MIDDLEBORO, Mass., Sept. 12 /PRNewswire-FirstCall/ -- Mayflower
Bancorp, Inc. (Nasdaq: MFLR), the parent company of Mayflower Cooperative
Bank, announced today that it will incur a loss of approximately $1.3
million, net of taxes, resulting from the markdown in value of preferred
stock issued by the Federal Home Loan Mortgage Corporation ("FHLMC") and
the Federal National Mortgage Association ("FNMA"). This loss will be
recorded during the Company's second quarter ending October 31, 2008.
This action was taken following the September 7, 2008 announcement that
the Federal Housing Finance Agency had placed FHLMC and FNMA under
conservatorship and that dividend payments on the subject securities were
being suspended. Accordingly, the Company will record a non-cash, other
than temporary gross impairment charge of approximately $1.9 million,
representing the entire value of the investments, during the three months
ending October 31, 2008 relative to its investments in these preferred
stocks. This represents an after-tax charge of $1.3 million or $0.62 per
share. With the outcome of this conservatorship being far from certain and
with subsequent actions providing clear evidence of these investments'
permanent impairment, the Company believes its decision to write these
investments down in accordance with the provisions of Statement of
Financial Accounting Standards No. 115 is appropriate. The Company will
continue to monitor the market and hold its original investments in FHLMC
preferred stock and FNMA and FHLMC auction preferred stock.
The Company anticipates remaining "well capitalized" subsequent to the
recording of these impairment charges. The Company expects its Tier 1
regulatory capital ratio to be approximately 7.6% at September 30, 2008
which is above the 5% level required by regulators to be considered
well-capitalized. The Company does not foresee a need to raise additional
equity capital as a result of this impairment-related writedown.
Edward M. Pratt, President of Mayflower Bancorp, Inc., commented, "The
Company has determined that the recognition of this loss is the most
appropriate action for Mayflower Bancorp, Inc., at this time. We note that
the Company remains well-capitalized under all regulatory guidelines, and
that earnings from operations remain consistent." Mr. Pratt noted further
that the Company expects to be able to declare its normal dividend for the
quarter ending October 31, 2008. Final results for that period are
anticipated to be released at the end of November.
Mayflower Bank is a Massachusetts-chartered co-operative bank with over
$239.6 million in assets, serving Southeastern Massachusetts from its main
office in Middleboro and full-service branch offices in Bridgewater,
Lakeville, Plymouth, Rochester, Wareham and West Wareham, Massachusetts.
The Bank's deposits are insured by the Federal Deposit Insurance
Corporation (FDIC) to applicable limits and by the Share Insurance Fund
(SIF) of Massachusetts for amounts in excess of those limits.
This earnings report may contain certain forward-looking statements,
which are based on management's current expectations regarding economic,
legislative and regulatory issues that may impact the Bank's earnings in
future periods. Factors that could cause future results to vary materially
from current management expectations include, but are not limited to,
general economic conditions, changes in interest rates, deposit flows, real
estate values and competition; changes in accounting principles, policies
or guidelines; changes in legislation or regulation; and other economic,
competitive, governmental, regulatory and technological factors affecting
the Bank's operations, pricing, products and services.
SOURCE Mayflower Bancorp, Inc.