Summit Financial Group 8-K Summit Mortgage Exit
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to
Section 13 or 15(d) of The Securities Exchange Act of 1934
Date
of
Report (Date of earliest event reported): November
15, 2006
Summit
Financial Group, Inc.
(Exact
name
of registrant as specified in its charter)
West
Virginia
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0-16587
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55-0672148
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(State
or Other Jurisdiction)
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(Commission
File Number)
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|
(I.R.S.
Employer Identification)
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|
|
|
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300
North Main Street
Moorefield,
WV 26836
(Address
of
principal executive offices) (Zip Code)
(304)
530-1000
Registrant's
telephone number, including area code
Not
Applicable
(Former
name
or former address, if changed since last report.)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
¨ |
Written communications
pursuant to Rule 425 under the Securities Act (17 CFR
230.425) |
¨ |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
¨ |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
|
¨ |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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Section
2 - Financial Information
Item
2.05. Costs Associated with Exit or Disposal Activities
On
November
15, 2006, the Executive Committee of the Board of Directors of Summit Financial
Group, Inc. (“Summit”) decided to either
sell or
terminate substantially all business activities of Summit Mortgage (a division
of Summit’s wholly-owned subsidiary, Shenandoah Valley National Bank), its
residential mortgage loan origination unit (previously reported as its Mortgage
Banking segment). Management anticipates that Summit Mortgage’s operations will
cease on or about January 31, 2007, if not sold prior to that date. The decision
to exit the mortgage banking business was based on this business unit’s poor
operating results and the continuing uncertainty for performance improvement.
Further, Summit desires to concentrate its resources and capital on its
community banking operations, which have a consistent record of exceptional
growth and profitability.
Management
expects the sale or termination of its mortgage banking unit and the results
of
its operations will be accounted for as discontinued operations in accordance
with Statement of Financial Accounting Standards No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets (“SFAS144”). Management anticipates
Summit will recognize a one-time after-tax charge in fourth quarter 2006 of
between $750,000 and $1,250,000 ($0.10 and $0.17 per diluted share,
respectively) as a component of discontinued operations to record the write
down
of furniture, equipment and leasehold improvements to fair value in accordance
with SFAS 144 and to record certain exit costs primarily related to severance
benefits and the termination of operating lease obligations in accordance with
Statement of Financial Accounting Standards No. 146, Accounting for Costs
Associated with Exit or Disposal Activities.
The
table
below details by major type the range of estimated costs expected to be incurred
in connection with this action.
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Range
of Estimated Impairments and Costs (before taxes)
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Low
Estimate
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High
Estimate
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Amount
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Diluted
EPS
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Amount
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Diluted
EPS
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Material
Impairment:
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Impairment
charge to reflect furniture, equipment, and leasehold improvements
at fair
value
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$
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575,000
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$
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0.08
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$
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625,000
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$
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0.09
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Exit
Costs:
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Severance
benefits
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-
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-
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450,000
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0.06
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Termination
of operating lease obligations
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575,000
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0.08
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850,000
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0.12
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Total
estimated costs
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$
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1,150,000
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$
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0.16
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$
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1,925,000
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$
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0.27
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Summit
estimates the range of the amount of the charge that will result in future
cash
expenditures to be between $575,000 and $1,300,000.
Item
2.06. Material Impairments
Information
required by this item is included in Item 2.05 above.
Section
9 - Financial Statements and Exhibits
Item
9.01 Financial Statements and Exhibits
99 News
Release
issued on November 17, 2006 announcing Summit Financial Group, Inc. intends
to
sell
or
terminate its Mortgage Banking segment.
SIGNATURE
Pursuant
to
the requirements of the Securities Exchange Act of 1934, the Registrant has
duly
caused this report to be signed on its behalf by the undersigned hereunto duly
authorized.
SUMMIT
FINANCIAL
GROUP, INC.
Date:
November 17, 2006
By:
/s/
Julie
R. Cook
Julie
R. Cook
Vice
President and
Chief
Accounting
Officer