Summit Financial Group Inc. in Moorefield, W.Va., has terminated negotiations to acquire an Alabama thrift company and extended the deadline on a deal to acquire a Virginia banking company.
The $1.3 billion-asset Summit said in a Dec. 10 filing with the Securities and Exchange Commission that it would pay a $10.5 million fee instead of buying Commonwealth Savingshares Corp., a Delaware corporation, and its $324 million-asset SouthBank in Huntsville, Ala.
To pay the fee, Summit said it would take a pretax charge of $9.25 million in the fourth quarter. Insurance would cover the remaining $1.25 million.
Summit said last month that it might buy Commonwealth for $52.5 million in stock and cash, to settle a 2003 lawsuit brought by SouthBank's mortgage subsidiary, Corinthian. The mortgage company claims that Summit Financial LLC, Summit's mortgage subsidiary, unlawfully used Corinthian's trade secrets after hiring former Corinthian employees.
The $10.5 million payment is meant to be both a breakup fee and settlement, Summit said in its filing.
Summit also said it moved to next quarter a closing deadline on its $13.9 million deal to acquire the troubled Greater Atlantic Financial Corp. in Reston, Va.
It announced the deal for the $287 million-asset Greater Atlantic in April and said at the time that it expected the closing to take place this quarter. It did not give a reason for the delay.
Greater Atlantic has lost money in five of its past six fiscal years, mostly because of a failed derivatives strategy and problems in its defunct mortgage lending unit. In late trading Tuesday, Greater Atlantic's shares were down more than 7% from Monday's close, to $4.50.
