Farmers Capital Bank Corporation Updates Status of its Investment in GSE Preferred Stocks, Remains 'Well-Capitalized'
September 09 2008 - 6:30PM
PR Newswire (US)
FRANKFORT, Ky., Sept. 9 /PRNewswire-FirstCall/ -- Farmers Capital
Bank Corporation (NASDAQ:FFKT) (the "Company") announced that the
aggregate market value of its investments in Federal National
Mortgage Association ("Fannie Mae") and Federal Home Loan Mortgage
Corporation ("Freddie Mac") preferred stock at the close of
business on Monday September 8, 2008 was $1.8 million compared to
its original purchase amount of $15.5 million. The value of the
Company's investments in these preferred stocks has declined $12.9
million or 88% since June 30, 2008, including a one-day drop of
$6.4 million following the weekend announcement on September 7 that
Fannie Mae and Freddie Mac are suspending dividend payments and
being placed into conservatorship by the Federal Housing Finance
Agency. These preferred stocks were also downgraded by the rating
agencies to below investment grade. It is currently not clear when
or if the Company will recover the value of its investments in
these preferred stocks. The Company will record a non-cash
other-than-temporary impairment charge of approximately $13.7
million this quarter relating to its investments in these preferred
stocks. This represents an after-tax amount of $8.9 million or
$1.21 per share. The Company expects to be able to utilize the tax
benefit of the impairment loss largely as a result of prior-year
capital gains from the sale of a subsidiary and also from other tax
planning strategies. The Company's estimated impairment write-down
is based on the September 8 closing prices of the individual
stocks. The Company continues to monitor the market and will
finalize estimates as necessary. The Company continues to hold its
original investment of 381,935 shares of Freddie Mac Series Z
preferred stock, 120,000 shares of Fannie Mae Series T preferred
stock, and 100,000 shares of Fannie Mae Series S preferred stock.
The Company anticipates remaining "well-capitalized", as defined by
its regulatory authorities, subsequent to the recording of any
impairment charges relating to its preferred stock investments in
Fannie Mae and Freddie Mac. The Company expects its regulatory
total capital ratio to be approximately 12.2% at September 30,
2008. This amount remains above the 10.0% level defined by
regulators as being "well-capitalized". The Company does not
foresee a need to raise additional equity capital as a result of
the expected impairment write-down. This release contains
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 that are based upon
current expectations, but are subject to certain risks and
uncertainties that may cause actual results to differ materially.
Among the risks and uncertainties that could cause actual results
to differ materially are economic conditions generally and in the
subject market areas, overall loan demand, increased competition in
the financial services industry which could negatively impact the
ability of the subject entities to increase total earning assets,
and retention of key personnel. Actions by the Federal Reserve
Board and changes in interest rates, loan prepayments by, and the
financial health of, borrowers, and other factors described in the
reports filed by us with the Securities and Exchange Commission
could also impact current expectations. For more information about
these factors please see our Annual Report on Form 10-K on file
with the SEC. All of these factors should be carefully reviewed,
and readers should not place undue reliance on these
forward-looking statements. These forward-looking statements were
based on information, plans and estimates at the date of this press
release, and the Company does not promise to update any
forward-looking statements to reflect changes in underlying
assumptions or factors, new information, future events or other
changes. DATASOURCE: Farmers Capital Bank Corporation CONTACT: Doug
Carpenter, Farmers Capital Bank Corporation, +1-502-227-1668 Web
site: http://www.farmerscapital.com/
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