Summit Reports GSE-Linked Charge

Summit Financial Group Inc., Moorefield, W. Va., has announced a fourth-quarter pretax impairment charge of $1.5 million related to preferred stock issued by Fannie Mae and Freddie Mac.Summit said the reason for taking the charge involves the difficulty of projecting the future recovery period of the $5.7 million in preferred stock. "Although the securities are still rated as investment grade, the company recognized the impairment charge at this time, in accordance with generally accepted accounting principles," the holding company said. Summit explained that the securities are held in its available-for-sale portfolio, and therefore the unrealized losses associated with them had already been recorded as "reductions of other comprehensive income." This means that no reductions of investment securities or shareholders' equity were required, and the charge had "no significant effect" on summit's consolidated balance sheet, the company said.