Mayflower Bancorp Reports Second Quarter Results and Payment of Dividend

Thursday, December 04, 2008 3:31 PM

MIDDLEBORO, Mass, Dec. 4 /PRNewswire-FirstCall/ -- Mayflower Bancorp, Inc. (Nasdaq: MFLR) today reported a net loss of $907,000 or $.44 per share for its second quarter ended October 31, 2008 as compared to earnings of $256,000 or $.12 per share for the same quarter last year. The diluted loss per share for the second quarter was $.44 compared to diluted earnings per share of $.12 for the second quarter of last year.

For the six-months ended October 31, 2008, the Company's net loss was $657,000 or $.32 per share, compared to earnings of $498,000 or $.24 per share for the same period last year. On a diluted per share basis, the loss for the six-months was $.32 per share compared to diluted earnings per share of $.23 for the same period last year.

Included in the operating results for the second quarter was an other than temporary impairment gross charge of $1.9 million related to the Company's ownership of Federal National Mortgage Association ('Fannie Mae') and Federal Home Loan Mortgage Corporation ('Freddie Mac') preferred and auction rate preferred stock. The net after-tax reduction in earnings as a result of this charge is $1.2 million.

Net interest income for the quarter increased by $171,000 or 10.1% to $1.9 million from $1.7 million for the quarter ended October 31, 2007, due in part to the payoff of a loan previously classified as non-performing and the subsequent receipt of unaccrued interest totaling $27,000. Additionally, the reduction of interest rates has permitted higher costing certificates of deposit to reprice at maturity into lower rates, thereby increasing net interest income. During the quarter ended October 31, 2008, the Company's net interest margin increased from 2.96% for the quarter ended October 31, 2007 to 3.32%. Average interest earning assets for the quarter decreased from $228.2 million for the quarter ended October 31, 2007 to $224.1 million for the quarter ended October 31, 2008 and average interest bearing liabilities declined from $222.0 million for the quarter ended October 31, 2007 to $220.4 million for the quarter ended October 31, 2008.

Non-interest income for the quarter was impacted by the $1.9 million gross Fannie Mae and Freddie Mac write downs, and decreased in total by $1.9 million. Excluding the writedown, non interest income increased by $27,000 for the quarter ended October 2008 as a function of an increase of $17,000 in loan origination fees, an increase of $22,000 in customer service fees, and an increase of $2,000 in other income. These were offset by a decrease of $11,000 in gains on sales of loans and a decrease of $3,000 in gains and losses on sales of investments.

Total operating expenses increased by $189,000 or 11.4% for the quarter ended October 31, 2008. This increase was primarily the result of an increase of $115,000 in losses on and expenses for foreclosed real estate. Also impacting operating expenses were increases of $12,000 in salary and benefit expense, $29,000 for the scheduled resumption of FDIC deposit insurance assessment expense, $10,000 in data processing expense, $6,000 in occupancy and equipment expense, and $17,000 in other expenses.

For the six-months ended October 31, 2008, net interest income was $3.7 million, an increase of $199,000 or 5.8% compared to the prior year six month period. Because of lower funding costs, the Company's net interest margin increased from 3.03% for the six-months ended October 31, 2007 to 3.26% for six-months ended October 31, 2008. Average interest earning assets for the six-months ended October 31, 2008 were $224.6 million as compared to $227.8 million for the six-months ended October 31, 2007 and average interest bearing liabilities were $220.4 million compared to $221.4 million for the same six month period one year ago.

For the six-months ended October 31, 2008, non-interest income was impacted by the $1.9 million Fannie Mae and Freddie Mac write-downs, and decreased in total by $1.9 million. Excluding the write-off, non-interest income was $623,000 for the six months ended October 31, 2008 as compared to $626,000 for the same period last year. This decrease was due to a decrease of $1,000 in gains on sales of loans and a decrease of $17,000 on gains and losses on sales of investments, as offset by an increase of $10,000 in loan origination fees, an increase of $4,000 in customer service fees, and an increase of $1,000 in other income.