Nonprime Shakeups

But first, Summit Financial Group Inc. said its board of directors authorized the open market repurchase of up to 225,000 of its outstanding shares of common stock for retirement.

In a filing Wednesday with the Securities and Exchange Commission, Fannie Mae reported it would miss the deadline to file its financial report for the second quarter and said it would not be able to submit it within the five-day extension period beyond Aug. 9 either. The secondary lender cited the missed deadlines were a result of the restatement of past results due to accounting errors, and the review of internal accounting controls, among other reasons.

Fannie added that it realized a net gain on certain mortgage commitments that is expected to “significantly reduce” the previously estimated loss of $2.4 billion in mortgage commitments as of Dec. 31, 2004, and thereby lower the overall related $10.8 billion loss that it previously estimated.

The Washington, D.C.-based company also said it believes its review has uncovered the last of accounting errors, which clears the way to complete the restatement of its 2004 earnings by the end of this year.

Following the release of the filing, Standard & Poor’s Ratings Services said its AA-minus ratings of Fannie, related to the company’s risk to the government, its subordinated debt, and its preferred stock, remain on CreditWatch Negative.

“While the latest update on Fannie Mae’s accounting restatement process revealed some positive developments, it also disclosed an additional accounting error that was discovered as part of the restatement process,” S&P said in an announcement, adding that the current ratings will remain until certain “critical uncertainties are finally clarified.”

Meanwhile, LandAmerica Financial Group Inc. is a step closer to acquiring Capital Title Group Inc., as Capital stockholders have approved the posed merger, according to a press release Thursday. The $251 million deal is expected to close this quarter.

Louisiana-based IBERIABANK Corp. inked an agreement Wednesday to acquire Pulaski Investment Corp. in a transaction valued at $130 million and expected to be consummated prior to yearend.

“This is a tremendous opportunity to solidify our presence in Arkansas, particularly in the central and northwest regions of the state,” IBERIABANK said.

“At the same time, this combination will enhance and aid IBERIABANK’s efforts to meet the post-Katrina needs of the South Louisiana franchise through increased construction real estate, mortgage and title expertise.”

Pulaski represents the second Arkansas-based bank IBERIABANK expects to acquire by yearend. On July 27, Iberia bank said it will buy Pocahontas Bancorp Inc. in a $76.3 million transaction.

NetBank Inc. reported that a decline in mortgage activity contributed to an after-tax loss of $31.4 million for the quarter ended June 30. Plus, net servicing losses nearly tripled from the first quarter to $16.7 million before taxes.

Additionally, the Atlanta-based banker said it is “biased toward the bottom range” of analysts’ forecasts of between 1 cent to a loss of 16 cents in third-quarter earnings per share, although continued operating pressures in the mortgage businesses could drive performance lower than its current expectations.

Originations fell 8 percent from the first quarter to $2.58 billion in part due to a reduction in its menu of nonconforming products.

“Quarterly results remain unacceptable,” said NetBank Chairman and Chief Executive Douglas K. Freeman in an announcement. “The company’s performance continues to be adversely impacted by the flat yield curve and relentless pricing and operating pressures we and other institutions are experiencing on the mortgage side of our businesses.”

In light of these conditions, NetBank said it has made staffing reductions in under performing areas and is pursuing the sale of its mortgage servicing platform and portfolio of mortgage servicing rights.

Fieldstone Investment Corp. reported $3.8 million second quarter net income, down about 71 percent from the first quarter. It said earnings were affected by market driven factors, including a meager 0.3 percent gain-on-sale for mortgage loans which it blamed on a $4.5 million pre-tax home equity loan charge.

“In response to the challenging environment, we are changing our products, pricing and commission plans and are consolidating our branch operations,” although it intends to keep building its origination franchise, Fieldstone said in the written statement.

Saxon Capital Inc. agreed to be acquired by Morgan Stanley for $706 million in transaction expected to be completed in the fourth quarter, according to an announcement.

“Morgan Stanley’s scale, access to funding and strong mortgage franchise will all help to enhance Saxon’s business, particularly as we see increased competition in a consolidating market,” the Saxon Mortgage parent stated.

Morgan Stanley said acquiring Saxon “facilitates our goal of achieving vertical integration in the residential mortgage business, with ownership and control of the entire value chain, from origination to capital markets execution to active risk management.”