Summit Financial Group Inc. in Moorefield, W.Va., said Monday that it has taken a $1.5 million impairment charge against its fourth-quarter earnings because it cannot accurately project the recovery period for preferred securities stock it owns that have declined in value.
The $1 billion-asset holding company said that the charge would reduce its fourth-quarter earnings per share by about 13 cents and that it expects to report earnings per share of between 32 cents and 34 cents for the quarter.
The company said the charge relates to $5.7 million in Fannie Mae and Freddie Mac preferred stock it holds in its available-for-sale investment portfolio. These securities are still rated investment-grade, but in the past year or so their values have declined below what many banks paid for them in the wake of the government-sponsored enterprises' accounting troubles.
Summit said in a news release that it still expects 2005 earnings to top 2004's. The company is expected to report its earnings later this month. Last year Summit reported net income of $10.6 million, or $1.51 cents a share. It said Monday that it expects to report 2005 earnings of $1.54 to $1.56 a share.
