Carrollton Bancorp Reports First Quarter Net Loss Due To A Write Down Of Trust Preferred Securities And Announces A $0.04 Quarterly Dividend
Carrollton Bancorp, (NASDAQ: CRRB) the parent company of Carrollton Bank, announced a net loss for the first quarter of 2010 of $131,000, compared to net income of $488,000 for the first quarter of 2009. Net loss attributable to common shareholders for the first quarter of 2010 was $267,000 ($0.10 loss per diluted share) compared to net income available to common shareholders of $428,000 ($0.17 per diluted share) for the first quarter of 2009.
Carrollton Bancorp also announced a quarterly dividend of $0.04 per share, payable June 1, 2010 to shareholders of record on May 14, 2010.
The Company’s quarterly operating loss, before taxes, was $294,000 for the quarter ended March 31, 2010 as compared to pre-tax operating income of $709,000 for the quarter ended March 31, 2009. The $1.0 million swing in operating results is primarily a result of a $754,000 write-down of Trust Preferred securities held in the Company’s investment portfolio as well as a $230,000 decline in mortgage related fee income. The mortgage fee income decline results from reduced volume of mortgage originations in 2010 as compared to 2009.
The Company has Trust Preferred securities with a cost basis of $7.3 million and a fair value of $1.8 million as of March 31, 2010. A total of $5.3 million of the unrealized losses of $5.5 million is currently recognized as an adjustment to shareholders equity. These investments are measured for other than temporary impairment on a quarterly basis and the investments are written down through the income statement as the impairment calculations dictate. These investments, which were investment grade at the time of acquisition, are supported by underlying debt obligations of several financial institutions. Impairments result from the deferral of dividends by these institutions or complete failure of the institution. It is possible that continuation of the current economic environment will result in additional write-downs resulting from future deferrals or failures. While this creates volatility in the Company’s earnings, the write-downs have very little effect on the Bank’s regulatory capital position since the regulatory capital calculations allocate enough capital to cover the unrealized losses. Management is hopeful that these investments will increase in value as the economy improves and management will continuously evaluate all strategies to maximize the ultimate value realized from these investments.
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