Mayflower Bancorp, Inc. Announces Mark-Down in Value of Preferred Stock; Remains Well Capitalized

Sep 12, 2008, 01:00 ET from Mayflower Bancorp, Inc.

    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.