restatement822.htm
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):
August
16, 2007
Summit
Financial Group, Inc.
(Exact
name of registrant as specified in its charter)
West
Virginia No.
0-16587 55-0672148
(State
or other
jurisdiction
of (Commission
File
Number) (I.R.S.
Employer
incorporation or
organization) Identification
No.)
300
North Main Street
Moorefield,
West Virginia 26836
(Address
of Principal Executive Offices)
(304)
530-1000
(Registrant’s
telephone number,
including area code)
Not
Applicable
(Former
name or 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))
|
Section
4 – Matters Related to Accountants and Financial
Statements
Item
4.02. Non-Reliance on Previously Issued Financial Statements or a
Related Audit Report or Completed Interim Review
On
August 16, 2007, Management, the Audit Committee of the
Board of Directors and the Executive Committee of the Board of Directors
of
Summit Financial Group, Inc. (“Summit” or the “Company”) concluded that a
restatement of its financial statements and other financial information for
the
year ended December 31, 2006 and for the quarters ended March 31 and June
30 of
2007 (including the financial statements and other financial information
for all
comparative periods contained therein) with respect to the accounting for
certain derivatives transactions under Statement of Financial Accounting
Standards No. 133, Accounting for Derivative Instruments and Hedging
Activities, as amended (“SFAS 133”) is necessary. The Company
intends to amend its Annual Report on Form 10-K for the year ended December
31,
2006 and its Quarterly Reports on Form 10-Q for each of the quarters ended
March
31, 2007 and June 30, 2007 to reflect the proper interpretations of SFAS
133. The Company’s amended filings will also include restatements of
management’s assessment of the Company’s disclosure controls and procedures,
including as of December 31, 2006, a restatement of management’s assessment of
the Company’s internal control over financial reporting. In light of
the restatements, investors should no longer rely on the Company’s previously
filed financial statements and other financial information for the year ended
December 31, 2006 and for the quarters ended March 31 and June 30 of 2007
(including the financial statements and other financial information for all
comparative periods contained therein).
Background
As
a
result of a review by the Staff of the Securities and Exchange Commission
(the
“Staff”) of Summit’s Form 10-K filed for the year ended December 31, 2006, the
Company determined that its interpretation with respect to applying the
short-cut method of hedge accounting under paragraph 68 of SFAS 133 to certain
of its interest rate swaps was incorrect.
In
August
2003, Summit entered into four interest rate swaps with notional values totaling
$36 million that were designated as fair value hedges of certain convertible
rate advances from the Federal Home Loan Bank (“FHLB”). The terms of
the FHLB convertible rate advances include an option of the FHLB to convert
the
debt’s fixed interest rate to a variable rate on a quarterly
basis. Summit evaluated these hedging relationships and concluded
that the short-cut method of hedge accounting could be applied and the
assumption of no ineffectiveness was valid based upon: (a) the
criteria in paragraph 68 of SFAS 133 were met, and (b) the conversion options
in
the FHLB advances were mirrored in the interest rate swaps.
Based
on
comments received from the Staff, Summit determined that the above
interpretation of paragraph 68 is incorrect. The conversion is not
specifically listed in paragraph 68, and the presence of that term prohibits
the
application of the short-cut method of hedge accounting, even if the terms
are
mirrored between the interest rate swap and the hedged item.
Internal
Control Over Financial Reporting
Summit
will restate management’s report on internal control over financial reporting as
of December 31, 2006 to conclude that its accounting for certain derivatives
was
not in accordance with Generally Accepted Accounting Principles and therefore
represents a material weakness as of December 31, 2006. As a result
of this material weakness, management’s restated report will conclude that
Summit’s internal control over financial reporting was ineffective as of
December 31, 2006.
Management,
the Audit Committee of the Board of Directors and the Executive Committee
of the
Board of Directors have discussed these matters with Arnett & Foster,
P.L.L.C., the Company’s independent registered public accounting firm, who
served as Summit’s external auditors for all affected periods.
Section
7 – Regulation FD
Item
7.01. Regulation FD Disclosure
The
Company has elected to furnish a Summary of Financial Results as Originally
Reported and As Restated (Unaudited). This Summary is furnished as
Exhibit 99.1 and is incorporated herein by reference.
Section
9 – Financial Statements and Exhibits
Item
9.01. Financial Statements and Exhibits
(d) Exhibits
99.1 Summary of
Financial Results as Originally Reported and As Restated
(Unaudited)
SIGNATURES
Pursuant
to the requirements of the Securities and 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: August
22,
2007 By: /s/
Julie R.
Cook
Julie R. Cook
Vice President and Chief Accounting Officer