SUMMIT FINANCIAL GROUP, INC. 10% Subordinated Promissory Note Due March 31, 2019

this note does not represent a deposit and is not insured by the federal deposit insurance corporation or any other governmental agency.  this note represents an unsecured obligation of summit financial group, inc.

this note has not been registered under the securities act of 1933, as amended (the “act”), or registered or qualified under the securities laws of any state, and the holder hereof cannot make any sale, assignment or other transfer of any such note except pursuant to an offering of such note duly registered under the act and registered or qualified under any applicable state securities laws, or under such other circumstances as in the opinion of counsel for or satisfactory to the company shall not, at the time, require registration under the act and/or registration or qualification under any state securities laws.

$5,000,000                                                                                                                                                                                                                       March 30, 2009

FOR VALUE RECEIVED, the undersigned, SUMMIT FINANCIAL GROUP, INC., a West Virginia corporation (the “Company”), hereby promises to pay to the order of ALLEGHENY WOOD PRODUCTS, INC. or registered assigns (the “Holder”), the principal sum of FIVE MILLION DOLLARS ($5,000,000) on March 31, 2019 and to pay interest on the unpaid balance thereof at the rate of 10% per annum, as provided for herein.

Section 1.               Definitions .

Section 1.1.           As used herein, the term “Business Day” shall mean any day other than a Saturday, a Sunday or other day on which commercial banks in Moorefield, West Virginia are authorized by law to close.

Section 1.2.           Interest Payment Date shall have the meaning provided in Section 3.

Section 1.3.           As used herein, the term “Junior Securities” means (i) shares of Common Stock of the Company, (ii) shares of any other class or classes of capital stock of the Company, (iii) any other non-debt securities of the Company (whether or not such other securities are convertible into Junior Securities of the Company), or (iv) debt securities of the Company (other than this Note) as to which, in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is provided that such debt securities are not Senior Indebtedness with respect to, or do not rank   pari passu with, this Note.

Section 1.4.           As used herein, the term “Note” shall mean this Note.

Section 1.5.           Note Register shall have the meaning provided in Section 9.1.

Section 1.6.           Notice of Redemption shall have the meaning provided in Section 6.2.

Section 1.7.           As used herein, “Redemption Date” shall mean the date specified in the Notice of Redemption on which the company shall return all or a portion of the Notes.

Section 1.8.           Redemption Price shall have the meaning provided in Section 6.1.

Section 1.9.           As used herein, “Senior Indebtedness” shall mean shall mean any obligation of the Company to its general creditors and the principal (and premium, if any) and interest on the following whether now outstanding or subsequently incurred, assumed or created, including (i) indebtedness of the Company for money borrowed or purchased, similar obligations arising from off-balance sheet guarantees and direct credit substitutes, and obligations associated with derivative products such as interest and foreign exchange rate contracts, commodity contracts, and similar arrangements and (ii) any deferrals, renewals, extensions and refundings of any such Senior Indebtedness; other than (i) any indebtedness or obligation as to which, in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is provided that such obligation (A) is not Senior Indebtedness with respect to the Note or (B) ranks pari passu with this Note, and (ii) indebtedness evidenced by this Note.

Section 1.10          As used herein, the “Special Record Date” shall mean the date fixed by the Company to determine holders of record of this Note which date shall not be more than 15 days nor less than 10 days prior to the date of the proposed payment of defaulted interest pursuant to Section 3.

Section 2.               Principal .  The principal amount of this Note shall be due and payable on March 31, 2019.  Payment of the principal shall be made by check mailed to the address of the Holder of this Note as it appears in the Note Register to be maintained by the Company.

Section 3.               Interest .  Interest on this Note shall begin to accrue on the date hereof and shall be due and payable monthly in arrears on the first day of each month during the term hereof (each an “Interest Payment Date”), commencing May 1, 2009 (or the next Business Day following such date, in the event such date is not a Business Day).  Interest will accrue based on the actual number of days that principal is outstanding over a year of 360 days.  Payments of interest will be made on the Interest Payment Dates to the person in whose name this Note is registered at the close of business on the Regular Record Date which shall be the 15th day of each month next preceding such Interest Payment Date.

Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid (i) to the person in whose name this Note is registered at the close of business on a Special Record Date for the proposed payment of such defaulted interest (to be fixed as described below), notice whereof shall be sent to the Holder of this Note by first-class, postage prepaid mail at his address as it appears in the Note Register not less than 10 days prior to such Special Record Date or (ii) in any other lawful manner.  Subject to the foregoing provision, each Note delivered upon registration of transfer of, or in exchange for or in lieu of, any other Note shall carry the rights to accrue interest and to accrued, but unpaid, interest which were carried by such other Note.  Payment of  interest is to be made by check mailed to the address of the person entitled thereto as it appears in the Note Register to be maintained by the Company.

Section 4.               Subordination/Ranking .

Section 4.1.           (a) All payments of principal and interest pursuant to this Note shall be subordinated, in the manner and to the extent provided in this Note, to the prior payment in full of all “Senior Indebtedness.”  The Company covenants and agrees that, anything herein to the contrary notwithstanding, the indebtedness evidenced by this Note is subordinate and junior in right of payment to all Senior Indebtedness to the extent provided herein, and the Holder of this Note, by such Holder’s acceptance hereof, likewise covenants and agrees to the subordination herein provided and shall be bound by the provisions hereof.  Senior Indebtedness shall continue to be Senior Indebtedness and entitled to the benefits of these subordination provisions irrespective of any amendment, modification or waiver of any term of the Senior Indebtedness or extension or renewal of the Senior Indebtedness.

(b)           In the event that the Company shall default in the payment of any principal of (or premium, if any), or interest on, any Senior Indebtedness when the same become due and payable, whether at maturity or at a date fixed for prepayment or by declaration of acceleration or otherwise, then, upon written notice of such default to the Company by the holder(s) of Senior Indebtedness or any trustee therefor, unless and until such default shall have been cured or waived or shall have ceased to exist, no direct or indirect payment (in cash, property, securities, by set-off or otherwise) shall be made or agreed to be made on account of the principal of (or premium, if any), or interest on, this Note, or in respect of any redemption, repayment, retirement, purchase or other acquisition of this Note.

(c)           In the event of

all Senior Indebtedness (including any interest thereon, whether accruing before or after the commencement of any such proceedings) shall first be paid in full before any payment or distribution, whether in cash, securities or other property, shall be made to any Holder of this Note on account of the principal of, or interest on, this Note.  Any payment or distribution, whether in cash, securities or other property which would otherwise (but for these subordination provisions) be payable or deliverable in respect of this Note shall be paid or delivered directly to the holders of Senior Indebtedness in accordance with the priorities then existing among such holders until all Senior Indebtedness (including any interest thereon accruing after the commencement of any such proceedings) shall have been paid in full.  In the event of any such proceeding, after payment in full of all sums owing with respect to Senior Indebtedness, the Holder of this Note, together with the holders of any obligations of the Company ranking on a parity with this Note, shall be entitled to be paid from the remaining assets of the Company the amounts at the time due and owing on account of unpaid principal of (and premium, if any, and interest on, this Note and such other obligations before any payment or other distribution, whether in cash, property or otherwise, shall be made on account of any capital stock or any obligations of the Company ranking junior to this Note and such other obligations.

(d)           In the event that, notwithstanding the foregoing, any payment or distribution of any character or any security, whether in cash, securities or other property shall be received by any Holder of this Note in contravention of any of the terms hereof, such payment or distribution or security shall be received in trust for the benefit of, and shall be paid over or delivered and transferred to, the holders of the Senior Indebtedness at the time outstanding in accordance with the priorities then existing among such holders for application to the payment of all Senior Indebtedness remaining unpaid, to the extent necessary to pay all such Senior Indebtedness in full.  In the event of the failure of any such Holder to endorse or assign any such payment, distribution or security, each holder of Senior Indebtedness is hereby irrevocably authorized to endorse or assign the same.

(e)           Nothing contained herein shall impair, as between the Company and the Holder of this Note, the obligation of the Company to pay such Holder the principal of, (and premium, if any) and

interest on, this Note or prevent such Holder from exercising all rights, powers and remedies otherwise permitted by applicable law or hereunder upon a default or Even