Summit Facing GSE Impairment
Summit Financial Group here plans to recognize $1.5 million of impairment in the fourth quarter relating to its $5.7 million investment in certain preferred stock of Fannie Mae and Freddie Mac.
Summit is the latest in a long line of banks that have taken "other than temporary" impairment charges related to their investment in the GSEs' preferred stock. Summit said the impairment equals $940,000 on an after-tax basis, or $0.13 per diluted share.
Summit continues to own the securities and said it made the decision to recognize impairment "primarily due to the difficulty in accurately projecting the future recovery period of these securities."
The securities are still rated as investment grade, Summit noted. The securities are held in the bank's "available for sale" investment portfolio.
Summit Financial Group is a financial holding company with $1.1 billion of assets and 14 banking locations through its subsidiaries, Summit Community Bank and Shenandoah Valley National Bank. The company also operates Summit Mortgage and Summit Insurance Services.
(c) 2006 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com http://www.sourcemedia.com