MIDDLEBORO, Mass., Feb. 26 /PRNewswire-FirstCall/ -- Mayflower Bancorp, Inc. (Nasdaq: MFLR) (the 'Company') the bank holding company for Mayflower Co-operative Bank (the 'Bank') today reported net income of $387,000 or $.19 per share for its third quarter ended January 31, 2009 as compared to earnings of $289,000 or $.14 per share for the same quarter last year. Diluted earnings per share for the third quarter were $.19 compared to $.14 for the third quarter of last year.
In conjunction with these announcements, Edward M. Pratt, President and Chief Executive Officer of the Company reported that the Company's Board of Directors has declared a quarterly cash dividend of $.10 per share to be payable on March 16, 2009, to shareholders of record as of March 9, 2009.
Mr. Pratt commented further that, 'The Company is pleased to announce the results of its most profitable quarter in more than three years. With those results aided by the successful origination and sale of residential mortgages to the secondary market, the Company marked further progress in the improvement of its net interest margin and in the reduction of its exposure to borrowed funds. Additionally, we have thus far avoided any substantial deterioration of credit quality.'
For the nine months ended January 31, 2009, the Company's net results were significantly impacted by the September 2008 announcement of a Federal conservatorship of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. As previously reported, this announcement prompted the Company to write off the balances of its preferred stock holdings in both entities, and resulted in a gross loss of $1.9 million. The net loss for the 9-month period was $270,000 or $.13 per share as compared to earnings of $787,000 or $.38 per share for the same period one year ago. On a diluted per share basis, the loss per share was $.13 for the 2009 9-month period compared to earnings per share of $.37 for the 2008 9-month period.
Net interest income for the quarter increased by $198,000 or 11.8% to $1.9 million from $1.7 million for the quarter ended January 31, 2008, due to the reduction of interest rates paid on deposit accounts. During the quarter ended January 31, 2009, the Company's net interest margin increased, from 2.95% for the quarter ended January 31, 2008 to 3.34% for the quarter ended January 31, 2009. Average interest earning assets for the quarter decreased from $226.9 million for the quarter ended January 31, 2008 to $224.1 million for the quarter ended January 31, 2009 and average interest bearing liabilities declined slightly from $221.7 million for the quarter ended January 31, 2008 to $221.6 million for the quarter ended January 31, 2009.
The Company made no provision for loan losses for either quarter ended January 31, 2009 or January 31, 2008. The Company provides for loan losses in order to maintain the allowance for loan losses at a level that it believes adequate to absorb potential losses based on known and inherent risks in the portfolio. In determining the appropriate level of the allowance for loan losses, the Company considers its past and anticipated loss experience, evaluations of underlying collateral, prevailing economic conditions, the nature and volume of the loan portfolio, and its levels of non-performing and other classified loans. The loan loss reserve is evaluated on a regular basis and was considered appropriate during both periods.
Non-interest income for the quarter increased by $86,000 as compared to the same quarter in the prior year. This increase was primarily due to an increase of $121,000 in gains realized upon the sale of mortgage loans and to an increase of $25,000 in loan origination and other loan fees. The recent decrease in prevailing mortgage interest rates resulted in increased volumes of fixed-rate residential refinance applications, and the Company was able to profitably sell these new originations. These increases were offset by a decrease of $28,000 in gains on sales of investments, a decrease of $7,000 in customer service fees, and a decrease of $25,000 in other income.
The Company's operating expenses increased by $109,000 or 6.6% for the quarter ended January 31, 2009 as compared to the quarter ended January 31, 2008. This increase was partially the result of an increase of $46,000 in FDIC assessment expense as a function of the scheduled resumption of deposit insurance premiums and an increase of $24,000 or 2.7% in compensation and fringe benefit expense, a result of higher benefit costs. Additionally, data processing expense increased by $13,000, foreclosed property expense increased by $12,000, occupancy and equipment expense increased by $2,000 and other expenses increased by $12,000.
For the nine months ended January 31, 2009, net interest income was $5.5 million, representing an increase of $397,000 or 7.7% compared to the prior year nine-month period. Because of lower funding costs, the Company's net interest margin increased from 3.01% for the nine-months ended January 31, 2008 to 3.28% for nine-months ended January 31, 2009.
