recent
fiscal  years.  The  source for the following information was the Nasdaq market.


<TABLE>
<CAPTION>

                                    QUARTERLY COMMON STOCK SUMMARY

                                        2001                                 2000
                         -----------------------------------  ------------------------------------
                           4Q       3Q       2Q        1Q        4Q       3Q       2Q        1Q
                         -------  -------  -------  --------  --------  -------  -------  --------
Stock Price ranges: (1)
<S>                      <C>      <C>      <C>      <C>       <C>       <C>      <C>      <C>
High. . . . . . . . . .  $ 11.75  $ 10.00  $  9.90  $  10.00  $   9.98  $  9.75  $  9.75  $  11.11
Low . . . . . . . . . .  $  9.13  $  9.19  $  9.05  $   8.57  $   8.39  $  8.16  $  8.16  $   7.93
Close . . . . . . . . .  $ 10.00  $  9.52  $  9.43  $  10.00  $   8.81  $  9.07  $  9.07  $   9.18
Volume Traded . . . . .   53,172   24,640   38,760   106,452   105,706   93,009   35,791   159,109

<FN>

(1)     -  Share  data  has  been  restated  to  reflect  all  5%  stock  dividends  issued.

</TABLE>


    The Company has not paid any cash dividends. The holders of common stock are
entitled  to  receive  dividends when and as declared by the Board of Directors.
The  Company's present policy is to retain all earnings for the operation of the
Company  until  such  time  as  future  earnings support cash dividend payments.
Accordingly,  the  Company  does  not  anticipate  paying  cash dividends in the
foreseeable future.  For information on dividend restrictions, refer to Part II,
Item  8.  "Financial  Statements and Supplementary Data", Note 14 under Notes to
Consolidated  Financial  Statements.


<PAGE>

ITEM  6.     SELECTED  FINANCIAL  DATA
     The  information  presented  below  should  be read in conjunction with the
consolidated  financial  statements,  the  notes  thereto  and  "Management's
Discussion  and  Analysis  of  Financial  Condition  and  Results of Operations"
contained  under  Item  7  of  this  report.
<TABLE>
<CAPTION>

                         SELECTED CONSOLIDATED FINANCIAL AND OTHER
                 (All Dollar Amounts In Thousands, Except Per Share Data)


                                       2001       2000       1999       1998       1997
                                     ---------  ---------  ---------  ---------  ---------
INCOME STATEMENT DATA
<S>                                  <C>        <C>        <C>        <C>        <C>
Net interest income . . . . . . . .  $ 10,398   $ 10,023   $  8,749   $  7,614   $  6,977
Provision for loan losses . . . . .       725        654        445        290        392
Other income. . . . . . . . . . . .     2,582      1,846      1,560      1,408      1,035
Other expenses. . . . . . . . . . .     8,259      7,356      6,520      5,826      5,150
Provision for income taxes. . . . .     1,280      1,204        936      1,011        895
Net income. . . . . . . . . . . . .     2,716      2,655      2,408      1,895      1,575
PER SHARE DATA: (1)
Basic net income. . . . . . . . . .  $   0.72   $   0.71   $   0.69   $   0.55   $   0.46
Diluted net income. . . . . . . . .      0.66       0.65       0.59       0.46       0.42
Book value per share. . . . . . . .      6.49       5.70       4.91       4.47       3.83
Closing market price per share. . .     10.00       8.81      10.89      12.52      10.19
BALANCE SHEET DATA (YEAR END)
Total assets. . . . . . . . . . . .  $273,097   $249,835   $191,229   $170,485   $160,279
Loans, net of unearned income . . .   207,041    180,521    148,170    130,669    118,755
Allowance for loan losses . . . . .     2,937      2,560      2,163      1,827      1,728
Total earning assets. . . . . . . .   258,044    236,145    181,443    159,586    151,300
Deposits. . . . . . . . . . . . . .   218,778    209,191    157,996    140,243    140,928
Long-term debt. . . . . . . . . . .    21,300     13,000      7,000      5,000          -
Shareholders' equity. . . . . . . .    24,601     21,528     17,591     15,674     13,369
BALANCE SHEET DATA (AVERAGES)
Total assets. . . . . . . . . . . .  $263,695   $212,177   $180,141   $166,432   $149,662
Loans, net of unearned income . . .   195,573    159,711    138,989    120,488    110,812
Total earning assets. . . . . . . .   249,152    201,151    169,674    158,048    142,561
Deposits. . . . . . . . . . . . . .   217,262    175,370    151,672    143,399    131,249
Shareholders' equity. . . . . . . .    23,193     19,562     16,671     14,424     12,500
FINANCIAL RATIOS
Return on average assets. . . . . .      1.03%      1.25%      1.34%      1.14%      1.05%
Return on average equity. . . . . .     11.71%     13.57%     14.45%     13.14%     12.60%
Net interest margin . . . . . . . .      4.29%      5.11%      5.31%      4.95%      4.94%
Tier 1 risk-based capital . . . . .     11.16%     10.96%     11.26%     10.91%     10.43%
Total risk-based capital. . . . . .     12.41%     12.21%     12.51%     12.16%     11.68%
ASSET QUALITY RATIOS
Allowance for loan losses to loans.      1.42%      1.42%      1.46%      1.40%      1.46%
Net charge-offs to average loans. .       .18%       .16%       .08%       .16%       .16%
Nonperforming assets. . . . . . . .  $  1,180   $    218   $    147          -          -
<FN>

(1)     All  per  share  data  has been restated to reflect all 5% stock dividends issued.
</TABLE>


<PAGE>

ITEM  7.     MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF FINANCIAL CONDITION AND
RESULTS  OF  OPERATIONS

     The  following  discussion  is  presented  to  provide  the  reader with an
understanding  of  the  financial  condition and results of operations of Summit
Financial  Corporation  and  its  subsidiaries, Summit National Bank and Freedom
Finance,  Inc.

FORWARD-LOOKING  STATEMENTS

     This  report  contains  certain  "forward-looking  statements",  within the
meaning of  Section 27A of the Securities Exchange Act of l934, as amended, that
represent  the Company's expectations or beliefs concerning future events.  Such
forward-looking  statements  are  about  matters  that are inherently subject to
certain risks, uncertainties, and assumptions.  Factors that could influence the
matters  discussed  in forward-looking statements include the relative levels of
market  interest  rates,  loan prepayments and deposit decline rates, the timing
and  amount  of  revenues that may be recognized by the Company, continuation of
current  revenue,  expense  and charge-off trends, legal and regulatory changes,
and  general  changes  in  the  economy.  Should  one  or more of these risks or
uncertainties  materialize,  or  should  underlying assumptions prove incorrect,
actual  results  may  vary  materially  from those expected or projected.  These
forward-looking  statements  speak  only  as  of  the date of the document.  The
Company assumes no obligation to update any forward-looking statements.  Because
of  the  risks and uncertainties inherent in forward-looking statements, readers
are  cautioned  not  to  place  undue  reliance  on  them.

GENERAL

     Summit  Financial  Corporation  (the  "Company" or "Summit Financial") 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  18  months.  Freedom  operates  11  branches  throughout  South
Carolina.

INCOME  STATEMENT  REVIEW

GENERAL
     The  Company reported another year of increased earnings in 2001 which were
up  2%  from 2000.  Net income totaled $2.716 million, or $0.66 diluted earnings
per  share,  in 2001 compared with $2.655 million, or $0.65 diluted earnings per
share,  in  2000  and  $2.408  million, or $0.59 diluted earnings per share, for
1999.  The  improvement  in  net  income and earnings per share between 2000 and
2001 resulted primarily from the growth in earning assets, offset by declines in
net  interest  margin.  Increases in other income also contributed to the higher
net  income  in  2001,  offset  somewhat  by  increases  in  other  expenses.

NET  INTEREST  INCOME
     Net interest income is the difference between the interest earned on assets
and  the  interest paid for the liabilities used to support those assets.  It is
the  largest  component  of  the  Company's earnings and changes in net interest
income 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  2001,  the Company recorded net interest income of $10.4 million, a
4%  increase  from  the  2000  net  interest  income  of $10.0 million.  This is
compared  to  net interest income of $8.7 million for 1999.  The increase in net
interest  income  in  2001  is  directly  related to the increase in the average
earning assets and interest-bearing liability volume of the Bank of 24% and 25%,
respectively,  offset  by  the  82  basis  point decrease in net interest margin
during the year.  Net interest income increased in 2000 primarily as a result of
the  higher  average  loan and interest-bearing deposit volume of the Bank which
was  up  from 1999 by 19% and 18%, respectively, offset somewhat by the 20 basis
point  decrease  in  net  interest  margin  during  2000.

     For the year ended December 31, 2001, the Company's net interest margin was
4.29%, compared to 5.11% in 2000 and 5.31% for 1999.  The net interest margin is
calculated as net interest income divided by average earning assets.  The margin
for  2001  decreased  82  basis  points from the prior year due primarily to the
rapid  and dramatic short-term interest rate reductions throughout 2001.  During
2001, the interest yield on assets decreased more rapidly than the interest cost
on  liabilities  supporting  those  assets.  The  margins  between 1999 and 2000
decreased  20  basis points due primarily to the higher cost of funds related to
the  general  rise  in  interest  rates  during  2000  and promotions offered on
certificates  of  deposit  ("CDs")  during  the  year.


<PAGE>
NET  INTEREST  INCOME  ANALYSIS
     The  following  table  presents the average balances, the average yield and
the  interest income earned on interest-earning assets, and the average rate and
the  interest paid or accrued on interest-bearing liabilities of the Company for
the  last  three  years.  Also  presented  is  the  average yields and rates for
interest-earning  assets  and interest-bearing liabilities at December 31, 2001.
Tabular presentation of all average statistical data is based on daily averages.

<TABLE>
<CAPTION>


                                     AVERAGE BALANCES AND NET INTEREST INCOME ANALYSIS
                                                   (DOLLARS IN THOUSANDS)


                                              Average                2001                         2000                1999
                                                         --------------------------   --------------------------   --------
                                            Yield/Rate   Average   Income/   Yield/   Average   Income/   Yield/   Average
                                             12/31/01    Balance   Expense    Rate    Balance   Expense    Rate    Balance
                                            -----------  --------  --------  -------  --------  --------  -------  --------
<S>                                         <C>          <C>       <C>       <C>      <C>       <C>       <C>      <C>
ASSETS
Earning Assets:
Loans (net of unearned income) (1) . . . .        7.26%  $195,573  $ 17,293    8.84%  $159,711  $ 16,882   10.57%  $138,989
Investment securities (taxable) (2). . . .        5.91%    28,940     1,751    6.05%    18,405     1,187    6.45%    16,038
Investment securities                                                   568             10,276
(non-taxable) (2) (3). . . . . . . . . . .        7.50%    11,292              7.62%                 515    7.59%    10,113
Investment in stock (4). . . . . . . . . .        5.39%     1,485        96    6.46%     1,221        87    7.13%       888
Federal funds sold . . . . . . . . . . . .        1.80%     7,808       318    4.07%     8,790       563    6.41%     2,015
Interest-bearing bank balances . . . . . .        2.00%     4,054       179    4.42%     2,748       183    6.66%     1,631
                                            -----------  --------  --------  -------  --------  --------  -------  --------
     Total earning assets. . . . . . . . .        6.91%   249,152  $ 20,205    8.23%   201,151  $ 19,417    9.78%   169,674
                                            ===========            ========  =======            ========  =======
Non-earning assets                                         14,543                       11,026                       10,467
                                                         --------                     --------                     --------
     Total average assets                                $263,695                     $212,177                     $180,141
                                                         ========                     ========                     ========
LIABILITIES & SHAREHOLDERS'
EQUITY
Liabilities:
Interest-bearing deposits:
  Interest checking. . . . . . . . . . . .        1.16%  $ 17,475       329    1.88%  $ 12,168  $    382    3.14%  $ 10,409
  Savings. . . . . . . . . . . . . . . . .         .75%     1,848        26    1.40%     1,834        44    2.40%     1,758
  Money market accounts. . . . . . . . . .        2.14%    76,665     2,754    3.59%    57,369     2,968    5.17%    55,667
  Time deposits greater than $100M . . . .        4.37%    47,705     2,737    5.74%    37,176     2,315    6.23%    20,869
  Other time deposits. . . . . . . . . . .        4.61%    47,020     2,782    5.92%    45,077     2,754    6.11%    43,765
                                            -----------  --------  --------  -------  --------  --------  -------  --------
     Total interest-bearing deposits . . .        3.04%   190,713     8,628    4.52%   153,624     8,463    5.51%   132,468
Federal funds purchased
 and repurchase agreements . . . . . . . .        2.14%        58         2    3.72%       254        16    6.30%       909
Other short-term borrowings. . . . . . . .        4.31%       500        31    6.22%       500        37    7.41%       510
FHLB advances. . . . . . . . . . . . . . .        5.35%    19,891     1,146    5.76%    14,131       878    6.21%     8,530
                                            -----------  --------  --------  -------  --------  --------  -------  --------
     Total interest-bearing liabilities. .        3.30%   211,162     9,807    4.64%   168,509  $  9,394    5.57%   142,417
                                            ===========            ========  =======            ========  =======
Noninterest bearing liabilities:
  Noninterest bearing deposits                             26,549                       21,746                       19,204
  Other noninterest bearing liabilities                     2,791                        2,360                        1,849
                                                         --------                     --------                     --------
     Total liabilities                                    240,502                      192,615                      163,470
Shareholders' equity                                       23,193                       19,562                       16,671
                                                         --------                     --------                     --------
     Total average liabilities and equity                $263,695                     $212,177                     $180,141
                                                         ========                     ========                     ========
Net interest margin (5)                                            $ 10,398    4.29%            $ 10,023    5.11%
                                                                   ========  =======            ========  =======
Interest rate spread (6)                                                       3.59%                        4.21%
                                                                             =======                      =======


                                              1999
                                            -----------------
                                            Income/   Yield/
                                            Expense    Rate
                                            --------  -------
<S>                                         <C>       <C>
ASSETS
Earning Assets:
Loans (net of unearned income) (1) . . . .  $ 13,676    9.84%
Investment securities (taxable) (2). . . .       951    5.93%
Investment securities
(non-taxable) (2) (3). . . . . . . . . . .       500    7.50%
Investment in stock (4). . . . . . . . . .        61    6.87%
Federal funds sold . . . . . . . . . . . .       102    5.06%
Interest-bearing bank balances . . . . . .        87    5.33%
                                            --------  -------
     Total earning assets. . . . . . . . .  $ 15,377    9.21%
                                            ========  =======
Non-earning assets

     Total average assets

LIABILITIES & SHAREHOLDERS'
EQUITY
Liabilities:
Interest-bearing deposits:
  Interest checking. . . . . . . . . . . .  $    251    2.41%
  Savings. . . . . . . . . . . . . . . . .        43    2.45%
  Money market accounts. . . . . . . . . .     2,450    4.40%
  Time deposits greater than $100M . . . .     1,074    5.15%
  Other time deposits. . . . . . . . . . .     2,268    5.18%
                                            --------  -------
     Total interest-bearing deposits . . .     6,086    4.59%
Federal funds purchased
 and repurchase agreements . . . . . . . .        46    5.02%
Other short-term borrowings. . . . . . . .        33    6.50%
FHLB advances. . . . . . . . . . . . . . .       463    5.42%
                                            --------  -------
     Total interest-bearing liabilities. .  $  6,628    4.65%
                                            ========  =======
Noninterest bearing liabilities:
  Noninterest bearing deposits
  Other noninterest bearing liabilities

     Total liabilities
Shareholders' equity

     Total average liabilities and equity

Net interest margin (5). . . . . . . . . .  $  8,749    5.31%
                                            ========  =======
Interest rate spread (6)                                4.56%
                                                      =======
<FN>


(1)     Average  loans are stated net of unearned income and include non-accrual loans.  Interest recognized on non-accrual
loans  has  been  included  in  interest  income.
(2)     Average  yield  on investment securities is computed using historical cost balances; the yield information does not
give  effect  to  changes  in  fair  value  that  are  reflected  as  a  component  of  shareholders'  equity.
(3)          Yields on nontaxable investment securities have been adjusted to a tax equivalent basis assuming a 34% Federal
tax  rate.
(4)     Includes  investments  in  stock  of  Federal  Reserve  Bank,  Federal  Home  Loan  Bank,  and  other  equities.
(5)     Net  interest margin is computed by dividing net interest income (adjusted to a tax equivalent basis assuming a 34%
Federal  tax  rate)  by  total  average  interest-earning  assets.
(6)     Interest rate spread is the difference between the average yield on interest-earning assets and the average rate on
interest-bearing  liabilities.
</TABLE>

<PAGE>

ANALYSIS  OF  CHANGES  IN  INTEREST  DIFFERENTIAL
     Net  interest income ("NII") is affected by changes in the average interest
rate  earned  on  interest-earning  assets and the average interest rate paid on
interest-bearing  liabilities.  In  addition, net interest income is affected by
changes  in  the  volume  of  interest-earning  assets  and  interest-bearing
liabilities.  The  following  table  sets forth the dollar amount of increase in
interest  income  and  interest  expense resulting from changes in (1) volume of
interest-earning  assets  and  interest-bearing  liabilities  (changes in volume
times  old  rate);  (2)  changes  in yields and rates (changes in rate times old
volume);  and  (3)  changes  in  rate-volume  (changes  in rate times changes in
volume).

<TABLE>
<CAPTION>

                                         VOLUME AND RATE VARIANCE ANALYSIS
                                              (DOLLARS IN THOUSANDS)

                                                  2000 - 2001                               1999 - 2000
                                       -------------------------------------   ----------------------------------
                                          CHANGE  RELATED  TO                   CHANGE  RELATED  TO
                                       ----------------------------   TOTAL   -------------------------    TOTAL
                                                             Rate/    CHANGE                      Rate/    CHANGE
                                        Volume     Rate      Volume   IN NII    Volume    Rate   Volume    IN NII
                                       --------  ---------  --------  -------  -------  -------  -------  -------
<S>                                    <C>       <C>        <C>       <C>     <C>       <C>      <C>       <C>
EARNING ASSETS:
Loans (net of unearned income). . . .  $ 3,791    ($2,760)    ($620)  $ 411   $ 2,039   $1,016   $   151   $3,206
Investment securities (taxable) . . .      679        (73)      (42)    564       140       83        13      236
Investment securities (non-taxable) .       50          3         0      53         8        6         1       15
Investment in stock . . . . . . . . .       19         (8)       (2)      9        23        2         1       26
Federal funds sold. . . . . . . . . .      (63)      (205)       23    (245)      343       27        91      461
Interest-bearing bank balances. . . .       87        (62)      (29)     (4)       60       22        14       96
                                       --------  ---------  --------  ------  --------  -------  --------  -------
     Total interest income. . . . . .    4,563     (3,105)     (670)    788     2,613    1,156       271    4,040
                                       --------  ---------  --------  ------  --------  -------  --------  -------
INTEREST-BEARING LIABILITIES:
Interest-bearing deposits:
  Interest checking . . . . . . . . .      167       (153)      (67)    (53)       42       76        13      131
  Savings . . . . . . . . . . . . . .        0        (18)        0     (18)        2       (1)        0        1
  Money market accounts . . . . . . .      998       (907)     (305)   (214)       75      430        13      518
  Time deposits greater than $100M. .      656       (182)      (52)    422       839      226       176    1,241
  Other time deposits . . . . . . . .      119        (87)       (4)     28        68      406        12      486
                                       --------  ---------  --------  ------  --------  -------  --------  -------
     Total interest-bearing deposits.    1,940     (1,347)     (428)    165     1,026    1,137       214    2,377
Federal funds purchased . . . . . . .      (12)        (7)        5     (14)      (33)      11        (8)     (30)
Other short-term borrowings . . . . .        0         (6)        0      (6)       (1)       5         0        4
FHLB advances . . . . . . . . . . . .      358        (64)      (26)    268       304       67        44      415
                                       --------  ---------  --------  ------  --------  -------  --------  -------
     Total interest expense . . . . .    2,286     (1,424)     (449)    413     1,296    1,220       250    2,766
                                       --------  ---------  --------  ------  --------  -------  --------  -------
NET INTEREST DIFFERENTIAL . . . . . .  $ 2,277   $ (1,681)  $  (221)  $ 375   $ 1,317     ($64)  $    21   $1,274
                                       ========  =========  ========  ======  ========  =======  ========  =======
</TABLE>


INTEREST  INCOME
     Interest  income  for  2001  was  $20.2  million,  which was an increase of
$788,000,  or 4%, over the $19.4 million for 2000.  Interest income for 1999 was
$15.4  million.  The  increases  each  year are primarily a result of the higher
levels  of  earning  assets  which  averaged  $249.2 million, $201.2 million and
$169.7  million  in 2001, 2000 and 1999, respectively.  Changes in average yield
on  earning  assets  also  affect  the  interest income reported each year.  The
average  yield, on a fully tax equivalent basis, increased from 9.21% in 1999 to
9.78%  in  2000, and decreased to 8.23% in 2001 due primarily to fluctuations in
the  general  interest  rate  environment  during  the  three  year  period.

     The  majority  of  the  increase in average earning assets between 1999 and
2000  and  between  2000  and  2001 was in loans, the Company's highest yielding
assets,  which  accounted  for  79%  of  average  earning  assets  for  2001.
Consolidated  loans  averaged  $195.6  million  in 2001 with an average yield of
8.84%,  compared  to $159.7 million in 2000 with an average yield of 10.57%, and
$139.0  million in 1999 with an average yield of 9.84%.  In excess of 60% of the
Company's  loan  portfolio adjusts immediately with changes in the prime lending
rate.  The  prime  rate  increased  from  an average of 8.00% in 1999 to average
9.23% in 2000 resulting in increases in the average yield on loans in 2000.  The
average  loan  rate  dropped  in  2001 as compared to the prior year as a direct
result of the 232 basis point decline in the average prime rate to 6.91% for the
year.  The  higher level of average loans each year, combined with the effect of
fluctuations in average yield, resulted in increases in interest income on loans
of $3.2 million, or 23%, between 1999 and 2000 and $400,000, or 2%, between 2000
and  2001.

     The  second largest component of earning assets is the Company's investment
portfolio which averaged $40.2 million yielding 6.49% in 2001.  This is compared
to average securities of $28.7 million in 2000 yielding 6.86%, and $26.3 million
yielding  6.50%  for  1999.  The  fluctuations  in  the  average  yield  of  the
investment  portfolio  each year is related to the timing, maturity distribution
and  types  of  securities  purchased,  called  and  matured,  combined  with
fluctuations  in the general interest rate environment.  The increase in average
securities,  offset  somewhat  by  the  37 basis point decrease in average rate,
resulted  in  an increase in interest income on investments of $617,000, or 36%,
between  2000  and  2001.  Higher levels of average investments, combined with a
higher  average  rate, resulted in an increase in interest income on investments
of  $251,000,  or  17%,  between  1999  and  2000.

INTEREST  EXPENSE
     The  Company's interest expense for 2001 was $9.8 million, compared to $9.4
million for 2000 and $6.6 million for 1999.  The 4% increase in interest expense
in 2001 was related to the 25% increase in average interest-bearing liabilities,
offset by the 93 basis point decrease in the cost of funds.  The increase in the
interest  expense  in 2000 from 1999 was a result of the 18% increase in average
interest-bearing  liabilities  combined  with the 92 basis point increase in the
cost  of  funds.  The lower average cost of funds in 2001 was a direct result of
the  declining  interest rates throughout the year combined with the maturity of
CDs  renewed  at  lower  current  market  rates.  Interest-bearing  liabilities
averaged  $211.2  million  in  2001  with  an average rate of 4.64%, compared to
$168.5  million  in 2000 with an average rate of 5.57%, and an average of $142.4
million  with  an  average  rate  of  4.65%  during  1999.

INTEREST  RATE  SENSITIVITY  ANALYSIS
     An  important  aspect of achieving satisfactory levels of net income is the
management  of  the  composition  and  maturities  of  rate sensitive assets and
liabilities in order to optimize net interest income as interest rates earned on
assets  and  paid  on  liabilities  fluctuate  from  time to time.  The interest
sensitivity  gap  (the "gap") is the difference between total interest sensitive
assets  and  liabilities in a given time period.  The gap provides an indication
of  the  extent  to  which  the Company's net interest income may be affected by
interest  rate  movements.

     The  objective of interest sensitivity management is to maintain reasonably
stable growth in net interest income despite changes in market interest rates by
maintaining  the  proper  mix  of  interest  sensitive  assets  and liabilities.
Management  seeks  to  maintain a general equilibrium between interest sensitive
assets and liabilities in order to insulate net interest income from significant
adverse  changes  in  market  rates.

     At  December  31,  2001,  on  a  cumulative  basis  through  12  months,
rate-sensitive liabilities exceed rate-sensitive assets, resulting in a 12 month
period  liability-sensitive  position at the end of 2001 of $32.5 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.

<PAGE>

     The  following table presents a measure, in a number of time frames, of the
interest  sensitivity  gap  by  subtracting  interest-sensitive liabilities from
interest-sensitive  assets.

<TABLE>
<CAPTION>

                             INTEREST SENSITIVITY ANALYSIS
                                 (DOLLARS IN THOUSANDS)

                                                  As of December 31, 2001
                                          Assets and Liabilities Repricing Within
                                     --------------------------------------------------
                                      3 Months    4 to 12    1 to 5   Over 5
                                       or Less     Months     Years    Years    Total
                                      ---------  ----------  -------  -------  --------
<S>                                   <C>        <C>         <C>      <C>      <C>
Interest-earning assets:
Loans (net of unearned income) . . .  $ 141,447  $   9,623   $55,318  $   653  $207,041
Investments  (1) . . . . . . . . . .          -          -     9,073   40,060    49,133
Federal funds sold . . . . . . . . .        925          -         -        -       925
Interest-bearing bank balances . . .        945          -         -        -       945
                                      ---------  ----------  -------  -------  --------
   Total . . . . . . . . . . . . . .    143,317      9,623    64,391   40,713   258,044
                                      ---------  ----------  -------  -------  --------
Interest-bearing liabilities:
Demand deposits  (2) . . . . . . . .    107,195          -         -        -   107,195
Time deposits greater than $100M . .     18,803     19,091     3,904        -    41,798
Other time deposits. . . . . . . . .     11,577     22,688     6,148        -    40,413
Federal funds purchased,
FHLB advances, and
other borrowings . . . . . . . . . .        500      5,600    18,300    3,000    27,400
                                      ---------  ----------  -------  -------  --------
   Total . . . . . . . . . . . . . .    138,075     47,379    28,352    3,000   216,806
                                      ---------  ----------  -------  -------  --------
Period interest-sensitivity gap. . .  $   5,242   ($37,756)  $36,039  $37,713  $ 41,238
                                      =========  ==========  =======  =======  ========
Cumulative interest-sensitivity gap.  $   5,242   ($32,514)  $ 3,525  $41,238
                                      =========  ==========  =======  =======
<FN>

(1)  -  Presented  at  market  value  as  all  investment  securities are classified as
"available for sale".  Includes the Bank's investment in stock of Federal Reserve Bank,
Federal  Home  Loan  Bank,  and  other  equities.
     (2)  -  Includes  interest-bearing  checking  accounts, money market accounts, and
regular  savings  accounts.

</TABLE>


    At December 31, 2001, approximately  59% of the Company's interest-earning
assets reprice or  mature within  one  year,  as compared to approximately 86%
of the interest-bearing  liabilities.

     Asset-liability management is the process by which the Company monitors and
controls  the  mix  and maturities of its assets and liabilities.  The essential
purposes  of  asset-liability management are to ensure adequate liquidity and to
maintain  an  appropriate  balance  between  interest  sensitive  assets  and
liabilities.  The  Bank  has established an Asset-Liability Management Committee
which  uses a variety of tools to analyze interest rate sensitivity, including a
static gap presentation and a simulation model.  A "static gap" presentation (as
in  the  above  table)  reflects the difference between total interest-sensitive
assets  and  liabilities within certain time periods.  While the static gap is a
widely-used measure of interest sensitivity, it is not, in management's opinion,
a true indicator of a company's sensitivity position.  It presents a static view
of  the  timing  of  maturities and repricing opportunities, without taking into
consideration  that  changes  in  interest  rates  do  not affect all assets and
liabilities  equally.  For  example,  rates  paid  on  a  substantial portion of
savings  and  core  time  deposits  may contractually change within a relatively
short time frame, but those rates are significantly less interest-sensitive than
market-based  rates  such  as  those  paid on non-core deposits.  Accordingly, a
liability  sensitive  gap  position  is  not  as  indicative of a company's true
interest sensitivity as would be the case for an organization which depends to a
greater  extent  on  purchased  funds  to  support earning assets.  Net interest
income  would  also be impacted by other significant factors in a given interest
rate  environment,  including  the  spread  between  the  prime  rate  and  the
incremental  borrowing  cost  and  the  volume  and mix of earning asset growth.
Accordingly, the Bank 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  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.  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.  The forecast presents information over
a  12  month period.  It reports a base case in which interest rates remain flat
and  reports  variations  that  occur when rates increase and decrease 100 basis
points.  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.

PROVISION  FOR  LOAN  LOSSES
     The  provision  for loan losses was $725,000 in 2001, $654,000 in 2000, and
$445,000 in 1999.  The change in the provision each year is primarily related to
the  level  of  net originations in each year as follows: $26.9 million in 2001,
$32.6  million  in  2000, and $17.6 million in 1999.  As discussed further below
under  the  "Allowance  for  Loan Losses" section, 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, (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.  Thus,  contributing to the higher provision in 2001 was the increase
in  nonperforming assets from 0.19% of gross loans at December 31, 2000 to 0.64%
of gross loans at the 2001 year end, as well as the general economic uncertainty
throughout  2001.  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  increased  $736,000,  or 40%, in 2001, to $2.6 million
from  $1.8  million  in 2000 and $1.6 million in 1999.  Insurance commission fee
income  rose 44% to $485,000 in 2001 from $337,000 in 2000 and $254,000 in 1999,
primarily  related  to  the  volume  of annuity product sales made by the Bank's
nondeposit investment sales subsidiary.  Credit card fees and income rose 22% to
$457,000  in  2001  from $376,000 in 2000 and $338,000 in 1999.  These increases
are  related  to  the higher volume of transactions and merchant activity in the
Bank's  credit  card  portfolio each year.  The higher amount in service charges
and  fees  on  deposit  accounts,  which  increased 17% in 2001 to $430,000 from
$369,000  in  2000  and  $247,000  in  1999,  is related to the increases in the
transaction fees and the higher number of Bank deposit accounts and transactions
subject  to  service  charges  and  fees each year.  The higher level of gain on
sales  of  investment  securities  totaling  $257,000 for 2001 is related to the
increase  in  volume  of  investment sales from the Company's available for sale
investment  portfolio  during  the  year.

     Increases in the line item, "other income", which was up $201,000 or 27% in
2001  and  $53,000 in 2000, is primarily related to the higher level of mortgage
and other loan referrals and loan late fees which increased $186,000 in 2001 and
decreased $43,000 between 1999 and 2000; and the higher level of mutual fund and
brokerage  activity in the Bank's nondeposit financial services subsidiary which
resulted  in  higher  income  of  $35,000  in  2001  and $58,000 in 2000.  Other
fluctuations  are  related to the level of activity and transactions of the Bank
generating  other  income  in  the  normal  course  of  business.

     Total noninterest expenses were $8.3 million in 2001, $7.4 million in 2000,
and  $6.5  million  in 1999.  A majority of the increased expenditures each year
reflects  the cost of additional personnel hired to support the Company's growth
and  the  new  bank  branch  opened  in  the  second  quarter of 2000.  The most
significant  item  included  in  noninterest  expenses  is  salaries,  wages and
benefits  which amounted to $4.8 million in 2001, $4.3 million in 2000, and $3.5
million  in  1999.  The  increase of $536,000 or 13% in 2001 was a result of (1)
normal  annual  raises  and replacement of staff; (2) a full year in 2001 of new
branch  staff,  including  three  officers,  added  in  September  2000; and (3)
increases  in  benefit  plan costs including group health insurance premiums and
401K  deferral  matches related to higher salaries.  The increase of $780,000 in
2000  was  a  result  of  (1) normal annual raises; (2) increases in bonuses and
incentive  plan calculations and payments; and (3) additional branch staff added
primarily  related  to  the  new  branch  location  during  2000.

     Occupancy  and  furniture,  fixtures,  and  equipment  expenses  increased
$26,000,  or  2%,  to  $1.319  million  in  2001 from $1.293 million in 2000 and
increased  $82,000 from $1.211 million in 1999.  Increases each year are related
primarily  to  the expenses associated with new branch facilities.  Increases in
2001  are  somewhat  offset  by  lower  expense  on  fully  depreciated  assets.

     Included  in  the  line item "other expenses", which increased $341,000, or
19%,  between 2000 and 2001 and decreased $26,000, or 1%, between 1999 and 2000,
are charges for advertising and public relations; insurance claims and premiums;
printing  and  office  support;  credit  card  expenses;  legal and professional
services;  and  other branch and customer related expenses.  A majority of these
items are related directly to the normal operations of the Bank and fluctuate in
relation  to the increase in assets, the higher level of transaction volume, and
the  larger number of customer accounts.  The most significant increases in 2001
relate to higher advertising for the new branch opening ($54,000), higher volume
of  transactions  and  deconversion  fee on the credit card portfolio ($93,000),
increases  in  legal  and  consultant  expenses  related to loan collections and
security audits ($95,000), and higher branch related expenses due to a full year
with  an  additional  facility  ($40,000).  The  reduction  in 2000 is primarily
related  to  the  Bank's  expenses  returning to a normal level after additional
expenses  were  incurred  in  1999 related to higher repossession and collection
costs;  advertising  expenses  associated  with  marketing  new internet banking
products;  and  Y2K  preparation  expenses.

INCOME  TAXES
     The Company recorded an income tax provision of $1.3 million, $1.2 million,
and  $936,000  in 2001, 2000, and 1999, respectively.  The effective tax rate in
each  year  was  32%,  31%, and 28%, respectively.  The change in effective rate
each  year  is  primarily  related  to  fluctuations  in  the  level of tax-free
municipal  investments.

QUARTERLY  OPERATING  RESULTS
     The  following  summarizes  selected  quarterly  operating  results for the
quarters  ended  in  2001  and  2000.


<TABLE>
<CAPTION>

                                                         2001                                             2000
                                    ----------------------------------------------   --------------------------------------------
(dollars in thousands, except per     FIRST       SECOND      THIRD       FOURTH      FIRST       SECOND      THIRD       FOURTH
share data)                          QUARTER     QUARTER     QUARTER     QUARTER     QUARTER     QUARTER     QUARTER     QUARTER
                                    ----------  ----------  ----------  ----------  ----------  ----------  ----------  ----------
<S>                                 <C>         <C>         <C>         <C>         <C>         <C>         <C>         <C>
Interest income. . . . . . . . . .  $    5,378  $    5,085  $    5,071  $    4,671  $    4,281  $    4,498  $    5,140  $    5,498
Interest expense . . . . . . . . .       2,768       2,532       2,469       2,038       1,877       2,059       2,634       2,824
                                    ----------  ----------  ----------  ----------  ----------  ----------  ----------  ----------
Net interest income. . . . . . . .       2,610       2,553       2,602       2,633       2,404       2,439       2,506       2,674
Provision for loan losses. . . . .         128         209         148         240          93         105         119         337
                                    ----------  ----------  ----------  ----------  ----------  ----------  ----------  ----------
Net interest income after
  provision for loan losses. . . .       2,482       2,344       2,454       2,393       2,311       2,334       2,387       2,337
Noninterest income . . . . . . . .         583         689         650         660         402         433         430         581
Noninterest expenses . . . . . . .       2,079       2,042       2,085       2,053       1,753       1,801       1,824       1,978
                                    ----------  ----------  ----------  ----------  ----------  ----------  ----------  ----------
Income before income taxes . . . .         986         991       1,019       1,000         960         966         993         940
Income taxes . . . . . . . . . . .         324         317         329         310         308         297         309         290
                                    ----------  ----------  ----------  ----------  ----------  ----------  ----------  ----------
Net income . . . . . . . . . . . .  $      662  $      674  $      690  $      690  $      652  $      669  $      684  $      650
                                    ==========  ==========  ==========  ==========  ==========  ==========  ==========  ==========
NET INCOME PER SHARE:
   Basic . . . . . . . . . . . . .  $     0.18  $     0.18  $     0.18  $     0.18  $     0.18  $     0.18  $     0.18  $     0.17
   Diluted . . . . . . . . . . . .  $     0.16  $     0.16  $     0.17  $     0.17  $     0.16  $     0.16  $     0.17  $     0.16
AVERAGE COMMON SHARES
OUTSTANDING:
   Basic . . . . . . . . . . . . .   3,743,000   3,741,000   3,741,000   3,770,000   3,657,000   3,699,000   3,721,000   3,739,000
   Diluted . . . . . . . . . . . .   4,105,000   4,109,000   4,118,000   4,173,000   4,083,000   4,045,000   4,048,000   4,072,000
</TABLE>


<PAGE>

BALANCE  SHEET  REVIEW

INVESTMENT  SECURITIES
     At  December  31, 2001, the Company's total investment portfolio had a fair
value  of  $47.4  million,  which  is  an increase of 46% from the $32.4 million
invested  as of the end of 2000.  The investment portfolio consists primarily of
securities of United States government agencies, mortgage-backed securities, and
state and municipal obligations.  The Company has no trading account securities.
At the 2001 year end, the portfolio had a weighted average life of approximately
7.4  years and an average duration of 5.4 years.  Investment securities averaged
$40.2  million  yielding  6.49%  in  2001, compared to the 2000 average of $28.7
million  yielding 6.86%.  Securities are the second largest earning asset of the
Company  at  16%  and  14%  of  average  earning  assets  for  2001  and  2000,
respectively.

     The Company's portfolio of investment securities consists primarily of U.S.
government  agencies,  mortgage-backed  securities,  and  state  and  municipal
securities.  The  investment  portfolio  is  designed to enhance liquidity while
providing  acceptable  rates  of  return.  The  following  table  sets forth the
amortized cost and the fair value of the investment securities of the Company at
December  31,  2001,  2000,  and 1999.  There were no investments categorized as
"held  to  maturity"  as  defined in Statement of Financial Accounting Standards
("SFAS")  115,  "Accounting  for  Certain  Investments  in  Debt  and  Equity
Securities".

<TABLE>
<CAPTION>

                                  SECURITY PORTFOLIO COMPOSITION
                                      (DOLLARS IN THOUSANDS)

                                            2001                 2000                 1999
                                    -------------------  -------------------  -------------------
<S>                                 <C>         <C>      <C>         <C>      <C>         <C>
                                    Amortized   Fair     Amortized   Fair     Amortized   Fair
Available for Sale:. . . . . . . .  Cost        Value    Cost        Value    Cost        Value
                                    ----------  -------  ----------  -------  ----------  -------
          U.S. Treasury. . . . . .           -        -           -        -  $      489  $   495
          U.S. government agencies  $   11,103  $11,214  $   17,167  $17,241      12,483   12,318
          Mortgage-backed. . . . .      21,716   21,660       5,642    5,666       3,573    3,537
          State and municipal. . .      14,253   14,526       9,584    9,538      10,829   10,116
                                    ----------  -------  ----------  -------  ----------  -------
                                    $   47,072  $47,400  $   32,393  $32,445  $   27,374  $26,466
                                    ==========  =======  ==========  =======  ==========  =======
</TABLE>



     The  Company  also maintains certain investments in stock as required to be
owned  by  the  Bank  as  follows:
<TABLE>
<CAPTION>



                                          2001    2000   1999
                                         ------  ------  -----
<S>                                      <C>     <C>     <C>
Federal Reserve Bank stock. . . . . . .  $  255  $  255  $ 255
Federal Home Loan Bank of Atlanta stock   1,345   1,000    550
Bankers Bank of Atlanta stock . . . . .     133     133    133
                                         ------  ------  -----
                                         $1,733  $1,388  $ 938
                                         ======  ======  =====
</TABLE>



     The  amount  of  Federal  Reserve  Bank  stock owned is based on the Bank's
capital  levels.  The  amount  of Federal Home Loan Bank ("FHLB") stock owned is
determined  based  on  the  Bank's  balances  of residential and commercial real
estate  mortgages  and  the  level  of  advances from the FHLB.  No ready market
exists  for  these  stocks  and  they  have  no  quoted  market value.  However,
redemption of these stocks has historically been at par value.  Accordingly, the
carrying  amounts  are  deemed  to  be  a  reasonable  estimate  of  fair value.

     The  following  table indicates the estimated fair value of each investment
security  category  by  maturity  as of December 31, 2001.  The weighted average
yield  for  each  range  of  maturities at December 31, 2001 is also shown.  All
securities  are  classified  as "Available for Sale" as defined in SFAS No. 115.

<TABLE>
<CAPTION>

                                           SECURITY PORTFOLIO MATURITY SCHEDULE
                                                  (DOLLARS IN THOUSANDS)

                                              After  1,  and    After  5,  and
                            Within 1 Year     Within 5 Years    Within 10 Years     After 10 Years           Total
                            ---------------  ----------------  -----------------  ------------------  ------------------
                                   Weighted          Weighted           Weighted            Weighted            Weighted
                            Fair   Average    Fair    Average    Fair    Average    Fair     Average    Fair     Average
                            Value   Yield    Value     Yield    Value     Yield     Value     Yield     Value     Yield
                            -----  --------  ------  ---------  ------  ---------  -------  ---------  -------  ---------
<S>                         <C>    <C>       <C>     <C>        <C>     <C>        <C>      <C>        <C>      <C>
U. S. Government agencies.      -         -  $6,986      5.94%  $4,228      5.68%        -         -   $11,214      5.84%
Mortgage-backed. . . . . .      -         -       -         -    3,294      5.49%   18,366      6.02%   21,660      5.94%
State and municipal (1). .      -         -       -         -      708      7.15%   13,818      7.52%   14,526      7.50%
                            -----  --------  ------  ---------  ------  ---------  -------  ---------  -------  ---------
     Total . . . . . . . .      -         -  $6,986      5.94%  $8,230      5.73%  $32,184      6.65%  $47,400      6.39%
                            =====  ========  ======  =========  ======  =========  =======  =========  =======  =========
<FN>

     (1)  -  Yields  have  been  adjusted  to  a  tax  equivalent  basis  assuming  a  34%  Federal  tax  rate.
</TABLE>

The  weighted  average  yields  shown  in the previous table are calculated
using  historical  cost balances and effective yields for the scheduled maturity
of  each security.  The yield calculations do not give effect to changes in fair
value  that  are  reflected  as  a  component  of shareholders' equity.  Certain
securities  contain  call  provisions  which  could  decrease  their anticipated
maturity.  Certain  securities  also  contain  rate  adjustment provisions which
could  either  increase  or  decrease  their  yields.

          Decisions  involving  securities  are  based  upon  management's
expectations  of  interest  rate  movements,  overall  market  conditions,  the
composition  and  structure of the balance sheet, and computer-based simulations
of  the  financial  impacts of alternative rate/maturity scenarios.  The Company
does  not purchase or hold securities for trading purposes.  However, securities
may be sold prior to their maturity as all securities in the Bank's portfolio at
December  31,  2001  were classified as "available for sale" and recorded on the
Company's  balance  sheet  at  estimated  fair  value.

LOANS
     The  loan  portfolio consists primarily of commercial and industrial loans,
commercial  loans  secured  by  real estate, loans secured by one-to-four family
residential mortgages, and consumer loans.  Substantially all of these loans are
located  in  the Upstate of South Carolina and are concentrated in the Company's
market  area.  At  December  31,  2001,  the  Company  had  no  loans for highly
leveraged  transactions and no foreign loans.  The Bank's primary focus has been
on  commercial  lending to small and medium-sized businesses in its marketplace.
Commercial loans are spread throughout a variety of industries, with no industry
or  group  of  related  industries  accounting  for a significant portion of the
commercial  loan  portfolio.

     As  of  December  31, 2001, the Company had gross loans outstanding, net of
unearned  income,  of  $207.0  million  which  represents  an  increase of $26.5
million, or 15%, from the 2000 outstanding loans of $180.5 million.  Outstanding
loans  represent  the  largest  component  of  earning  assets at 79% of average
earning  assets  for  both  2001  and  2000.  Gross  loans  were  76%  and  72%,
respectively,  of  total assets at December 31, 2001 and 2000.  The 15% increase
in loans between 2000 and 2001 is attributable to internal growth and the Bank's
expansion  into  a  new  market  during 2000 as the Company did not purchase any
loans  during  the  year.  Freedom's  outstanding loans, net of unearned income,
totaled $3.6 million, or 1.7% of consolidated loans, at December 31, 2001.  This
is  compared  to  $3.5  million,  or 1.9% of consolidated loans, at December 31,
2000.

     For  2001,  the  Company's  loans  averaged  $195.6 million with a yield of
8.84%.  This  is compared to $159.7 million average loans with a yield of 10.57%
in  2000.  The  decrease  in  the loan yield is a direct result of the rapid and
dramatic  short-term  interest  rate reductions experienced throughout 2001 as a
majority  of  the  Bank's  loans  adjust immediately with movements in the prime
lending  rate.  The  interest  rates  charged on loans of the Bank vary with the
degree  of  risk, maturity and amount of the loan.  Competitive pressures, money
market  rates, availability of funds, and government policy and regulations also
influence  interest  rates.  Loans  of  the  Finance Company are regulated under
state  laws which establish the maximum loan amounts and interest rates, and the
types  and maximum amounts of fees, insurance premiums, and other costs that may
be  charged.

     The loan portfolio is the Company's principal earning asset.  The following
table  shows  the composition of the loan portfolio at December 31 for each year
presented.

<TABLE>
<CAPTION>

                                                 LOAN PORTFOLIO COMPOSITION
                                                   (DOLLARS IN THOUSANDS)

                                                  2001                 2000                1999                  1998
                                          -------------------  -------------------  -------------------  -------------------
                                           Amount    Percent    Amount    Percent    Amount    Percent    Amount    Percent
                                          ---------  --------  ---------  --------  ---------  --------  ---------  --------
<S>                                       <C>        <C>       <C>        <C>       <C>        <C>       <C>        <C>
Commercial and industrial. . . . . . . .  $ 35,737      17.3%  $ 31,995      17.7%  $ 26,217      17.7%  $ 24,100      18.4%
Real estate - commercial . . . . . . . .    70,036      33.8%    62,709      34.7%    55,647      37.6%    48,527      37.1%
Real estate - residential. . . . . . . .    64,239      31.0%    52,287      29.0%    47,366      32.0%    42,832      32.8%
Construction, development. . . . . . . .    26,672      12.9%    23,232      12.9%    10,135       6.9%     6,463       5.0%
Installment and other consumer loans . .     6,301       3.1%     6,540       3.6%     5,402       3.6%     5,656       4.3%
Consumer finance, net of unearned income     3,606       1.7%     3,542       2.0%     3,183       2.1%     2,881       2.2%
Other loans, including overdrafts. . . .       450       0.2%       216       0.1%       220       0.1%       210       0.2%
                                          ---------  --------  ---------   -------  ---------  --------  ---------  --------
                                           207,041       100%   180,521       100%   148,170       100%   130,669       100%

Less - Allowance for loan losses . . . .    (2,937)              (2,560)              (2,163)              (1,827)
                                          ---------            ---------            ---------            ---------
Net loans. . . . . . . . . . . . . . . .  $204,104             $177,961             $146,007             $128,842
                                          =========            =========            =========            =========

                                                 1997
                                          -------------------
                                           Amount    Percent
                                          ---------  --------
<S>                                       <C>        <C>
Commercial and industrial. . . . . . . .  $ 25,313      21.3%
Real estate - commercial . . . . . . . .    41,172      34.7%
Real estate - residential. . . . . . . .    37,683      31.7%
Construction, development. . . . . . . .     3,685       3.1%
Installment and other consumer loans . .     7,819       6.6%
Consumer finance, net of unearned income     2,792       2.4%
Other loans, including overdrafts. . . .       291       0.2%
                                          ---------  --------
                                           118,755       100%

Less - Allowance for loan losses . . . .    (1,728)
                                          ---------
Net loans. . . . . . . . . . . . . . . .  $117,027
                                          =========
</TABLE>


The  Company  makes loans to individuals and small- to mid-sized businesses
for  various  personal and commercial purposes primarily in the Upstate of South
Carolina.  The  Company  has a diversified loan portfolio and the Company's loan
portfolio  is  not  dependent  upon  any specific economic segment.  The Company
regularly  monitors  its  credit concentrations based on loan purpose, industry,
and  customer  base.  As  of  December  31,  2001,  there  were  no  material
concentrations  of  credit  risk  within  the  Company's  loan  portfolio.

     The  Company's  real  estate  loans are primarily owner-occupied commercial
facilities  and  other  loans  secured  by  both commercial and residential real
estate  located  within the Company's primary market area.  The Company does not
actively  pursue  long-term, fixed rate mortgage loans for retention in its loan
portfolio.  Commercial loans are spread through a variety of industries, with no
industry  or group of related industries accounting for a significant portion of
the  commercial  loan portfolio.  These loans may be made on either a secured or
unsecured  basis.  When  taken,  collateral  generally  consists  of  liens  on
inventories,  receivables,  equipment,  and  furniture  and fixtures.  Unsecured
commercial  loans  are generally short-term with emphasis on repayment strengths
and  low debt-to-worth ratios.  At December 31, 2001, the Company had no foreign
loans.

          A  significant portion of the installment and other consumer loans are
secured  by  automobiles  and other personal assets.  Consumer finance loans are
those  originated by the Company's consumer finance subsidiary, Freedom Finance,
IncThese  loans  generally  carry a higher risk of nonpayment than do the other
categories  of  loans,  but  the  increased  risk is substantially offset by the
smaller amounts of such loans and the higher rates charged thereon, as well as a
higher  allocation  of  the  allowance for loan losses related to Freedom's loan
portfolio.

<PAGE>


LOAN  MATURITY  AND  INTEREST  SENSITIVITY
          The  following  table  shows  the  maturity  distribution and interest
sensitivity  of  the  Company's  loan  portfolio  at  December  31,  2001.

<TABLE>
<CAPTION>

                         LOAN PORTFOLIO MATURITY SCHEDULE
                              (DOLLARS IN THOUSANDS)

                                                     Over 1,
                                           1 Year   Less Than     Over
                                          or Less    5 Years    5 Years    Total
                                          --------  ----------  --------  --------
<S>                                       <C>       <C>         <C>       <C>
MATURITY DISTRIBUTION:
Commercial and industrial. . . . . . . .  $ 24,365  $   11,215  $    157  $ 35,737
Real estate - commercial . . . . . . . .    19,722      49,236     1,078    70,036
Real estate - residential. . . . . . . .    18,549      33,240    12,450    64,239
Construction, development. . . . . . . .    17,927       8,745         0    26,672
Installment and other consumer loans . .     3,382       2,919         0     6,301
Consumer finance, net of unearned income     3,606           0         0     3,606
Other loans, including overdrafts. . . .       450           0         0       450
                                          --------  ----------  --------  --------
Total. . . . . . . . . . . . . . . . . .  $ 88,001  $  105,355  $ 13,685  $207,041
                                          ========  ==========  ========  ========

INTEREST SENSITIVITY:
Total of loans with:
Predetermined interest rates . . . . . .  $ 72,275  $   49,696  $ 13,385  $135,356
Floating interest rates. . . . . . . . .    15,726      55,659       300    71,685
                                          --------  ----------  --------  --------
Total. . . . . . . . . . . . . . . . . .  $ 88,001  $  105,355  $ 13,685  $207,041
                                          ========  ==========  ========  ========
</TABLE>

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
December  31,  2001.  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  $2.9 million, or 1.42% of total
loans,  at  the  end  of 2001.  This is compared to a $2.6 million allowance, or
1.42%  of  total  loans,  at December 31, 2000.  For the year ended December 31,
2001, the Company reported net charge-offs of $348,000, or 0.18% of consolidated
average loans.  This is compared to consolidated net charge-offs of $257,000, or
0.16%  of  average  loans,  for  the  year  ended  December  31,  2000.

     The table below presents an allocation of the allowance for loan losses for
each  of the years ended December 31 by the different loan categories.  However,
the  breakdown  is  based  on  a  number  of qualitative factors and the amounts
presented are not necessarily indicative of actual amounts which will be charged
to  any  particular  category.

<TABLE>
<CAPTION>

                                             ALLOCATION OF ALLOWANCE FOR LOAN LOSSES
                                                     (DOLLARS IN THOUSANDS)

                                    2001                       2000                    1999                      1998
                         ------------------------   ------------------------   ----------------------   -----------------------
                                       Percent of                Percent of                Percent of                Percent of
                           Allowance    Loans in     Allowance    Loans in     Allowance    Loans in     Allowance    Loans in
                          Break-down    Category    Break-down    Category    Break-down    Category    Break-down    Category
                          -----------  -----------  -----------  -----------  -----------  -----------  -----------  -----------
<S>                       <C>          <C>          <C>          <C>          <C>          <C>          <C>          <C>
Commercial . . . . . . .  $     1,365        51.1%  $     1,011        52.4%  $       879        55.3%  $       771        55.5%
Residential real estate.          746        31.0%          741        29.0%          692        32.0%          599        32.8%
Construction . . . . . .          375        12.9%          330        12.9%          148         6.9%           90         5.0%
Installment, consumer
finance, and other loans          440         5.0%          337         5.7%          331         5.8%          275         6.7%
Unallocated. . . . . . .           11                       141                       113                        92
                          -----------  -----------  -----------  -----------  -----------  -----------  -----------  -----------

                          $     2,937         100%  $     2,560         100%  $     2,163         100%  $     1,827         100%
                          ===========  ===========  ===========  ===========  ===========  ===========  ===========  ===========

                                    1997
                          -----------------------
                                       Percent of
                           Allowance    Loans in
                          Break-down    Category
                          -----------  -----------
<S>                       <C>          <C>
Commercial . . . . . . .  $       662        56.0%
Residential real estate.          548        31.7%
Construction . . . . . .           54         3.1%
Installment, consumer
finance, and other loans          253         9.2%
Unallocated. . . . . . .          211
                          -----------  -----------

                          $     1,728         100%
                          ===========  ===========

</TABLE>

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 ("OREO").  Loans past due 90
days and greater totaled $153,000, or 0.07% of gross loans, at December 31, 2001
compared  to  $122,000, or 0.07% of gross loans, at December 31, 2000.  Loans on
non-accrual  totaled $1,180,000 and $218,000, respectively, at December 31, 2001
and  2000.  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.  At December 31, 2001, loans
considered  to be impaired under Statement of Financial Accounting Standards 114
totaled  $1.0  million,  which  is  included  in  the  total  non-accrual loans.
Impaired  loans  at  December  31, 2000 totaled $1.5 million, which included the
$218,000  of non-accrual loans.  At December 31, 2001 and 2000, the Bank held no
other  real  estate  owned  acquired in partial or total satisfaction of problem
loans.

     The  following table summarizes the nonperforming assets at December 31 for
each  year  presented.
<TABLE>
<CAPTION>

                              NONPERFORMING ASSETS
                             (DOLLARS IN THOUSANDS)


                                      2001     2000    1999    1998    1997
                                     -------  ------  ------  ------  ------
<S>                                  <C>      <C>     <C>     <C>     <C>
Non-accrual loans . . . . . . . . .  $1,180   $ 218   $ 147   $   0   $   0
Loans past due 90 days or more. . .     153     122     130     483      82
Troubled debt restructurings. . . .       0       0       0       0       0
Other real estate owned . . . . . .       0       0       0       0       0
                                     -------  ------  ------  ------  ------
Total nonperforming assets. . . . .  $1,333   $ 340   $ 277   $ 483   $  82
                                     =======  ======  ======  ======  ======
Nonperforming assets to total loans     .64%    .19%    .19%    .36%    .07%
                                     =======  ======  ======  ======  ======
</TABLE>



     At December 31, 2001, the carrying value of loans that are considered to be
impaired  under  SFAS  114  totaled  $1,045,000, which was included in the total
non-accrual  loans.  At  December 31, 2000, the carrying value of loans that are
considered  to be impaired under SFAS 114 totaled $1,462,000, which includes the
$218,000  non-accrual loan.  There were no impaired loans at December 31 for any
other  year presented.  The average balance of impaired loans was $1,099,000 and
$1,457,000  for  the year ended December 31, 2001 and 2000, respectively.  There
was  no  impairment  allowance  required  at  either  year  end.

     The  amount  of  foregone  interest income that would have been recorded on
non-accrual loans had these loans performed according to their contractual terms
amounted to approximately $62,000 and $6,000 during 2001 and 2000, respectively.
Interest  income  recognized on non-accrual and impaired loans was approximately
$35,000  and  $158,000  during  2001  and  2000,  respectively.

     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  outstanding at December 31, 2001 determined to be
potential problem loans based upon management's internal designations, was $15.1
million  or  7.4% of the loan portfolio at year end, compared to $7.9 million or
4.4%  of  the  loan  portfolio  at  December  31, 2000.  The amount of potential
problem  loans  at December 31, 2001 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.  The increase in the amount of
classified  loans  in  2001 is primarily related to the deterioration of general
economic  conditions  during  2001  and  management's proactive approach to more
closely monitor credits.  Management believes that the allowance for loan losses
as  of  December  31,  2001  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.

LOAN  LOSS  EXPERIENCE
          The  following  table  sets  forth certain information with respect to
changes  in  the  Company's  allowance for loan losses arising from charge-offs,
recoveries,  and  provision  for  the  years  ended  December  31.
<TABLE>
<CAPTION>

                         SUMMARY OF LOAN LOSS EXPERIENCE
                             (DOLLARS IN THOUSANDS)


                                 2001     2000     1999     1998     1997
<S>                             <C>      <C>      <C>      <C>      <C>
Balance at beginning of period  $2,560   $2,163   $1,827   $1,728   $1,487
                                -------  -------  -------  -------  -------
Charge-offs:
   Commercial & industrial . .     130      125       74       26       40
   Installment & consumer. . .     358      309      343      382      388
                                -------  -------  -------  -------  -------
                                   488      434      417      408      428
                                -------  -------  -------  -------  -------
Recoveries:
   Commercial & industrial . .      31       50       51       25       55
   Installment & consumer. . .     109      127      257      192      196
                                -------  -------  -------  -------  -------
                                   140      177      308      217      251
                                -------  -------  -------  -------  -------
Net charge-offs. . . . . . . .    (348)    (257)    (109)    (191)    (177)
Provision charged to expense .     725      654      445      290      392
Allocation for purchased loans       0        0        0        0       26
                                -------  -------  -------  -------  -------
Balance at end of period . . .  $2,937   $2,560   $2,163   $1,827   $1,728
                                =======  =======  =======  =======  =======
Ratio of net charge-offs to
 average loans . . . . . . . .     .18%     .16%     .08%     .16%     .16%
                                =======  =======  =======  =======  =======
Ratio of allowance for loan
 losses to gross loans . . . .    1.42%    1.42%    1.46%    1.40%    1.46%
                                =======  =======  =======  =======  =======
Ratio of net charge-offs to
 allowance for loan losses . .   11.85%   10.04%    5.04%   10.45%   10.24%
                                =======  =======  =======  =======  =======
</TABLE>


DEPOSITS
     The  Company  has  a  large,  stable  base  of  time  deposits, principally
certificates  of deposit and individual savings and retirement accounts obtained
primarily  from  customers  in  South Carolina.  The Company's core deposit base
consists  of  consumer  and commercial money market accounts, checking accounts,
savings and retirement accounts, NOW accounts, and non-jumbo time deposits (less
than  $100,000).  Although  such core deposits continue to be interest sensitive
for  both  the  Company  and the industry as a whole, these deposits continue to
provide  the  Company  with  a  large  and  stable source of funds.  The Company
closely  monitors its reliance on certificates of deposit greater than $100,000,
which are generally considered less stable and more interest rate sensitive than
core  deposits.  Certificates  of  deposit in excess of $100,000 represented 19%
and  22%,  respectively,  of  total deposits at December 31, 2001 and 2000.  The
Company  has  no  brokered  deposits.  At  December 31, 2001, the Company had no
foreign  deposits.

     During  2001,  interest-bearing liabilities averaged $211.2 million with an
average  rate  of 4.64% compared to $168.5 million with an average rate of 5.57%
in  2000.  The decrease in the average rate reflects the general decreasing rate
environment  experienced  throughout  2001  and  the  repricing of maturing time
deposits  with higher rates to lower current market rates.  In pricing deposits,
the  Company considers its liquidity needs, the anticipated direction and levels
of  interest  rates  and  local  market  conditions.  At  December  31,  2001,
interest-bearing  deposits comprised approximately 87% of total deposits and 87%
of  total  interest-bearing  liabilities.  The  remainder  of  interest-bearing
liabilities  consists  principally  of  Federal  Home  Loan  Bank  advances.

     The  Company  uses  its deposit base as a primary source with which to fund
earning assets.  Deposits increased 5% from  $209.2 million at December 31, 2000
to  $218.8 million as of year end 2001.  The increase was primarily in the money
market accounts and interest-bearing demand accounts, which were somewhat offset
with  decreases in time deposit accounts.  Noninterest-bearing deposits averaged
12.2%  of  total  deposits  for  the  year  2001  compared  to  12.4%  in  2000.

     The  maturity distribution of certificates of deposit greater than or equal
to  $100,000  as  of  December  31,  2001  is as follows (dollars in thousands):


<TABLE>
<CAPTION>

<S>                            <C>
3 months or less. . . . . . .  $18,803
Greater than 3, but less than
or equal to 6 months. . . . .   11,047
Greater than 6, but less than
or equal to 12 months . . . .    8,044
Greater than 12 months. . . .    3,904
                               -------
                               $41,798
                               =======
</TABLE>

CAPITAL  RESOURCES

     Total  shareholders'  equity  amounted  to  $24.6 million, or 9.0% of total
assets,  at  December  31,  2001.  This is compared to $21.5 million, or 8.6% of
total  assets,  at  December  31,  2000.  The  $3.1  million  increase  in total
shareholders'  equity  resulted  principally  from  retention of earnings, stock
issued  pursuant  to  the  Company's  stock  option  plans,  and the increase in
unrealized  gain  on  investment  securities available for sale.  Book value per
share  at  December  31,  2001  and  2000 was $6.49 and $5.70, respectively.  On
November  9, 2001, the Company issued its tenth consecutive 5% stock dividend to
shareholders  of  record  as of October 29, 2001.  This dividend resulted in the
issuance of approximately 181,000 shares of the Company's $1.00 par value common
stock.  All  weighted  average  share  and  per  share data has been restated to
reflect  all  stock  dividends.

     To  date,  the  capital  needs  of  the  Company  have been met through the
retention  of  earnings,  from  the  proceeds  of its initial offering of common
stock,  and  from  the  proceeds of stock issued pursuant to the Company's stock
option  plans.  The  Company  believes  that  the  rate of asset growth will not
negatively impact the capital base.  The Company has no commitments or immediate
plans  for  any significant capital expenditures outside of 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  following  table sets forth various capital ratios for the Company and
the Bank at December 31, 2001 and 2000.  The Company and the Bank are subject to
various  regulatory  capital  requirements  administered  by the federal banking
agencies.  At  December  31,  2001  and  2000,  the Company and the Bank were in
compliance  with  each  of  the applicable regulatory capital requirements.  The
Bank exceeded the "well-capitalized" standard under the regulatory framework for
prompt  corrective  action.


<TABLE>
<CAPTION>

                                 CAPITAL SUMMARY
                                 ---------------
                               THE COMPANY            THE BANK
                           --------------------  --------------------
                           12/31/01   12/31/00   12/31/01   12/31/00
                           ---------  ---------  ---------  ---------
<S>                        <C>        <C>        <C>        <C>
Total risk-based capital.     12.41%     12.21%     11.00%     10.76%
Tier 1 risk-based capital     11.16%     10.96%      9.75%      9.56%
Leverage capital. . . . .      9.25%     10.13%      8.07%      8.82%
</TABLE>


RETURN  ON  EQUITY  AND  ASSETS
     The  return  on  average  shareholders' equity ratio (net income divided by
average total equity) and the return on average assets ratio (net income divided
by  average  total assets) for the years ended December 31, 2001, 2000, and 1999
are  presented in the following table.  The Company has not paid a cash dividend
since  its  inception.  The  holders  of  common  stock  are entitled to receive
dividends when and as declared by the Board of Directors.  The Company's present
policy  is  to  retain  all earnings for the operation of the Company until such
time  as  future  earnings  support  cash  dividend  payments.

<TABLE>
<CAPTION>

                                     For the Year Ended December 31,
                                               2001    2000    1999
                                              ------  ------  ------
<S>                                           <C>     <C>     <C>
Return on average assets . . . . . . . . . .   1.03%   1.25%   1.34%
Return on average shareholders' equity . . .  11.71%  13.57%  14.45%
Average shareholders' equity as a percent of
  average assets . . . . . . . . . . . . . .   8.80%   9.22%   9.25%
</TABLE>

LIQUIDITY

     Liquidity  management  involves  meeting  the cash flow requirements of the
Company.  The  Company  must maintain an adequate liquidity position in order to
respond  to  the  short-term demand for funds caused by withdrawals from deposit
accounts,  maturities  of  other  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 easily be
converted  into  cash, and access to additional sources of funds.  The Company's
primary liquid assets are cash and due from banks, federal funds sold, unpledged
investment  securities  available  for  sale,  other  short-term investments and
maturing  loans.  These  primary  liquidity sources accounted for 15% of average
assets  (exclusive  of cash flows on loans) for each of the years ended December
31,  2001  and  2000.  In  management's  opinion, the Company maintains adequate
levels  of  liquidity by retaining sufficient liquid assets and assets which can
be  easily  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 ("FHLB"), purchasing federal funds from other
financial  institutions,  lines  of credit through the Federal Reserve Bank, and
increasing  deposits  by  raising  rates  paid.  At  December 31, 2001, based on
eligible  collateral  available,  the  Bank  had  additional available credit of
approximately $27 million from the FHLB.  Further, the Bank had short-term lines
of credit to purchase unsecured federal funds from unrelated correspondent banks
with  available  balances  of  $15.5  million  at  December  31,  2001.

     Summit  Financial, the parent holding company, has limited liquidity needs.
The  Company requires liquidity to pay limited operating expenses and to provide
funding  to  its consumer finance subsidiary, Freedom Finance.  Summit Financial
has approximately $3.2 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 December 31, 2001.  Additional sources of
liquidity  for  Summit  Financial  include  borrowing  funds  from  unrelated
correspondent  banks,  borrowing  from  individuals, and payments for management
fees  and  debt  service which are made by the Company's subsidiary on a monthly
basis.  Liquidity  needs  of  Freedom Finance, primarily for the funding of loan
originations,  paying  operating  expenses, and servicing debt, have been met to
date  through  the  initial  capital  investment  of  $500,000  made  by  Summit
Financial,  borrowings  from  an  unrelated private investor, and line of credit
facilities  provided  by  Summit  Financial  and  Summit  National  Bank.

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

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  December 31, 2001 the Company's commitments to extend additional credit
totaled  approximately  $47.2  million,  of  which  approximately  $2.8  million
represents 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
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 other industries,
virtually  all  of  the  assets  and  liabilities of a financial institution are
monetary  in  nature.  As  a  result,  interest  rates  generally  have  a  more
significant effect in a financial institution's performance than does the effect
of  inflation.

     The  yield  on  a  majority  of  the  Company's  earning  assets  adjusts
simultaneously  with  changes  in  the  general  level  of  interest  rates.
Approximately  50% of the Company's interest-bearing liabilities at December 31,
2001  had  been  issued  with  fixed terms and can be repriced only at maturity.
During  periods  of  declining  interest rates, as experienced through 2001, the
Company's  assets reprice faster than the supporting liabilities.  This causes a
decrease  in  the  short-term  in  the  net interest margin until the fixed rate
deposits  mature  and  are  repriced  at  then  lower current market rates, thus
narrowing  the  difference between what the Company earns on its assets and what
it  pays  on  its  liabilities.  Given  the  Company's  current  balance  sheet
structure,  the opposite effect (that is, an increase in net interest income) is
realized  in  the  short-term  in  a  rising  rate  environment.


ACCOUNTING,  REPORTING  AND  REGULATORY  MATTERS

     Statement  of  Financial Accounting Standards ("SFAS") 133, "Accounting for
Derivative  Instruments  and  Hedging  Activities" and SFAS 138, "Accounting for
Certain  Derivative  Instruments and Certain Hedging Activities, an Amendment of
FASB  133"  establish  accounting  and  reporting  standards  for  derivative
instruments,  including  certain  derivative  instruments  embedded  in  other
contracts  and  hedging  activities.  They  require that an entity recognize all
derivatives  as  either  assets  or  liabilities  in  the statement of financial
position,  and  measure  those  instruments  at fair value.  Changes in the fair
value  of  those derivatives will be reported in earnings or other comprehensive
income  depending  on  the  use  of  the  derivative  and whether the derivative
qualifies  for  hedge  accounting.  The  Company adopted SFAS 133, as amended by
SFAS  138,  on  January  1, 2001. The adoption was not material to the Company's
consolidated  financial  statements.

     SFAS  140,  "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments  of  Liabilities - a replacement of FASB No. 125", was issued in
September 2000.  It revises the standards for accounting for securitizations and
other  transfers  of  financial  assets  and  collateral  and  requires  certain
disclosures  but  carries  over  most  of  the  provisions  of  SFAS 125 without
reconsideration.  SFAS 140 is effective for transfers and servicing of financial
assets  and  extinguishment of liabilities occurring after March 31, 2001.  This
statement  is  effective  for recognition and reclassification of collateral and
for disclosures related to securitization transactions and collateral for fiscal
years  ending  after  December 15, 2000.  The adoption of the provisions of SFAS
140  on  April  1,  2001  did  not  have  a  material  effect  on  the  Company.

     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 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be  Disposed  Of".

     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 will be required to test the intangible asset for impairment
in  accordance  with the provisions of SFAS 142 within the first interim period.
Any  impairment  loss will be 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.  Management  does  not  anticipate  that  the  adoption  of  the
provisions  of  SFAS  142  will  have  a  material  effect  on  the  Company.

     In  August  2001,  SFAS  144, "Accounting for the Impairment or 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 will adopt SFAS 144 on
January  1,  2002  and  does  not anticipate any material effect on the Company.

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 or decrease 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, assumed interest rate changes as well as
assumed  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  reviewed  periodically  to  provide insights related to static
repricing  structure  of  assets  and  liabilities.  At  December 31, 2001, on a
cumulative  basis  through  12  months,  rate-sensitive  liabilities  exceed
rate-sensitive  assets,  resulting  in  a  12  month  period liability-sensitive
position  of  approximately $32.5 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 asset-sensitive over a 12 month period and the
entire  repricing lives of the assets and liabilities.  This is primarily due to
the  fact  that  in  excess  of 60% of the loan portfolio moves immediately on a
one-to-one  ratio  with  a  change  in the prime lending rate, while the deposit
rates  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.


<PAGE>
ITEM  7A.     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, investing, deposit-gathering and borrowing activities.
Management  actively  monitors  and  manages  its  interest  rate risk exposure.
Although the Company manages other risks, including 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 Company'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  Company's  Board of Directors has adopted an
interest  rate  risk policy which establishes maximum allowable decreases in NPV
in  the  event of a sudden and sustained increase or decrease in market interest
rates.

     The  following table presents the Company's projected change in NPV for the
various  rate  shock levels as of year end.  At December 31, 2001, the Company's
estimated  changes  in  NPV  were  within  the  limits established by the Board.

<TABLE>
<CAPTION>



                                    MARKET VALUE
                                    OF PORTFOLIO
                          POLICY       EQUITY      PERCENT
CHANGE IN INTEREST RATES   LIMIT       (000S)       CHANGE
------------------------  -------  --------------  --------
<S>                       <C>      <C>             <C>
300 basis point rise . .   40.00%  $       21,480    12.69%
200 basis point rise . .   25.00%  $       22,369     9.07%
100 basis point rise . .   10.00%  $       23,457     4.65%
No change. . . . . . . .    0.00%  $       24,601     0.00%
100 basis point decline.   10.00%  $       25,228     2.55%
200 basis point decline.   25.00%  $       25,102     2.04%
300 basis point decline.   40.00%  $       24,864     1.07%
</TABLE>


<PAGE>

ITEM  8.          FINANCIAL  STATEMENTS  AND  SUPPLEMENTARY  DATA

<TABLE>
<CAPTION>

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

                                                           December 31,
                                                      --------------------
                                                        2001       2000
                                                      ---------  ---------
<S>                                                   <C>        <C>
ASSETS
Cash and due from banks. . . . . . . . . . . . . . .  $  8,579   $  7,604
Interest-bearing bank balances . . . . . . . . . . .       945      5,111
Federal funds sold . . . . . . . . . . . . . . . . .       925     16,680
Investment securities available for sale . . . . . .    47,400     32,445
Investment in Federal Home Loan Bank and other stock     1,733      1,388
Loans, net of unearned income and net of allowance
 for loan losses of $2,937 and $2,560. . . . . . . .   204,104    177,961
Premises and equipment, net. . . . . . . . . . . . .     4,447      3,473
Accrued interest receivable. . . . . . . . . . . . .     1,393      1,691
Other assets . . . . . . . . . . . . . . . . . . . .     3,571      3,482
                                                      ---------  ---------
                                                      $273,097   $249,835
                                                      =========  =========
  LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
 Noninterest-bearing demand. . . . . . . . . . . . .  $ 29,372   $ 35,468
 Interest-bearing demand . . . . . . . . . . . . . .    21,807     14,641
 Savings and money market. . . . . . . . . . . . . .    85,388     63,821
 Time deposits, $100,000 and over. . . . . . . . . .    41,798     46,523
 Other time deposits . . . . . . . . . . . . . . . .    40,413     48,738
                                                      ---------  ---------
                                                       218,778    209,191
Other short-term borrowings. . . . . . . . . . . . .       500        500
Federal Home Loan Bank advances. . . . . . . . . . .    26,900     16,000
Accrued interest payable . . . . . . . . . . . . . .     1,194      1,753
Other liabilities. . . . . . . . . . . . . . . . . .     1,124        863
                                                      ---------  ---------
     Total liabilities . . . . . . . . . . . . . . .   248,496    228,307
                                                      ---------  ---------

Shareholders' equity:
 Common stock, $1.00 par value; 20,000,000 shares
  authorized; 3,793,032 and 3,598,318 shares
  issued and outstanding . . . . . . . . . . . . . .     3,793      3,598
 Additional paid-in capital. . . . . . . . . . . . .    18,409     16,803
 Retained earnings . . . . . . . . . . . . . . . . .     2,379      1,425
 Accumulated other comprehensive income, net of tax.       203         32
 Nonvested restricted stock. . . . . . . . . . . . .      (183)      (330)
                                                      ---------  ---------
     Total shareholders' equity. . . . . . . . . . .    24,601     21,528
                                                      ---------  ---------
                                                      $273,097   $249,835
                                                      =========  =========
<FN>

See  accompanying  notes  to  consolidated  financial  statements.
</TABLE>

<TABLE>
<CAPTION>


                        SUMMIT FINANCIAL CORPORATION AND SUBSIDIARIES
                              CONSOLIDATED STATEMENTS OF INCOME
                        (Dollars in Thousands, except Per Share Data)

                                                            For the Years Ended December 31,
                                                          ----------------------------------
                                                             2001        2000        1999
                                                          ----------  ----------  ----------
<S>                                                       <C>         <C>         <C>
Interest Income:
 Loans . . . . . . . . . . . . . . . . . . . . . . . . .  $   17,293  $   16,882  $   13,676
 Taxable securities. . . . . . . . . . . . . . . . . . .       1,751       1,187         951
 Nontaxable securities . . . . . . . . . . . . . . . . .         568         515         500
 Federal funds sold. . . . . . . . . . . . . . . . . . .         318         563         102
 Other . . . . . . . . . . . . . . . . . . . . . . . . .         275         270         148
                                                          ----------  ----------  ----------
                                                              20,205      19,417      15,377
                                                          ----------  ----------  ----------
Interest Expense:
 Deposits. . . . . . . . . . . . . . . . . . . . . . . .       8,628       8,463       6,086
 Federal Home Loan Bank advances . . . . . . . . . . . .       1,146         878         463
 Federal funds purchased . . . . . . . . . . . . . . . .           2          16          46
 Other short-term borrowings . . . . . . . . . . . . . .          31          37          33
                                                          ----------  ----------  ----------
                                                               9,807       9,394       6,628
                                                          ----------  ----------  ----------
     Net interest income . . . . . . . . . . . . . . . .      10,398      10,023       8,749
Provision for loan losses. . . . . . . . . . . . . . . .         725         654         445
                                                          ----------  ----------  ----------
     Net interest income after provision for loan losses       9,673       9,369       8,304
                                                          ----------  ----------  ----------
Noninterest Income:
 Service charges and fees on deposit accounts. . . . . .         430         369         247
 Credit card fees and income . . . . . . . . . . . . . .         457         376         338
 Insurance commission fee income . . . . . . . . . . . .         485         337         254
 Gain on sale of investment securities . . . . . . . . .         257          12          22
 Other income. . . . . . . . . . . . . . . . . . . . . .         953         752         699
                                                          ----------  ----------  ----------
                                                               2,582       1,846       1,560
                                                          ----------  ----------  ----------
Noninterest Expense:
 Salaries, wages and benefits. . . . . . . . . . . . . .       4,815       4,279       3,499
 Occupancy . . . . . . . . . . . . . . . . . . . . . . .         652         630         578
 Furniture, fixtures and equipment . . . . . . . . . . .         667         663         633
 Other expenses. . . . . . . . . . . . . . . . . . . . .       2,125       1,784       1,810
                                                          ----------  ----------  ----------
                                                               8,259       7,356       6,520
                                                          ----------  ----------  ----------
Income before income taxes . . . . . . . . . . . . . . .       3,996       3,859       3,344
Income taxes . . . . . . . . . . . . . . . . . . . . . .       1,280       1,204         936
                                                          ----------  ----------  ----------
Net income . . . . . . . . . . . . . . . . . . . . . . .  $    2,716  $    2,655  $    2,408
                                                          ==========  ==========  ==========

Net income per common share:
 Basic . . . . . . . . . . . . . . . . . . . . . . . . .  $     0.72  $     0.71  $     0.69
 Diluted . . . . . . . . . . . . . . . . . . . . . . . .  $     0.66  $     0.65  $     0.59
Average shares outstanding:
 Basic . . . . . . . . . . . . . . . . . . . . . . . . .   3,749,000   3,716,000   3,501,000
 Diluted . . . . . . . . . . . . . . . . . . . . . . . .   4,127,000   4,063,000   4,109,000
<FN>

See  accompanying  notes  to  consolidated  financial  statements.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                       SUMMIT FINANCIAL CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME
                                   FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999
                                                   (Dollars in Thousands)


                                                                                Accumulated
                                                                                   Other
                                                     Additional                Comprehensive    Nonvested        Total
                                           Common     paid-in      Retained       Income       Restricted    Shareholders'
                                           stock      capital      earnings     (loss), net       stock         equity
                                          --------  ------------  ----------  ---------------  -----------  ---------------
<S>                                       <C>       <C>           <C>         <C>              <C>          <C>
Balance at December 31, 1998 . . . . . .  $ 3,039   $    12,726           -   $          313        ($404)  $       15,674
Net income for the year ended
December 31, 1999. . . . . . . . . . . .        -             -       2,408                -            -            2,408
Other comprehensive loss:
 Unrealized holding losses on
securities arising during the period,
net of taxes of ($531) . . . . . . . . .        -             -           -             (860)           -
 Less: reclassification adjustment
for gains included in net income,
net of tax of ($6) . . . . . . . . . . .        -             -           -              (16)
                                                                              ---------------
 Other comprehensive loss. . . . . . . .        -             -           -             (876)           -             (876)
                                                                              ---------------               ---------------
Comprehensive income . . . . . . . . . .        -             -           -                -            -            1,532
                                                                                                            ---------------
Stock options exercised. . . . . . . . .       53           233           -                -            -              286
Amortization of deferred compensation
on restricted stock. . . . . . . . . . .        -             -           -                -          101              101
Issuance of 5% stock dividend. . . . . .      152         1,771      (1,923)               -            -                -
Cash in lieu of fractional shares. . . .        -             -          (2)               -            -               (2)
                                          --------  ------------  ----------  ---------------  -----------  ---------------
Balance at December 31, 1999 . . . . . .    3,244        14,730         483             (563)        (303)          17,591
Net income for the year ended
December 31, 2000. . . . . . . . . . . .        -             -       2,655                -            -            2,655
Other comprehensive income:
 Unrealized holding gains on
securities arising during the period,
net of taxes of $369 . . . . . . . . . .        -             -           -              603            -
 Less: reclassification adjustment
for gains included in net income,
net of tax of ($4) . . . . . . . . . . .        -             -           -               (8)
 Other comprehensive income. . . . . . .        -             -           -              595            -              595
                                                                              ---------------               ---------------
Comprehensive income . . . . . . . . . .        -             -           -                -            -            3,250
                                                                                                            ---------------
Stock options exercised. . . . . . . . .      169           392           -                -            -              561
Issuance of common stock pursuant
to restricted stock plan . . . . . . . .       14           141           -                -         (155)               -
Amortization of deferred compensation
on restricted stock. . . . . . . . . . .        -             -           -                -          128              128
Issuance of 5% stock dividend. . . . . .      171         1,540      (1,711)               -            -                -
Cash in lieu of fractional shares. . . .        -             -          (2)               -            -               (2)
                                          --------  ------------  ----------  ---------------  -----------  ---------------
Balance at December 31, 2000 . . . . . .    3,598        16,803       1,425               32         (330)          21,528
Net income for the year ended
December 31, 2001. . . . . . . . . . . .        -             -       2,716                -            -            2,716
Other comprehensive income:
 Unrealized holding gains on
securities arising during the period,
net of taxes of $187 . . . . . . . . . .        -             -           -              346            -
 Less: reclassification adjustment
for gains included in net income,
net of tax of ($82). . . . . . . . . . .        -             -           -             (175)
 Other comprehensive income. . . . . . .        -             -           -              171            -              171
                                                                              ---------------               ---------------
Comprehensive income . . . . . . . . . .        -             -           -                -            -            2,887
                                                                                                            ---------------
Stock options exercised. . . . . . . . .       16            47           -                -            -               63
Cancellation of restricted common stock.       (2)          (19)          -                -           21                -
Amortization of deferred compensation
on restricted stock. . . . . . . . . . .        -             -           -                -          126              126
Issuance of 5% stock dividend. . . . . .      181         1,578      (1,759)               -            -                -
Cash in lieu of fractional shares. . . .        -             -          (3)               -            -               (3)
                                          --------  ------------  ----------  ---------------  -----------  ---------------
Balance at December 31, 2001 . . . . . .  $ 3,793   $    18,409   $   2,379   $          203        ($183)  $       24,601
                                          ========  ============  ==========  ===============  ===========  ===============
<FN>

See  accompanying  notes  to  consolidated  financial  statements.
</TABLE>

<PAGE>


<TABLE>
<CAPTION>

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

                                                             For the Years Ended December 31,
                                                             --------------------------------
                                                                2001       2000       1999
                                                              ---------  ---------  ---------
<S>                                                           <C>        <C>        <C>
Cash flows from operating activities:
  Net income . . . . . . . . . . . . . . . . . . . . . . . .  $  2,716   $  2,655   $  2,408
  Adjustments to reconcile net income to net
cash provided by operating activities:
    Provision for loan losses. . . . . . . . . . . . . . . .       725        654        445
    Depreciation . . . . . . . . . . . . . . . . . . . . . .       467        478        496
    Net gain on sale and disposal of equipment and vehicles.       (28)         -        (18)
    Net gain on sale of investment securities. . . . . . . .      (257)       (12)       (22)
    Net amortization of net premium on investment securities       175         30         75
    Amortization of deferred compensation on
restricted stock . . . . . . . . . . . . . . . . . . . . . .       126        128        101
    Decrease (increase) in other assets. . . . . . . . . . .       309       (210)      (335)
    (Decrease) increase in other liabilities . . . . . . . .      (298)       454        152
    Deferred income taxes. . . . . . . . . . . . . . . . . .      (205)      (200)      (179)
                                                              ---------  ---------  ---------
         Net cash provided by operating activities . . . . .     3,730      3,977      3,123
                                                              ---------  ---------  ---------
Cash flows from investing activities:
  Purchases of investment securities . . . . . . . . . . . .   (38,533)   (12,415)    (7,483)
  Proceeds from sales of investment securities . . . . . . .    12,695      5,400      1,021
  Proceeds from maturities of investment securities. . . . .    11,241      1,977      5,632
  Purchases of Federal Home Loan Bank and other stock. . . .      (345)      (450)      (146)
  Net increase in loans. . . . . . . . . . . . . . . . . . .   (26,868)   (32,608)   (17,610)
  Purchases of premises and equipment. . . . . . . . . . . .    (1,470)    (1,061)      (315)
  Proceeds from sale of equipment and vehicles . . . . . . .        57          -         49
                                                              ---------  ---------  ---------
         Net cash used by investing activities . . . . . . .   (43,223)   (39,157)   (18,852)
                                                              ---------  ---------  ---------
Cash flows from financing activities:
  Net increase in deposit accounts . . . . . . . . . . . . .     9,587     51,195     17,753
  Net (decrease) increase in federal funds
purchased and repurchase agreements. . . . . . . . . . . . .         -     (4,000)       433
  Proceeds from Federal Home Loan Bank advances. . . . . . .    17,000     22,000     10,550
  Repayments of Federal Home Loan Bank advances. . . . . . .    (6,100)   (15,000)    (9,550)
  Net repayments of other short-term borrowings. . . . . . .         -          -       (320)
  Proceeds from stock options exercised. . . . . . . . . . .        63        561        286
  Cash paid in lieu of fractional shares . . . . . . . . . .        (3)        (2)        (2)
                                                              ---------  ---------  ---------
         Net cash provided by financing activities . . . . .    20,547     54,754     19,150
                                                              ---------  ---------  ---------
Net (decrease) increase in cash and cash equivalents . . . .   (18,946)    19,574      3,421
Cash and cash equivalents, beginning of year . . . . . . . .    29,395      9,821      6,400
                                                              ---------  ---------  ---------
Cash and cash equivalents, end of year . . . . . . . . . . .  $ 10,449   $ 29,395   $  9,821
                                                              =========  =========  =========
<FN>

See  accompanying  notes  to  consolidated  financial  statements.
</TABLE>

<PAGE>

                 SUMMIT FINANCIAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999


NOTE  1  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

PRINCIPLES  OF CONSOLIDATION  -  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.  Summit Investment Services,
Inc.  is  a  wholly-owned  subsidiary  of  the  Bank  which  provides  financial
management services and nondeposit product sales.  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.

USE  OF  ESTIMATES  -  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, they affect the reported amounts of
income  and  expense  during  the reporting period.  Actual results could differ
from  these  estimates  and  assumptions.

INVESTMENT  SECURITIES  -  Investment securities are accounted for in accordance
with  Statement  of Financial Accounting Standards ("SFAS") 115, "Accounting for
Certain  Investments  in  Debt and Equity Securities".  At the time of purchase,
investment  securities  are  classified  by  management into three categories as
follows:  (1) Investments Held to Maturity: securities which the Company has the
positive intent and ability to hold to maturity, which are reported at amortized
cost;  (2)  Trading  Securities: securities that are bought and held principally
for  the  purpose of selling them in the near future, which are reported at fair
value with unrealized gains and losses included in earnings; and (3) Investments
Available  for Sale: securities that may be sold under certain conditions, which
are  reported  at  fair  value,  with  unrealized gains and losses excluded from
earnings  and  reported  as a separate component of shareholders' equity, net of
income  taxes.  The  amortization  of  premiums  and  accretion  of discounts on
investment  securities are recorded as adjustments to interest income.  Gains or
losses  on  sales of investment securities are based on the net proceeds and the
adjusted  carrying  amount  of  the  securities  sold,  using  the  specific
identification method.  Unrealized losses on securities, reflecting a decline in
value  or  impairment  judged  by  the  Company  to be other than temporary, are
charged  to  income  in  the  consolidated  statements  of  income.

LOANS  AND  INTEREST  INCOME  -  Loans  of  the  Bank  are  carried at principal
amounts,  reduced by an allowance for loan losses.  The Bank recognizes interest
income daily based on the principal amount outstanding using the simple interest
method.  The  accrual of interest is generally discontinued on loans of the Bank
which  become  90  days  past due as to principal or interest or when management
believes,  after  considering  economic  and  business conditions and collection
efforts,  that  the  borrower's  financial  condition is such that collection of
interest is doubtful.  Management may elect to continue accrual of interest when
the  estimated  net  realizable  value  of collateral is sufficient to cover the
principal  balances  and  accrued  interest  and  the  loan is in the process of
collection.  Amounts  received on nonaccrual loans generally are applied against
principal prior to the recognition of any interest income.  Generally, loans are
restored to accrual status when the obligation is brought current, has performed
in accordance with the contractual terms for a reasonable period of time and the
ultimate  collectibility  of  the total contractual principal and interest is no
longer  in  doubt.

     Loans  of  the Finance Company are carried at the gross amount outstanding,
reduced  by  unearned interest, insurance income and other deferred fees, and an
allowance  for loan losses.  Unearned interest and fees are deferred at the time
the  loans are made and accreted to income using the "Rule of 78's" method.  The
results  from  the use of the "Rule of 78's" method are not materially different
from  those  obtained  by  using  the  simple interest method.  Charges for late
payments  are  credited  to income when collected.  Loans of the Finance Company
are  generally  charged-off  when  they  become  150 days past due or when it is
determined  that  collection  is  doubtful.

IMPAIRMENT  OF  LOANS  -  Loans  are  considered  to  be  impaired  when,  in
management's  judgment,  the collection of all amounts of principal and interest
is not probable in accordance with the terms of the loan agreement.  The Company
accounts  for  impaired  loans  in  accordance  with  SFAS  114,  "Accounting by
Creditors  for  Impairment  of  a  Loan", as amended by SFAS 118 in the areas of
disclosure  requirements  and  methods of recognizing income.  SFAS 114 requires
that  impaired  loans  be recorded at fair value, which is determined based upon
the  present  value  of  expected  cash flows discounted at the loan's effective
interest  rate,  the market price of the loan, if available, or the value of the
underlying  collateral.  All  cash  receipts  on  impaired  loans are applied to
principal  until  such  time as the principal is brought current, and thereafter
according  to  the contractual terms of the agreement.  After principal has been
satisfied,  future  cash  receipts are applied to interest income, to the extent
that any interest has been foregone.  As a practical matter, the Bank determines
which  loans  are  impaired  through  a  loan  review  process.

ALLOWANCE  FOR  LOAN  LOSSES  -  The  allowance  for  loan losses is established
through a provision for loan losses charged to operations and reflects an amount
that,  in  management's  opinion,  is  adequate to absorb inherent losses in the
existing  portfolio.  Additions  to  the  allowance  are  based  on management's
evaluation  of  the  loan portfolio under current economic conditions, past loan
loss  experience,  and  such  other  factors  which,  in management's judgement,
deserve  recognition  in estimating loan losses.  Loans are charged-off when, in
the  opinion  of  management,  they  are deemed to be uncollectible.  Recognized
losses  are charged against the allowance and subsequent recoveries are added to
the  allowance.  Management  believes  that  the  allowance  is adequate.  While
management  uses  the  information  available  to  make  evaluations,  future
adjustments to the allowance may be necessary if economic conditions differ from
the  assumptions  used in making the evaluations.  The allowance for loan losses
is  subject  to periodic evaluation by various regulatory authorities and may be
subject  to  adjustments based upon information that is available to them at the
time  of  their  examination.

LOAN  FEES  -  Loan  origination  fees and direct costs of loan originations are
deferred  and  recognized as an adjustment of yield by the interest method based
on  the  contractual  terms  of the loan.  Loan commitment fees are deferred and
recognized  as  an  adjustment  of yield over the related loan's life, or if the
commitment  expires  unexercised,  recognized  in  income  upon  expiration.

PREMISES  AND  EQUIPMENT  -  Premises,  equipment and leasehold improvements are
stated  at cost less accumulated depreciation and amortization.  Depreciation is
recorded  using  the  straight-line method over the estimated useful life of the
related  assets as follows: building, 40 years; furniture and fixtures, 7 years;
equipment  and  computer  hardware  and  software, 3 to 7 years; and vehicles, 3
years.  Amortization  of  leasehold  improvements  is  recorded  using  the
straight-line  method  over the lesser of the estimated useful life of the asset
or  the  term  of the respective lease.  Additions to premises and equipment and
major  replacements  or betterments are added at cost.  Maintenance, repairs and
minor  replacements  are  charged to operating expense as incurred.  When assets
are  retired or otherwise disposed of, the cost and accumulated depreciation are
removed  from  the  accounts  and  any  gain  or  loss  is  reflected in income.

INTANGIBLE  ASSETS  -  As  of  January  1,  2002,  the Company adopted SFAS 142,
"Goodwill  and  Other  Intangible  Assets".  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.  The  Company's intangible assets consist of goodwill
resulting  from  the  Finance  Company's branch acquisitions and are included in
"Other  assets" on the accompanying consolidated balance sheets.  The balance of
goodwill  at December 31, 2001 and 2000 was $183,000 and $340,000, respectively.
Prior to the adoption of SFAS 142, the Company recorded amortization of goodwill
of  $157,000  for  each  of  the  years ended December 31, 2001, 2000, and 1999.

STOCK-BASED  COMPENSATION  -  The Company reports stock-based compensation using
the  intrinsic  value  method  prescribed in Accounting Principles Board Opinion
("APB")  25,  "Accounting  for  Stock  Issued  to  Employees",  which  measures
compensation  expense  as  the excess, if any, of the quoted market price of the
Company's stock at the date of the grant over the amount an employee must pay to
acquire  the  stock.  SFAS  123,  "Accounting  for  Stock-Based  Compensation",
encourages  but  does  not  require  companies  to  record compensation cost for
stock-based  compensation  plans  at  fair  value.  The  Company  follows  the
disclosure-only  provisions  of  SFAS  123.


PER  SHARE  DATA  -  Earnings  per share ("EPS") are computed in accordance with
SFAS 128, "Earnings per Share."  SFAS 128 requires companies to report basic and
diluted  EPS.  Basic EPS includes no dilution and is computed by dividing income
available to common shareholders by the weighted average number of common shares
outstanding  for  the  period.  Shares of restricted stock that are unvested are
not  included  in weighted average shares outstanding.  Diluted EPS reflects the
potential  dilution  of  securities  that  could occur if the Company's dilutive
stock  options  were  exercised.  Weighted average share and per share data have
been  restated  to  reflect  all  5%  stock  dividends.

REPORTING  COMPREHENSIVE  INCOME  -  The Company reports comprehensive income in
accordance  with  SFAS 130, "Reporting Comprehensive Income."  SFAS 130 requires
that  all items that are required to be recognized under accounting standards as
comprehensive income be reported in a financial statement that is displayed with
the  same prominence as other financial statements.  The disclosure requirements
of  SFAS  130  have  been  included  in the Company's consolidated statements of
shareholders'  equity  and  comprehensive  income.

INCOME  TAXES  -  Income  taxes  are  accounted for in accordance with SFAS 109,
"Accounting  for  Income  Taxes".  Under  the asset and liability method of SFAS
109,  deferred  tax  assets  and  liabilities  are recognized for the future tax
consequences  attributable  to  differences  between  the  financial  statement
carrying  amounts  of  existing  assets and liabilities and their respective tax
bases.  Deferred tax assets and liabilities are measured using the enacted rates
expected  to  apply  to  taxable  income  in  the years in which those temporary
differences are expected to be recovered or settled.  Under SFAS 109, the effect
on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.  Valuation allowances are
established to reduce deferred tax assets if it is determined to be "more likely
than  not" that all or some portion of the potential deferred tax asset will not
be  realized.

DISCLOSURES  REGARDING  SEGMENTS  -  SFAS 131, "Disclosures about Segments of an
Enterprise  and  Related  Information"  establishes  standards  for the way that
public  businesses  report  information  about  operating  segments  in  annual
financial  statements  and  requires  that  those  enterprises  report  selected
information  about  operating  segments  in  interim financial reports issued to
shareholders.  It  also  establishes  standards  for  related  disclosures about
products  and  services, geographic areas, and major customers.  The Company has
two  reportable  operating  segments,  Summit National Bank and Freedom Finance,
Inc.

FAIR  VALUE OF FINANCIAL INSTRUMENTS  -  SFAS 107, "Disclosures about Fair Value
of  Financial  Instruments",  requires  disclosures  about the fair value of all
financial  instruments,  whether or not recognized in the balance sheet, when it
is  practicable to estimate fair value.  In cases where quoted market prices are
not  available,  fair values are based on estimates using present value or other
valuation  techniques.  Those  techniques  are  significantly  affected  by  the
assumptions  used,  including  the  discount  rate  and estimates of future cash
flows.  In that regard, the derived fair value estimates cannot be substantiated
by  comparison  to independent markets and, in many cases, could not be realized
through  immediate  settlement  of the instrument.  SFAS 107 defines a financial
instrument  as  cash,  evidence  of  an  ownership  interest  in  an  entity, or
contractual  obligations  which  require the exchange of cash or other financial
instruments.  Certain  financial  instruments  and all non-financial instruments
are  specifically  excluded  from  the  disclosure  requirements,  including the
Company's  common  stock,  premises  and  equipment,  and  other  assets  and
liabilities.  Accordingly,  the  aggregate  fair  value amounts presented do not
represent  the  underlying  value  of  the  Company.

RECLASSIFICATIONS  -  Certain  amounts  in  the  2000  and  1999  consolidated
financial  statements  have  been  reclassified  to  conform  with  the  2001
presentations.  These reclassifications had no impact on shareholders' equity or
net  income  as  previously  reported.


NOTE  2  -  RESTRICTIONS  ON  CASH  AND  DUE  FROM  BANKS
     The  Company's  banking  subsidiary is required to maintain average reserve
balances with the Federal Reserve Bank based upon a percentage of deposits.  The
amount  of  the  required  reserve  balance  at  December  31, 2001 and 2000 was
$1,259,000  and  $850,000,  respectively.


NOTE  3  -  STATEMENT  OF  CASH  FLOWS
     For  the  purpose 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 $10,449,000 and $29,395,000
at  December  31,  2001  and  2000,  respectively.  The  following  summarizes
supplemental  cash  flow  data  for  the  years  ended  December  31:
<TABLE>
<CAPTION>

(dollars in thousands)                2001     2000    1999
-----------------------------------  -------  ------  -------
<S>                                  <C>      <C>     <C>
Interest paid . . . . . . . . . . .  $10,366  $8,773  $6,548
Income taxes paid . . . . . . . . .    1,445   1,419   1,162
Change in fair value of investment
 securities, net of income taxes. .      171     595    (876)
</TABLE>



NOTE  4  -  INVESTMENT  SECURITIES
     All  investment  securities  are classified as "Available for Sale" in each
year  presented.  There  were  no securities classified as "Held to Maturity" or
"Trading"  in any year presented.  The aggregate amortized cost, fair value, and
gross unrealized gains and losses of investment securities available for sale at
December  31  were  as  follows: (dollars in thousands)

<TABLE>
<CAPTION>

                                                    2001                                     2000
                               -----------------------------------------   ---------------------------------------
                                                   GROSS                                      GROSS
                                AMORTIZED        UNREALIZED        FAIR    AMORTIZED        UNREALIZED        FAIR
                                            --------------------                       --------------------
                                   COST        GAINS     LOSSES    VALUE      COST        GAINS     LOSSES    VALUE
                                ----------  -----------  -------  -------  ----------  -----------  -------  -------
<S>                             <C>         <C>          <C>      <C>      <C>         <C>          <C>      <C>
U.S. government agencies . . .  $   11,103  $       164    ($53)  $11,214  $   17,167  $       114    ($40)  $17,241
Mortgage-backed securities . .      21,716          110    (166)   21,660       5,642           33      (9)    5,666
State and municipal securities      14,253          336     (63)   14,526       9,584          126    (172)    9,538
                                ----------  -----------  -------  -------  ----------  -----------  -------  -------
                                $   47,072  $       610   ($282)  $47,400  $   32,393  $       273   ($221)  $32,445
                                ==========  ===========  =======  =======  ==========  ===========  =======  =======
</TABLE>



     The  amortized  cost  and  estimated  fair  value  of investment securities
available  for  sale at December 31, 2001, by contractual maturity, are shown in
the following table.  Expected maturities may differ from contractual maturities
because issuers may have the right to call or prepay obligations with or without
prepayment  penalties.  Fair  value  of  securities  was determined using quoted
market  prices.
<TABLE>
<CAPTION>



                                          AMORTIZED    FAIR
(dollars in thousands)                       COST      VALUE
----------------------------------------  ----------  -------
<S>                                       <C>         <C>
Due in one year or less. . . . . . . . .  $        -  $     -
Due after one year, through five years .       6,852    6,986
Due after five years, through ten years.       8,238    8,230
Due after ten years. . . . . . . . . . .      31,982   32,184
                                          ----------  -------
                                          $   47,072  $47,400
                                          ==========  =======
</TABLE>



     The  change in the unrealized gain on securities available for sale, net of
taxes, recorded in shareholders' equity for the year ended December 31, 2001 was
$171,000.  Investment  securities  with an approximate book value of $20,667,000
and  $15,987,000  at  December  31, 2001 and 2000, respectively, were pledged to
secure  public  deposits and for other purposes as required or permitted by law.
Estimated  fair values of securities pledged were $20,986,000 and $16,011,000 at
December  31,  2001  and  2000,  respectively.

Information  related  to the sale of securities classified as available for sale
for  each  year  is  as  follows:
<TABLE>
<CAPTION>



(dollars in thousands)                      2001     2000    1999
-----------------------------------------  -------  ------  ------
<S>                                        <C>      <C>     <C>
Proceeds from sales of securities . . . .  $12,695  $5,400  $1,021
Gross realized gains on securities sold .      261      49      22
Gross realized losses on securities sold.        4      37       -
</TABLE>



NOTE  5  -  INVESTMENTS  IN  STOCK
     Summit  National  Bank, as a member of the Federal Reserve Bank ("FRB") and
the Federal Home Loan Bank of Atlanta ("FHLB"), is required to own capital stock
in  these  organizations.  The  amount  of  stock  owned  is based on the Bank's
capital  levels in the case of the FRB and totaled $255,000 at December 31, 2001
and  2000.  The  amount  of  FHLB  stock owned is determined based on the Bank's
balances  of  residential  mortgages  and  advances  from  the  FHLB and totaled
$1,345,000  and  $1,000,000  at  December  31,  2001 and 2000, respectively.  At
December  31,  2001  and 2000, the Bank also owns $133,000 of stock in a bankers
bank  located  in Atlanta, Georgia.  No ready market exists for these stocks and
they  have  no  quoted  market  value.  However,  redemption of these stocks has
historically been at par value.  Accordingly, the carrying amounts are deemed to
be  a  reasonable  estimate  of  fair  value.

NOTE  6  -  LOANS  AND  ALLOWANCE  FOR  LOAN  LOSSES
     A  summary  of  loans  by  classification  at  December  31  is as follows:
<TABLE>
<CAPTION>



(dollars in thousands)                       2001       2000
-----------------------------------------  ---------  ---------
<S>                                        <C>        <C>
Commercial and industrial . . . . . . . .  $ 35,737   $ 31,995
Commercial secured by real estate . . . .    70,036     62,709
Real estate - residential mortgages . . .    64,239     52,287
Real estate - construction. . . . . . . .    26,672     23,232
Installment and other consumer loans. . .     6,301      6,540
Consumer finance, net of unearned income
 of $1,118 and $1,057 . . . . . . . . . .     3,606      3,542
Other loans and overdrafts. . . . . . . .       450        216
                                           ---------  ---------
                                            207,041    180,521
Less - allowance for loan losses. . . . .    (2,937)    (2,560)
                                           ---------  ---------
                                           $204,104   $177,961
                                           =========  =========
</TABLE>



     Nonperforming  and  impaired  loans  at  December  31  are  as  follows:
<TABLE>
<CAPTION>



(dollars in thousands)                                   2001    2000   1999
------------------------------------------------------  ------  ------  -----
<S>                                                     <C>     <C>     <C>
Accruing loans, past due in excess of 90 days. . . . .  $  153  $  122  $ 130
Accruing loans, considered impaired under SFAS 114 . .       -   1,244      -
Non-accrual loans, not considered impaired . . . . . .     135       -    147
Non-accrual loans, considered impaired under SFAS 114.   1,045     218      -
</TABLE>



     The average balance of impaired loans was $1,099,000 and $1,457,000 for the
years  ended  December  31,  2001  and  2000,  respectively,  and  there  was no
impairment  allowance  required  at  either  year  end.  The  amount of foregone
interest  income  that  would  have  been  recorded  had  the  non-accrual loans
performed  according  to  their  contractual  terms  amounted  to  approximately
$62,000,  $6,000  and $4,000 during 2001, 2000 and 1999, respectively.  Interest
income  recognized  on non-accrual and impaired loans was approximately $35,000,
$158,000  and  $17,000  during 2001, 2000 and 1999, respectively.  There were no
foreclosed  loans  or  other  real  estate  owned  in  any  year  presented.

Changes in the allowance for loan losses for the years ended December 31 were as
follows:
<TABLE>
<CAPTION>



(dollars in thousands)                            2001     2000     1999
-----------------------------------------------  -------  -------  -------
<S>                                              <C>      <C>      <C>
Balance, beginning of year. . . . . . . . . . .  $2,560   $2,163   $1,827
    Provision for losses. . . . . . . . . . . .     725      654      445
    Loans charged-off . . . . . . . . . . . . .    (488)    (434)    (417)
    Recoveries of loans previously charged-off.     140      177      308
                                                 -------  -------  -------
Balance, end of year. . . . . . . . . . . . . .  $2,937   $2,560   $2,163
                                                 =======  =======  =======
</TABLE>



     The  Company  makes loans to individuals and small- to mid-sized businesses
for  various  personal and commercial purposes primarily in the Upstate of South
Carolina.  The  Company  has a diversified loan portfolio and the Company's loan
portfolio  is  not  dependent  upon  any specific economic segment.  The Company
regularly  monitors  its  credit concentrations based on loan purpose, industry,
and  customer  base.  As  of  December  31,  2001,  there  were  no  material
concentrations  of  credit  risk  within  the  Company's  loan  portfolio.

     Directors, executive officers, and associates of such persons are customers
of  and  have  transactions  with  the Company's bank subsidiary in the ordinary
course  of  business.  Included  in  such transactions are outstanding loans and
commitments,  all  of  which are made under substantially the same credit terms,
including  interest  rates  and  collateral, as those prevailing at the time for
comparable  transactions with unrelated persons and do not involve more than the
normal  risk  of  collectibility.  All loans to related parties were current and
performing  in  accordance  with  contractual  terms  at December 31, 2001.  The
aggregate  dollar  amount  of  loans  outstanding  to  related  parties  was
approximately  $4,482,000  and  $5,805,000  at  December  31,  2001  and  2000,
respectively.  During  2001,  new  loans  and  advances  on  lines  of credit of
approximately  $5,225,000  were  made,  and  payments  on  these loans and lines
totaled  approximately $6,548,000.  At December 31, 2001, there were commitments
to  extend  additional  credit to related parties in the amount of approximately
$2,198,000.

     Under  current  Federal  Reserve  regulations,  the  Bank is limited in the
amount  it  may  loan  to the Company, the Finance Company, or other affiliates.
Loans  made  by  the Bank to a single affiliate may not exceed 10%, and loans to
all  affiliates may not exceed 20%, of the Bank's capital, surplus and undivided
profits,  after  adding  back  the  allowance  for  loan losses.  Based on these
limitations,  approximately  $4.7 million was available for loans to the Company
and  the  Finance Company at December 31, 2001.  Certain collateral restrictions
also  apply  to  loans  from  the  Bank  to  its  affiliates.

NOTE  7  -  PREMISES,  EQUIPMENT  AND  LEASES
     A  summary  of  premises  and  equipment  at  December  31  is  as follows:
<TABLE>
<CAPTION>



(dollars in thousands)                  2001      2000
------------------------------------  --------  --------
<S>                                   <C>       <C>
Land . . . . . . . . . . . . . . . .  $ 1,043   $ 1,043
Building and leasehold improvements.    3,333     2,118
Furniture, fixtures and equipment. .    2,718     2,387
Vehicles . . . . . . . . . . . . . .      191       161
Construction in progress . . . . . .        -       207
                                      --------  --------
                                        7,285     5,916
Less - accumulated depreciation. . .   (2,838)   (2,443)
                                      --------  --------
                                      $ 4,447   $ 3,473
                                      ========  ========
</TABLE>



     Depreciation  expense charged to operations totaled $467,000, $478,000, and
$496,000  in  2001,  2000,  and  1999,  respectively.  The Company leases branch
facilities for both the Bank and the Finance Company.  These leases have initial
terms  of  from two to ten years and various renewal options under substantially
the  same  terms  with  certain  rate  escalations.   Rent  expense  charged  to
operations totaled $299,000, $297,000, and $271,000, respectively, for the years
ended  December  31,  2001,  2000,  and  1999.

The  annual  minimum  rental  commitments  under  the  terms  of  the  Company's
noncancellable  leases  at  December  31,  2001  are  as  follows:  (dollars  in
thousands)
<TABLE>
<CAPTION>



<S>         <C>
2002 . . .  $273
2003 . . .   264
2004 . . .   219
2005 . . .    53
2006 . . .     7
Thereafter     -
            ----
            $816
            ====
</TABLE>



NOTE  8  -  DEPOSITS
The scheduled maturities of time deposits subsequent to December 31, 2001 are as
follows:  (dollars  in  thousands)
<TABLE>
<CAPTION>



<S>         <C>
2002 . . .  $72,057
2003 . . .    4,403
2004 . . .    2,479
2005 . . .    1,254
2006 . . .    1,916
Thereafter      102
            -------
            $82,211
            =======
</TABLE>



     The  remaining  maturity  of  time  deposits  in denominations in excess of
$100,000  is  $18,803,000  in  three  months  or less; $11,047,000 in over three
through  six months; $8,044,000 in over six through 12 months; and $3,904,000 in
over  12  months.

NOTE  9  -  OTHER  BORROWINGS
     Federal funds purchased represent unsecured overnight borrowings from other
financial  institutions  by  the  Bank.  These  borrowings  bear interest at the
prevailing  market  rate for federal funds purchased.  Average interest rates on
federal  funds  purchased  were  3.72%,  6.04%,  and  5.02%  for the years ended
December  31,  2001,  2000,  and  1999  respectively.  There were no outstanding
balances  of  federal  funds  purchased  at  December 31, 2001 or 2000.  Average
balances  were  $58,000,  $254,000,  and  $909,000  for  2001,  2000,  and 1999,
respectively.  The maximum balance of federal funds purchased at any time during
2001,  2000,  and  1999  was  $5.6  million,  $5.5  million,  and $12.5 million,
respectively.  At  December 31, 2001, the Bank had short-term lines of credit to
purchase  unsecured  federal  funds from unrelated banks with available balances
totaling  $15.5  million.  These lines are generally available to be outstanding
up  to  ten consecutive days for general corporate purposes of the Bank and have
specified  repayment  deadlines after disbursement of funds.  All of the lenders
have  reserved  the  right  to  withdraw  these  lines  at  their  option.

     Other  short-term  borrowings  consist  of  a  term  loan agreement with an
unrelated  individual that matures every six months and has been renewed in each
year presented.  This term loan is unsecured and bears interest at a fixed rate.
The  weighted  average  interest  rate  on  short-term borrowings outstanding at
December  31,  2001,  2000  and  1999 was 6.22%, 7.41%, and 6.50%, respectively.


NOTE  10  -  FHLB  ADVANCES
     FHLB  advances  represent  borrowings  from the FHLB of Atlanta by the Bank
pursuant  to  a  line  of  credit collateralized by a blanket lien on qualifying
loans  secured  by  first mortgages on 1-4 family residences and commercial real
estate.  These  advances  have  various  maturity  dates,  terms  and  repayment
schedules  with  fixed  or  variable  rates  of  interest,  payable  monthly  on
maturities  of  one  year  or  less and payable quarterly on maturities over one
year.

     Total  qualifying  loans  of  the  Bank pledged to the FHLB for advances at
December  31,  2001  were  approximately  $87 million.  The Bank has adopted the
policy of pledging excess collateral to facilitate future advances.  At December
31,  2001,  based  on  eligible  collateral  available,  the Bank had additional
available  credit  of  approximately  $27  million  from  the  FHLB.

     At  December  31,  2001 fixed rate FHLB advances ranged from 4.05% to 7.48%
with  initial maturities from one to ten years.  Variable rate advances based on
3  month LIBOR had a rate of 5.73% and 6.53%, respectively, at December 31, 2001
and  2000.  Interest rates ranged from 5.01% to 7.48% at December 31, 2000.  The
weighted-average interest rate on FHLB advances outstanding at December 31, 2001
and  2000  was  5.35%  and  6.31%, respectively.  At December 31, 2001, advances
totaling  $12  million  were  subject to call features at the option of the FHLB
with  call  dates  ranging from January 2002 to September 2006.  Call provisions
are  more  likely  to  be  exercised  by  the  FHLB  when rates rise.  Scheduled
maturities  of  FHLB  advances subsequent to December 31, 2001 are $5,600,000 in
2002;  $8,600,000 in 2003; $4,600,000 in 2004; $1,600,000 in 2005; $3,500,000 in
2006  and  $3,000,000  thereafter.

NOTE  11  -  INCOME  TAXES
     The  provision  for  income  taxes  for  the  years ended December 31 is as
follows:

<TABLE>
<CAPTION>



(dollars in thousands)   2001     2000     1999
----------------------  -------  -------  -------
<S>                     <C>      <C>      <C>
Current:
  Federal. . . . . . .  $1,356   $1,287   $1,023
  State. . . . . . . .     129      117       92
                        -------  -------  -------
                         1,485    1,404    1,115
                        -------  -------  -------
Deferred:
  Federal. . . . . . .    (200)    (172)    (179)
  State. . . . . . . .      (5)     (28)       -
                        -------  -------  -------
                          (205)    (200)    (179)
                        -------  -------  -------
Total tax provision. .  $1,280   $1,204   $  936
                        =======  =======  =======
</TABLE>



     Income  taxes  are  different  than  tax  expense  computed by applying the
statutory  federal  tax  rate of 34% to income before income taxes.  The reasons
for  the  differences  for  years  ended  December  31  are  as  follows:
<TABLE>
<CAPTION>




(dollars in thousands)               2001     2000     1999
----------------------------------  -------  -------  -------
<S>                                 <C>      <C>      <C>
Tax expense at statutory rate. . .  $1,359   $1,312   $1,137
State tax, net of federal benefit.      82       59       61
Change in valuation allowance for
 deferred tax assets . . . . . . .       -       (2)     (13)
Effect of tax exempt interest. . .    (168)    (148)    (192)
Other, net . . . . . . . . . . . .       7      (17)     (57)
                                    -------  -------  -------
Total. . . . . . . . . . . . . . .  $1,280   $1,204   $  936
                                    =======  =======  =======
</TABLE>



     The  sources  and  tax  effects  of temporary differences that give rise to
significant  portions of the deferred tax assets and deferred tax liabilities at
December  31  were  as  follows:
<TABLE>
<CAPTION>




(dollars in thousands)                                     2001     2000
--------------------------------------------------------  -------  -------
<S>                                                       <C>      <C>
Deferred tax assets:
  Allowance for loan losses deferred for tax purposes. .  $  971   $  842
  Book depreciation and amortization in excess of tax. .     134      125
  Other. . . . . . . . . . . . . . . . . . . . . . . . .      75       54
                                                          -------  -------
          Gross deferred tax assets. . . . . . . . . . .   1,180    1,021
Deferred tax liabilities:
  Net deferred loan costs. . . . . . . . . . . . . . . .       -       (5)
  Unrealized net gains on securities available for sale.    (125)     (20)
  Compensation expense deferred for financial reporting.     (51)     (92)
                                                          -------  -------
          Gross deferred tax liabilities . . . . . . . .    (176)    (117)
                                                          -------  -------
Net deferred tax asset . . . . . . . . . . . . . . . . .  $1,004   $  904
                                                          =======  =======
</TABLE>



     The  net  deferred  tax  asset  is  included  in  "Other  assets"  in  the
accompanying  consolidated  balance  sheets.  A portion of the change in the net
deferred  tax  asset  relates  to  unrealized  gains  and  losses  on securities
available for sale for which a current period deferred tax expense of ($105,000)
has  been  recorded directly to shareholders' equity.  The balance of the change
in  the  net  deferred  tax  asset  results from the current period deferred tax
benefit  of  $205,000.  In management's opinion, it is more likely than not that
the  results of future operations will generate sufficient income to realize the
net  deferred  tax  asset  and no valuation allowance is considered necessary at
December  31,  2001.


NOTE  12  -  OTHER  INCOME  AND  OTHER  EXPENSES
     The  components  of  other operating income for the years ended December 31
are  as  follows:

<TABLE>
<CAPTION>



(dollars in thousands)                2001   2000   1999
------------------------------------  -----  -----  -----
<S>                                   <C>    <C>    <C>
Late charges and other loan fees . .  $ 295  $ 216  $ 235
Nondeposit product sales commission.    241    206    148
Other. . . . . . . . . . . . . . . .    417    330    316
                                      -----  -----  -----
                                      $ 953  $ 752  $ 699
                                      =====  =====  =====
</TABLE>



     The  components of other operating expenses for the years ended December 31
are  as  follows:

<TABLE>
<CAPTION>



(dollars in thousands)                     2001    2000    1999
----------------------------------------  ------  ------  ------
<S>                                       <C>     <C>     <C>
Advertising and public relations . . . .  $  230  $  176  $  251
Stationary, printing and office support.     386     364     314
Credit card service expense. . . . . . .     391     298     277
Legal and professional fees. . . . . . .     335     240     311
Amortization of intangibles. . . . . . .     157     157     157
Other. . . . . . . . . . . . . . . . . .     626     549     500
                                          ------  ------  ------
                                          $2,125  $1,784  $1,810
                                          ======  ======  ======
</TABLE>



NOTE  13  -  CAPITAL  STOCK  AND  PER  SHARE  INFORMATION
     On  November 9, 2001, the Company issued a 5% stock dividend.  The dividend
was issued to all shareholders of record on October 29, 2001 and resulted in the
issuance  of  approximately  181,000 shares of common stock of the Company.  All
average share and per share data have been retroactively restated to reflect the
stock  dividend  as  of  the  earliest  period  presented.

     As  of  December  31,  2001, there were approximately 830,000 common shares
reserved  for  issuance  under  stock  compensation  benefit  plans,  of  which
approximately  261,000  were  available  for  issuance.

     The  following  is  a  reconciliation  of the denominators of the basic and
diluted per share computations for net income.  There was no required adjustment
to  the numerator from the net income reported on the accompanying statements of
income.

<TABLE>
<CAPTION>

                                        2001                    2000                    1999
                                ----------------------   --------------------   ----------------------
                                  BASIC      DILUTED      BASIC      DILUTED      BASIC      DILUTED
<S>                             <C>         <C>         <C>         <C>         <C>         <C>
Net income . . . . . . . . . .  $2,716,000  $2,716,000  $2,655,000  $2,655,000  $2,408,000  $2,408,000
                                ----------  ----------  ----------  ----------  ----------  ----------
Average shares outstanding . .   3,749,032   3,749,032   3,715,930   3,715,930   3,501,284   3,501,284
Effect of dilutive securities:
   Stock options . . . . . . .           -     345,737           -     308,627           -     571,007
   Unvested restricted stock .           -      32,000           -      38,037           -      36,757
                                ----------  ----------  ----------  ----------  ----------  ----------
                                 3,749,032   4,126,769   3,715,930   4,062,594   3,501,284   4,109,048
                                ----------  ----------  ----------  ----------  ----------  ----------
Per share amount . . . . . . .  $     0.72  $     0.66  $     0.71  $     0.65  $     0.69  $     0.59
                                ==========  ==========  ==========  ==========  ==========  ==========
</TABLE>


NOTE  14  -  REGULATORY  CAPITAL  REQUIREMENTS  AND  DIVIDEND  RESTRICTIONS
     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 I capital, and Tier I leverage capital
as  set  forth  in the table following.  Management believes, as of December 31,
2001,  that  the  Company and the Bank meet all capital adequacy requirements to
which  they are subject.  At December 31, 2001 and 2000, the Bank is 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 risk-based capital regulatory-defined
category.

     The  following  table  presents the Company's and the Bank's actual capital
amounts  and  ratios  at  December  31,  2001  and  2000  as well as the minimum
calculated  amounts  for  each  regulatory  defined  category.

<TABLE>
<CAPTION>

                                                          FOR CAPITAL   TO BE CATEGORIZED
                                                            ADEQUACY          "WELL
(dollars  in thousands)                     ACTUAL          PURPOSES        CAPITALIZED"
-----------------------                 --------------   --------------   ---------------
                                        AMOUNT   RATIO   AMOUNT   RATIO   AMOUNT   RATIO
                                        -------  ------  -------  ------  -------  ------
<S>                                     <C>      <C>     <C>      <C>     <C>      <C>
AS OF DECEMBER 31, 2001
The Company
--------------------------------------
Total capital to risk-weighted assets.  $27,132  12.41%  $17,497   8.00%  N.A.
Tier 1 capital to risk-weighted assets  $24,398  11.16%  $ 8,749   4.00%  N.A.
Tier 1 capital to average assets . . .  $24,398   9.25%  $10,548   4.00%  N.A.
The Bank
--------------------------------------
Total capital to risk-weighted assets.  $23,727  11.00%  $17,252   8.00%  $21,565  10.00%
Tier 1 capital to risk-weighted assets  $21,031   9.75%  $ 8,626   4.00%  $12,939   6.00%
Tier 1 capital to average assets . . .  $21,031   8.07%  $10,429   4.00%  $13,037   5.00%

AS OF DECEMBER 31, 2000
The Company
--------------------------------------
Total capital to risk-weighted assets.  $23,937  12.21%  $15,688   8.00%  N.A.
Tier 1 capital to risk-weighted assets  $21,486  10.96%  $ 7,844   4.00%  N.A.
Tier 1 capital to average assets . . .  $21,486  10.13%  $ 8,487   4.00%  N.A.
The Bank
--------------------------------------
Total capital to risk-weighted assets.  $20,822  10.76%  $15,474   8.00%  $19,343  10.00%
Tier 1 capital to risk-weighted assets  $18,490   9.56%  $ 7,737   4.00%  $11,606   6.00%
Tier 1 capital to average assets . . .  $18,490   8.82%  $ 8,387   4.00%  $10,483   5.00%
</TABLE>



     The  ability  of  the  Company  to  pay  cash  dividends  is dependent upon
receiving  cash  in the form of dividends from the Bank.  The dividends that may
be  paid  by  the  Bank  to  the  Company  are  subject to legal limitations and
regulatory  capital  requirements.  The  approval  of  the  Comptroller  of  the
Currency  is  required if the total of all dividends declared by a national bank
in  any  calendar  year  exceeds  the  Bank's  net  profits  (as  defined by the
Comptroller) for that year combined with its retained net profits (as defined by
the Comptroller) for the two preceding calendar years.  As of December 31, 2001,
no  cash  dividends  have  been  declared  or  paid by the Bank and the Bank had
available  retained  earnings  of  $12.5  million.

NOTE  15  -  STOCK  COMPENSATION  PLANS
     The  Company  has  a  Restricted  Stock  Plan  for  awards  to  certain key
employees.  Under  the Restricted Stock Plan, the Company may grant common stock
to  its  employees  for  up to approximately 295,000 shares.  All shares granted
under  the  Restricted  Stock  Plan are subject to restrictions as to continuous
employment for a specified time period following the date of grant.  During this
period,  the  holder  is  entitled  to  full  voting  rights and dividends.  The
restrictions as to transferability of shares granted under this plan vest over a
period  of  5  years at a rate of 20% on each anniversary date of the grant.  At
December  31, 2001, there were 74,492 shares of restricted stock outstanding, of
which  32,000  shares  were  unvested.  Deferred  compensation  representing the
difference  between  the fair market value of the stock at the date of grant and
the  cash  paid  for the stock is amortized over the five-year vesting period as
the restrictions lapse.  Included in the accompanying consolidated statements of
income  under  the caption "Salaries, wages and benefits" is $126,000, $128,000,
and $101,000 of amortized deferred compensation for the years ended December 31,
2001,  2000  and  1999,  respectively.

     The  Company has two Incentive Stock Option Plans (one approved in 1989 and
one  in  1999) and a Non-Employee Stock Option Plan (collectively referred to as
stock-based  option plans).  Under the Incentive Stock Option Plans, options are
periodically granted to employees at a price not less than the fair market value
of  the  shares  at  the  date  of grant.  Options granted are exercisable for a
period  of  ten years from the date of grant and become exercisable at a rate of
20%  each  year  on  the  first  five  anniversaries  of the date of grant.  The
Incentive  Stock  Option  Plans authorized the granting of stock options up to a
maximum  of  approximately 1,006,000 shares of common stock, however, 840,000 of
these  reserved  shares  are under the 1989 Plan which has expired.  At December
31,  2001,  approximately 7,300 option shares were available to be granted under
these  plans.

     Under  the  Non-Employee  Stock Option Plan, options have been granted at a
price  not less than the fair market value of the shares at the date of grant to
eligible  non-employee  directors as a retainer for their services as directors.
Options  granted  are  exercisable  for  a  period of ten years from the date of
grant.  Options  granted  in  1995 became exercisable one year after the date of
grant.  Options  granted  in 1996 become exercisable over a period of nine years
at a rate of 11.1% on each of the first nine anniversaries of the date of grant.
The  Non-Employee  Stock Option Plan authorizes the granting of stock options up
to  a  maximum of approximately 369,000 shares of common stock.  At December 31,
2001, approximately 33,000 option shares were available to be granted under this
plan.

     All  outstanding  options  and  option  activity for all stock-based option
plans  have  been  retroactively restated to reflect the effects of all 5% stock
dividends  issued.

     A  summary  of the activity under the stock-based option plans for the year
ended  December  31  is  as  follows:

<TABLE>
<CAPTION>

                                  2001                 2000                    1999
                          -------------------  --------------------  ---------------------
                                    WEIGHTED               WEIGHTED               WEIGHTED
                                     AVERAGE                AVERAGE                AVERAGE
                                    EXERCISE               EXERCISE               EXERCISE
                           SHARES     PRICE      SHARES      PRICE      SHARES      PRICE
                          --------  ---------  ----------  ---------  ----------  ---------
<S>                       <C>       <C>        <C>         <C>        <C>         <C>
Outstanding, January 1 .  936,006   $    6.17  1,000,864   $    5.19  1,072,762   $    5.04
Granted. . . . . . . . .        -           -    151,924   $    8.78     17,728   $   12.15
Canceled . . . . . . . .  (11,357)  $    9.73    (29,931)  $    7.35    (30,838)  $    6.83
Exercised. . . . . . . .  (17,269)  $    3.15   (186,851)  $    2.87    (58,788)  $    3.49
                          --------  ---------  ---------  ----------  ----------  ---------
Outstanding, December 31  907,380   $    6.18    936,006   $    6.17  1,000,864   $    5.19
                          ========  =========  ==========  =========  ==========  =========
Exercisable, December 31  642,282   $    5.62    537,634   $    5.27    660,978   $    4.42
                          ========  =========  ==========  =========  ==========  =========
</TABLE>

The  following table summarizes information about stock options outstanding
under  the  stock-based  option  plans  at  December  31,  2001:
<TABLE>
<CAPTION>

                           OPTIONS OUTSTANDING            OPTIONS EXERCISABLE
                    ----------------------------------  ----------------------
                                  WEIGHTED
                                   AVERAGE    WEIGHTED                WEIGHTED
                     NUMBER OF    REMAINING    AVERAGE    NUMBER OF    AVERAGE
RANGE OF EXERCISE     OPTIONS    CONTRACTUAL  EXERCISE     OPTIONS    EXERCISE
PRICES:             OUTSTANDING     LIFE        PRICE    EXERCISABLE    PRICE
-----------------   -----------  -----------  ---------  -----------  ---------
<S>                 <C>          <C>          <C>        <C>          <C>
2.15. . . . . . .        4,059     .1 years  $    2.15        4,059  $    2.15
3.30  -  $3.98. .      174,864    2.8 years  $    3.96      174,864  $    3.96
5.33. . . . . . .      290,496    4.0 years  $    5.33      178,209  $    5.33
5.78 - $5.88. . .      231,133    5.0 years  $    5.87      222,862  $    5.87
7.93 - $8.62. . .      133,177    8.2 years  $    8.56       31,230  $    8.47
9.52 - $11.56 . .       35,003    8.2 years  $   10.15        8,622  $   10.41
13.16 - $13.39. .       38,648    6.4 years  $   13.19       22,436  $   13.18
                    -----------  ----------  ----------   ----------  --------
2.15  - $13.39. .      907,380    4.9 years  $    6.18      642,282  $    5.62
                    ===========  ===========  =========  ===========  =========
</TABLE>


     The  Company  follows  APB  25 to account for its stock-based option plans.
Accordingly, no compensation cost has been recognized for the stock-based option
plans.  Had compensation cost for the Company's incentive and non-employee stock
option  plans  been  determined  based  on  the fair value at the grant date for
awards  in  the  years presented consistent with the provisions of SFAS 123, the
Company's  net  income and diluted earnings per share would have been reduced to
the  proforma  amounts  as  follows:

<TABLE>
<CAPTION>


(dollars, except per share, in thousands)   2001    2000    1999
-----------------------------------------  ------  ------  ------
<S>                                        <C>     <C>     <C>
Net income - as reported. . . . . . . . .  $2,716  $2,655  $2,408
Net income - proforma . . . . . . . . . .  $2,371  $2,398  $2,167
Diluted earnings per share - as reported.  $ 0.66  $ 0.65  $ 0.59
Diluted earnings per share - proforma . .  $ 0.57  $ 0.59  $ 0.52
</TABLE>


     There were no stock options granted during 2001.  The weighted average fair
value  per  share  of  options  granted  in 2000, and 1999 amounted to $5.32 and
$7.64,  respectively.  Fair values were estimated on the date of grant using the
Black-Scholes  option-pricing  model  with  the  following  assumptions used for
grants:  expected volatility of 63.5% and 79.5% for 2000 and 1999, respectively;
risk-free  interest rate of 4.95% and 6.00% for 2000 and 1999, respectively; and
expected  lives  of  the  options  of 4.9 years and 4.6 years for 2000 and 1999,
respectively.  There  were  no  cash  dividends  in  any  year.


NOTE  16  -  CONTINGENT  LIABILITIES
     In  the  normal  course  of  business, the Company and its subsidiaries are
periodically  subject  to various pending or threatened lawsuits in which claims
for  monetary  damages  may  be  asserted.  In  the  opinion  of  the  Company's
management,  after  consultation  with  legal  counsel,  none of this litigation
should  have  a  material  adverse effect on the Company's financial position or
results  of  operations.


NOTE  17  -  EMPLOYEE  BENEFIT  PLANS
     The  Company  maintains an employee benefit plan for all eligible employees
of  the  Company  and  its subsidiaries under the provisions of Internal Revenue
Code  Section  401K.  The Summit Retirement Savings Plan (the "Plan") allows for
employee  contributions and, upon annual approval of the Board of Directors, the
Company  matches  employee  contributions  from  one percent to a maximum of six
percent  of  deferred  compensation.  The matching contributions as a percent of
deferred  compensation  were  6%  for each year 2001, 2000 and 1999.  A total of
$157,000,  $124,000,  and  $113,000,  respectively,  in 2001, 2000, and 1999 was
charged  to  operations  for the Company's matching contribution.  Employees are
immediately vested in their contributions to the Plan and become fully vested in
the  employer matching contribution after completion of six years of service, as
defined  in  the  Plan.

     During  1998,  Summit  National  Bank  entered  into  salary  continuation
agreements  with  several  key  management  employees, all of whom are officers.
Under the agreements, the Bank is obligated to provide for each such employee or
his  beneficiaries,  during  a  period  of  20 years after the employee's death,
disability,  or  retirement,  annual  benefits ranging from $38,000 to $113,000.
The  estimated present value of future benefits to be paid is being accrued over
the  period  from  the  effective  date  of  the  agreements  until the expected
retirement  dates  of the participants.  The expense incurred and amount accrued
for  this  nonqualified salary continuation plan, which is an unfunded plan, for
the  years  ended  December 31, 2001, 2000 and 1999 amounted to $62,000, $56,000
and  $52,000, respectively.  To partially finance benefits to be paid under this
plan,  the  Bank  purchased,  and  is the beneficiary of, several life insurance
policies.  Proceeds  from the insurance policies are payable to the Company upon
the  death  of  the  participant.  The  cash  surrender  value of these policies
included  in  the accompanying consolidated balance sheets in "Other assets" was
$2,012,000  and  $1,919,000  at  December  31,  2001  and  2000,  respectively.

NOTE  18  -  FINANCIAL  INSTRUMENTS  WITH  OFF-BALANCE  SHEET  RISK
     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  December 31, 2001 the Company's commitments to extend additional credit
totaled  approximately $47,241,000, of which approximately $2,804,000 represents
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 $4,798,000 at 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.

NOTE  19  -  FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS
     The Company estimates the fair value of financial instruments in accordance
with  SFAS  107,  "Disclosures about Fair Value of Financial Instruments".  Fair
value  is  assumed  to  approximate  book  value  for  the  following  financial
instruments  due  to  the short-term nature of the instrument: cash and due from
banks,  interest-bearing bank balances, federal funds sold, and other short-term
borrowings.  Fair  value  of  investment securities is estimated based on quoted
market  prices where available.  If quoted market prices are not available, fair
values  are  based  on  quoted  market  prices  of  comparable  instruments.

     Fair  value  for  variable rate loans that reprice frequently and for loans
that  mature in less that one year is based on the carrying value, reduced by an
estimate  of  credit losses inherent in the portfolio.  Fair value of fixed rate
real  estate,  consumer,  commercial  and other loans maturing after one year is
based  on  the  discounted  present  value  of  the estimated future cash flows,
reduced  by  an  estimate  of credit losses inherent in the portfolio.  Discount
rates  used  in  these  computations approximate the rates currently offered for
similar loans of comparable terms and credit quality.  The estimated fair market
value of commitments to extend credit and standby letters of credit are equal to
their carrying value as the majority of these off-balance sheet instruments have
relatively  short  terms  to  maturity  and  are  written with variable rates of
interest.

     Fair  value  for demand deposit accounts and variable rate interest-bearing
accounts  is  equal to the carrying value.  Fair value of certificate of deposit
accounts  are estimated by discounting cash flows from expected maturities using
current  interest rates on similar instruments.  Fair value for FHLB advances is
based  on  discounted  cash  flows  using  the  current  market  rate.

     The Company has used management's best estimate of fair values based on the
above assumptions.  Thus, the fair values presented may not be the amounts which
could  be  realized  in  an  immediate sale or settlement of the instrument.  In
addition,  any income tax or other expenses which would be incurred in an actual
sale  or  settlement  are  not  taken  into  consideration  in  the  fair values
presented.  The  estimated fair values of the Company's financial instruments as
of  December  31  are  as  follows: (dollars in thousands)

<TABLE>
<CAPTION>

                                                   2001                     2000
                                          ---------------------   ---------------------
                                          CARRYING    ESTIMATED   CARRYING    ESTIMATED
                                           AMOUNT    FAIR VALUE    AMOUNT    FAIR VALUE
                                          ---------  -----------  ---------  -----------
<S>                                       <C>        <C>          <C>        <C>
FINANCIAL ASSETS:
Cash and due from banks. . . . . . . . .  $   8,579  $     8,579  $   7,604  $     7,604
Interest-bearing bank balances . . . . .        945          945      5,111        5,111
Federal funds sold . . . . . . . . . . .        925          925     16,680       16,680
Investment securities available for sale     47,400       47,400     32,445       32,445
Loans, net . . . . . . . . . . . . . . .    204,104      216,977    177,961      172,234
FINANCIAL LIABILITIES:
Deposits . . . . . . . . . . . . . . . .    218,778      219,914    209,191      209,814
Other short-term borrowings. . . . . . .        500          500        500          500
FHLB advances. . . . . . . . . . . . . .     26,900       26,121     16,000       15,875
</TABLE>


NOTE  20  -  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.  Through its bank subsidiary, the
Company  provides  a  full  range  of banking services and nondeposit investment
services.  The  Finance Company makes and services small, short-term installment
loans  and  related  credit  insurance  products  to  individuals.  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>



(dollars in thousands)         BANK     FINANCE    CORPORATE    TOTAL
---------------------------  --------  ---------  -----------  --------
<S>                          <C>       <C>        <C>          <C>
AT AND FOR THE YEAR ENDED
 DECEMBER 31, 2001
Interest income . . . . . .  $ 18,439  $  1,813         ($47)  $ 20,205
Interest expense. . . . . .     9,776       266         (235)     9,807
                             --------  ---------  -----------  --------
Net interest income . . . .     8,663     1,547          188     10,398
Provision for loan losses .       478       247            -        725
Noninterest income. . . . .     2,293       337          (48)     2,582
Noninterest expenses. . . .     6,763     1,482           14      8,259
                             --------  ---------  -----------  --------
Income before income taxes.     3,715       155          126      3,996
Income taxes. . . . . . . .     1,174        60           46      1,280
                             --------  ---------  -----------  --------
Net income. . . . . . . . .  $  2,541  $     95   $       80   $  2,716
                             ========  =========  ===========  ========
Net loans . . . . . . . . .  $201,682  $  3,368        ($946)  $204,104
                             ========  =========  ===========  ========
Total assets. . . . . . . .  $269,570  $  3,964        ($437)  $273,097
                             ========  =========  ===========  ========
AT AND FOR THE YEAR ENDED
 DECEMBER 31, 2000
Interest income . . . . . .  $ 17,787  $  1,744        ($114)  $ 19,417
Interest expense. . . . . .     9,356       342         (304)     9,394
                             --------  ---------  -----------  --------
Net interest income . . . .     8,431     1,402          190     10,023
Provision for loan losses .       495       159            -        654
Noninterest income. . . . .     1,562       332          (48)     1,846
Noninterest expenses. . . .     5,847     1,514           (5)     7,356
                             --------  ---------  -----------  --------
Income before income taxes.     3,651        61          147      3,859
Income taxes. . . . . . . .     1,155        (6)          55      1,204
                             --------  ---------  -----------  --------
Net income. . . . . . . . .  $  2,496  $     67   $       92   $  2,655
                             ========  =========  ===========  ========
Net loans . . . . . . . . .  $176,088  $  3,314      ($1,441)  $177,961
                             ========  =========  ===========  ========
Total assets. . . . . . . .  $247,360  $  4,000      ($1,525)  $249,835
                             ========  =========  ===========  ========
AT AND FOR THE YEAR ENDED
 DECEMBER 31, 1999
Interest income . . . . . .  $ 13,761  $  1,713         ($97)  $ 15,377
Interest expense. . . . . .     6,594       284         (250)     6,628
                             --------  ---------  -----------  --------
Net interest income . . . .     7,167     1,429          153      8,749
Provision for loan losses .       265       180            -        445
Noninterest income. . . . .     1,262       346          (48)     1,560
Noninterest expenses. . . .     4,998     1,512           10      6,520
                             --------  ---------  -----------  --------
Income before income taxes.     3,166        83           95      3,344
Income taxes. . . . . . . .       874        29           33        936
                             --------  ---------  -----------  --------
Net income. . . . . . . . .  $  2,292  $     54   $       62   $  2,408
                             ========  =========  ===========  ========
Net loans . . . . . . . . .  $144,285  $  2,932      ($1,210)  $146,007
                             ========  =========  ===========  ========
Total assets. . . . . . . .  $188,769  $  3,748      ($1,288)  $191,229
                             ========  =========  ===========  ========
</TABLE>


NOTE  21  -  PARENT  COMPANY  FINANCIAL  INFORMATION
     The  following  is  condensed  financial  information  of  Summit Financial
Corporation  (parent  company  only)  at  December 31, 2001 and 2000 and for the
years  ended  December  31,  2001,  2000,  and  1999.

<TABLE>
<CAPTION>

                          SUMMIT FINANCIAL CORPORATION
                            CONDENSED BALANCE SHEETS

                                         DECEMBER 31,
(dollars in thousands)                  2001     2000
-------------------------------------  -------  -------
<S>                                    <C>      <C>
ASSETS
Cash. . . . . . . . . . . . . . . . .  $   331  $ 1,053
Interest-bearing deposits . . . . . .      613        -
Investment in bank subsidiary . . . .   21,234   18,522
Investment in nonbank subsidiary. . .      215      120
Due from subsidiaries . . . . . . . .    2,243    1,860
Other assets. . . . . . . . . . . . .        2        -
                                       -------  -------
                                       $24,638  $21,555
                                       =======  =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Accruals and other liabilities. . . .  $    35  $    27
Due to subsidiaries . . . . . . . . .        2        -
Shareholders' equity. . . . . . . . .   24,601   21,528
                                       -------  -------
                                       $24,638  $21,555
                                       =======  =======

</TABLE>

<TABLE>
<CAPTION>


                          SUMMIT FINANCIAL CORPORATION
                         CONDENSED STATEMENTS OF INCOME

                           FOR THE YEARS ENDED DECEMBER 31,
(dollars in thousands)                2001    2000    1999
-----------------------------------  ------  ------  ------
<S>                                  <C>     <C>     <C>
Interest income . . . . . . . . . .  $  188  $  191  $  153
Interest expense. . . . . . . . . .       -       -       1
                                     ------  ------  ------
Net interest income . . . . . . . .     188     191     152
Noninterest expenses. . . . . . . .      62      43      57
                                     ------  ------  ------
Net operating income. . . . . . . .     126     148      95
Equity in undistributed net income
 of subsidiaries. . . . . . . . . .   2,636   2,562   2,346
                                     ------  ------  ------
Income before taxes . . . . . . . .   2,762   2,710   2,441
Income taxes. . . . . . . . . . . .      46      55      33
                                     ------  ------  ------
Net income. . . . . . . . . . . . .  $2,716  $2,655  $2,408
                                     ======  ======  ======

</TABLE>


<TABLE>
<CAPTION>

                            SUMMIT FINANCIAL CORPORATION
                         CONDENSED STATEMENTS OF CASH FLOWS

                                                    FOR THE YEARS ENDED DECEMBER 31,
(dollars in thousands)                                    2001      2000      1999
------------------------------------------------------  --------  --------  --------
<S>                                                     <C>       <C>       <C>
OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . .  $ 2,716   $ 2,655   $ 2,408
Adjustments to reconcile net income to net cash
  provided by operating activities:
Equity in undistributed net income of subsidiaries . .   (2,636)   (2,562)   (2,346)
(Increase) decrease in other assets. . . . . . . . . .       (2)        -         2
Increase (decrease) in other liabilities . . . . . . .        8       (13)        2
Amortization of deferred compensation. . . . . . . . .      126       128       101
                                                        --------  --------  --------
     Net cash provided by operating activities . . . .      212       208       167
                                                        --------  --------  --------
INVESTING ACTIVITIES:
Net (increase) decrease in due from subsidiary . . . .     (383)       19       (15)
Net increase (decrease) in due to subsidiary . . . . .        2         -        (3)
                                                        --------  --------  --------
     Net cash (used) provided by investing activities.     (381)       19       (18)
                                                        --------  --------  --------
FINANCING ACTIVITIES:
Repayments of notes payable. . . . . . . . . . . . . .        -         -      (320)
Employee stock options exercised . . . . . . . . . . .       63       561       286
Cash paid in lieu of fractional shares . . . . . . . .       (3)       (2)       (2)
                                                        --------  --------  --------
     Net cash provided (used) by financing activities.       60       559       (36)
                                                        --------  --------  --------
Net (decrease) increase in cash and cash equivalents .     (109)      786       113
Balance, beginning of year . . . . . . . . . . . . . .    1,053       267       154
                                                        --------  -------  ---------
Balance, end of year . . . . . . . . . . . . . . . . .  $   944   $ 1,053   $   267
                                                        ========  ========  ========
</TABLE>

<PAGE>

                              INDEPENDENT AUDITORS' REPORT

The  Board  of  Directors
Summit  Financial  Corporation

     We  have  audited  the  accompanying  consolidated balance sheets of Summit
Financial  Corporation  and subsidiaries (the "Company") as of December 31, 2001
and  2000,  and  the  related  consolidated  statements of income, shareholders'
equity  and  comprehensive  income  and  cash flows for each of the years in the
three-year  period  ended  December  31,  2001.  These  consolidated  financial
statements  are  the  responsibility  of  the  Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements  based  on  our  audits.

     We  conducted  our  audits  in accordance with auditing standards generally
accepted  in the United States of America.  Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test  basis,  evidence  supporting  the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made  by  management,  as well as evaluating the overall
financial  statement  presentation.  We  believe  that  our  audits  provide  a
reasonable  basis  for  our  opinion.

     In  our  opinion,  the  consolidated financial statements referred to above
present  fairly,  in  all  material  respects,  the financial position of Summit
Financial Corporation and subsidiaries as of December 31, 2001 and 2000, and the
results  of  their  operations and their cash flows for each of the years in the
three-year  period  ended  December  31,  2001,  in  conformity  with accounting
principles  generally  accepted  in  the  United  States  of  America.

                                              /s/  KPMG  LLP
Greenville,  South  Carolina
January  18,  2002


                               MANAGEMENT'S REPORT

     The  management  of  Summit  Financial  Corporation  is responsible for the
preparation  and  integrity  of  the consolidated financial statements and other
information  presented  in  this  annual  report.  The  consolidated  financial
statements have been prepared in accordance with accounting principles generally
accepted  in  the  United  States  of  America  and  include  amounts  based  on
management's  estimates  and  judgement  with  respect  to  certain  events  and
transactions.

     Management  is  responsible  for  maintaining a system of internal control.
The  purpose  of the system is to provide reasonable assurance that transactions
are  recorded  in  accordance  with  management's authorization, that assets are
safeguarded  against  loss  or  unauthorized  use, and that underlying financial
records  support  the  preparation of financial statements.  The system includes
the  communication  of  written  policies and procedures, selection of qualified
personnel, appropriate segregation of responsibilities, and the ongoing internal
audit  function.

     The  Board  of  Directors  meets  periodically with Company management, the
internal  auditor,  and  the  independent  auditors, KPMG LLP, to review matters
relative  to  the  quality  of  financial  reporting,  internal control, and the
nature,  extent  and  results  of  the  audit  efforts.

     The  independent auditors conduct an annual audit to enable them to express
an  opinion  on  the Company's consolidated financial statements.  In connection
with the audit, the independent auditors consider the Company's internal control
to  the  extent  they  consider  necessary  to determine the nature, timing, and
extent  of  their  auditing  procedures.


     /s/  J.  Randolph  Potter                         /s/  Blaise B. Bettendorf

     J.  Randolph  Potter                              Blaise  B.  Bettendorf
     President  and  Chief  Executive Officer          Senior Vice President and
                                                       Chief  Financial  Officer

<PAGE>

ITEM  9.     CHANGES  IN  AND  DISAGREEMENTS  WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL  DISCLOSURES

     There  has  been  no  changes  in  or  disagreements  with  accountants  on
accounting  and  financial  disclosure as defined by Item 304 of Regulation S-K.


                                    PART III

ITEM  10.     DIRECTORS  AND  EXECUTIVE  OFFICERS  OF  THE  REGISTRANT

     The  information  required  by  this  item  is set forth under the headings
"Election  of  Directors",  "Executive  Officers  and Compensation" and "Section
16(a)  Beneficial  Ownership  Reporting  Compliance"  in  the  definitive  Proxy
Statement of the Company filed in connection with its 2002 Annual Meeting of the
Shareholders,  which  information  is  incorporated  herein  by  reference.

ITEM  11.     EXECUTIVE  COMPENSATION

     The  information  required  by  this  item  is set forth under the headings
"Directors'  Compensation", "Executive Officers and Compensation", "Compensation
Committee  Report",  and  "Stock  Performance  Graph"  in  the  definitive Proxy
Statement  of  the  Company  filed in connection with its 2002 Annual Meeting of
Shareholders,  which  information  is  incorporated  herein  by  reference.

ITEM  12.     SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL OWNERS AND MANAGEMENT

     The  information  required  by  this  item  is set forth under the headings
"Stock Ownership" and  "Election of Directors" in the definitive Proxy Statement
of the Company filed in connection with its 2002 Annual Meeting of Shareholders,
which  information  is  incorporated  herein  by  reference.

ITEM  13.     CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

     The  information  required  by  this  item  is  set forth under the heading
"Compensation  Committee Interlocks and Insider Participation" and "Transactions
with  Management"  in  the  definitive  Proxy  Statement of the Company filed in
connection  with  its  2002 Annual Meeting of Shareholders, which information is
incorporated  herein  by  reference.


<PAGE>
                                     PART IV

ITEM  14.     EXHIBITS,  FINANCIAL  STATEMENT  SCHEDULES  &  REPORTS ON FORM 8-K

     (a)     List  of  documents  filed  as  a  part  of  this  report:

     1.  Financial  Statements:

          The  following  consolidated  financial  statements  and  report  of
independent  auditors  of  the  Company  are  included in Part I, Item 8 hereof:

          Consolidated  Balance  Sheets  as  of  December  31,  2001  and  2000
          Consolidated  Statements  of  Income  For The Years Ended December 31,
2001,  2000,  and  1999
          Consolidated  Statements  of  Shareholders'  Equity  And Comprehensive
Income  For  The  Years  Ended  December  31,  2001,  2000,  and  1999
          Consolidated Statements of Cash Flows For The Years Ended December 31,
2001,  2000,  and  1999
          Notes  to  Consolidated  Financial  Statements
          Report  of  Independent  Auditors

     2.  Financial  Statement  Schedules:

All other consolidated financial statements or schedules have been omitted since
the required information is included in the consolidated financial statements or
notes thereto referenced in Item 14(a)1 above, or is not applicable or required.

     3.  Exhibits  (numbered  in  accordance  with  Item 601 of Regulation S-K):

     3.1     Articles of Incorporation, as amended (incorporated by reference to
Exhibit 3.1 filed with the Registrant's Registration Statement on Form S-1 Under
The  Securities  Act  of  1933,  File  No.  33-31466).

     3.2     Bylaws,  as amended (incorporated by reference to Exhibit 3.2 filed
with  the  Registrant's  Registration  Statement  on Amendment No. 1 To Form S-1
Under  The  Securities  Act  of  1933,  File  No.  33-31466).

     4.     Form  of  Certificate for Common Stock (incorporated by reference to
Exhibit  4 filed with the Registrant's Registration Statement on Amendment No. 1
To  Form  S-1  Under  The  Securities  Act  of  1933,  File  No.  33-31466).

     10.1     Summit Financial Corporation Incentive Stock Plan (incorporated by
reference  to Exhibit 10.1 filed with the Registrant's Registration Statement on
Form  S-1  Under  The  Securities  Act  of  1933,  File  No.  33-31466).

     10.2     Lease  Agreement  for  North  Pleasantburg  Drive  Bank  Site
(incorporated  by  reference  to  Exhibit  10.2  filed  with  the  Registrant's
Registration  Statement  on  Form S-1 Under The Securities Act of 1933, File No.
33-31466).

     10.3     Employment Agreement of J. Randolph Potter dated December 21, 1998
(incorporated  by  reference  to Exhibit 10.3 filed with the Registrant's Annual
Report  on  Form 10-K for the year ended December 31, 1998, File No. 000-19235).

     10.4     Employment  Agreement  of  Blaise B. Bettendorf dated December 21,
1998  (incorporated  by  reference  to  Exhibit 10.4 filed with the Registrant's
Annual  Report  on  Form  10-K  for  the  year ended December 31, 1998, File No.
000-19235).

     10.5     Summit  Financial  Corporation Restricted Stock Plan (incorporated
by  reference  to Exhibit 10.5 filed with the Registrant's Annual Report on Form
10-K  for  the  year  ended  December  31,  1993,  File  No.  000-19235).

     10.6     Summit  Financial  Corporation  Non-Employee  Stock  Option  Plan
(incorporated  by  reference  to Exhibit 10.6 filed with the Registrant's Annual
Report  on  Form 10-K for the year ended December 31, 1994, File No. 000-19235).

10.7     Employment  Agreement  of  James  B.  Schwiers  dated September 2, 1999
(incorporated  by  reference  to Exhibit 10.7 filed with the Registrant's Annual
Report  on  Form 10-K for the year ended December 31, 1999, File No. 000-19235).

10.8     Summit Financial Corporation 1999 Incentive Stock Plan (incorporated by
reference  to Exhibit 10.8 filed the Registrant's Annual Report on Form 10-K for
the  year  ended  December  31,  1999,  File  No.  000-19235).

10.9     Employment  Agreement  of  James  G.  Bagnal  dated  April  20,  2000
(incorporated  by  reference  to Exhibit 10.9 filed with the Registrant's Annual
Report  on  Form 10-K for the year ended December 31, 2000, File No. 000-19235).

10.10     Lease  Agreement  for  East  North  Street  Bank Site (incorporated by
reference  to  Exhibit  10.10  filed with the Registrant's Annual Report on Form
10-K  for  the  year  ended  December  31,  2000,  File  No.  000-19235)

10.11     Salary Continuation Agreement of J. Randolph Potter dated September 9,
1998  (incorporated  by  reference  to Exhibit 10.11 filed with the Registrant's
Annual  Report  on  Form  10-K  for  the  year ended December 31, 2000, File No.
000-19235)  .

10.12     Salary  Continuation Agreement of Blaise B. Bettendorf dated September
9,  1998 (incorporated by reference to Exhibit 10.12 filed with the Registrant's
Annual  Report  on  Form  10-K  for  the  year ended December 31, 2000, File No.
000-19235).

10.13     Salary  Continuation Agreement of James B. Schwiers dated September 9,
1998  (incorporated  by  reference  to Exhibit 10.13 filed with the Registrant's
Annual  Report  on  Form  10-K  for  the  year ended December 31, 2000, File No.
000-19235).

21     Subsidiaries  of  Summit  Financial  Corporation:
  Summit  National  Bank, a nationally chartered bank, incorporated
in  South  Carolina
  Summit Investment Services, Inc., a subsidiary of Summit National
Bank,  incorporated  in  South  Carolina
   Freedom  Finance,  Inc., a consumer finance company, incorporated
in  South  Carolina

23     Consent  of  KPMG LLP with regard to S-8 Registration Statements for
Summit Financial Corporation Restricted Stock Plan (as filed with the Securities
and  Exchange  Commission,  "SEC",  August  23, 1994, File No. 33-83538); Summit
Financial  Corporation  Incentive  Stock Option Plan (as filed with the SEC July
19, 1995, File No. 33-94962); and Summit Financial Corporation 1995 Non-Employee
Stock  Option  Plan  (as  filed  with the SEC July 19, 1995, File No. 33-94964).


NOTE:  The  exhibits  listed above will be furnished to any security holder upon
written  request  to  Ms.  Blaise B. Bettendorf, Chief Financial Officer, Summit
Financial  Corporation,  Post Office Box 1087, Greenville, South Carolina 29602.
The Registrant will charge a fee of $.50 per page for photocopying such exhibit.


     (b)     No  reports  on  Form  8-K  were filed by the Registrant during the
fourth  quarter  of  2001.

     (c)     Exhibits required to be filed with this report, which have not been
previously  filed  as indicated in Item 14(a) above, are submitted as a separate
section  of  this  report.

     (d)     Not  applicable.



                                 SIGNATURES
     Pursuant  to  the  requirements  of  Section  13 or 15(d) 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,  in the City of
Greenville,  South  Carolina,  on  the  18th  day  of  March,  2002.

                              SUMMIT  FINANCIAL  CORPORATION
                                /s/  J.  Randolph  Potter
                              ---------------------------
Dated:  March  18,  2002        J.  Randolph  Potter,  President

     Pursuant  to  the requirements of the Securities Exchange Act of 1934, this
report  has  been  signed  below  by  the  following  persons  on  behalf of the
Registrant  and  in  the  capacities  and  on  the  dates  indicated.
<TABLE>
<CAPTION>



 SIGNATURE                           TITLE                     DATE
<S>                         <C>                          <C>
  /s/ J. Randolph Potter .  President, Chief Executive   March 18, 2002
--------------------------
J. Randolph Potter . . . .  Officer and Director

  /s/ Blaise B. Bettendorf  Senior Vice President        March 18, 2002
--------------------------
Blaise B. Bettendorf . . .  (Principal Financial and
                            Accounting Officer)
  /s/ C. Vincent Brown . .  Chairman                     March 18, 2002
--------------------------
C. Vincent Brown

--------------------------  Vice Chairman                March 18, 2002
John A. Kuhne

  /s/ David C. Poole . . .  Secretary                    March 18, 2002
--------------------------
David C. Poole

  /s/ James G. Bagnal, III  Director                     March 18, 2002
--------------------------
James G. Bagnal, III

  /s/ Ivan E. Block. . . .  Director                     March 18, 2002
--------------------------
Ivan E. Block

  /s/ J. Earle Furman, Jr.  Director                     March 18, 2002
--------------------------
J. Earle Furman, Jr.

 /s/ John W. Houser. . . .  Director                     March 18, 2002
--------------------------
John W. Houser

 /s/ T. Wayne McDonald . .  Director                     March 18, 2002
--------------------------
T. Wayne McDonald

 /s/ Allen H. McIntyre . .  Director                     March 18, 2002
--------------------------
T. Wayne McDonald

  /s/ Larry A. McKinney. .  Director                     March 18, 2002
--------------------------
Larry A. McKinney

  /s/ James B. Schwiers. .  Director                     March 18, 2002
--------------------------
James B. Schwiers

</TABLE>