Business

Bank Notes |

American Community might take non-cash loss of $2.6 million on Fannie, Freddie shares

American Community Bancshares Inc. said Tuesday that it expected to take a non-cash loss of $2.6 million on its preferred shares of Fannie Mae and Freddie Mac.

American Community originally invested about $2.9million in Fannie and Freddie. But shares of the federally chartered mortgage companies have lost almost all their value since the government took them over Sept. 7. American Community's chief financial officer, Dan Ellis, said the bank planned to hold onto the shares for now. He said he thought the shares would bounce back and the entities would reinstate their dividend payouts.

The estimate for the write-down could change slightly, because it's based on the shares' value as of Sept. 10. The final charge will be determined by their value Sept. 30, which is the last day of the third quarter.

The loss will not result in a cut to the bank's dividend payout or affect American Community's status as “well capitalized” by regulators' levels, the Charlotte bank said in a Securities and Exchange Commission filing.

Wachovia Corp. and Bank of America Corp. have both said they would record losses on their preferred shares of Fannie and Freddie, though Wachovia sold off its shares this summer. BB&T Corp. in Winston-Salem, as well as smaller local banks such as Park Sterling, First Trust, Bank of Granite and Citizens South, have said they do not invest in Fannie and Freddie shares.

American Community said last week that it was selling itself to Yadkin Valley Financial Corp. in Elkin. The transaction is valued at about $92 million.

Christina Rexrode
  Comments