Mortgage giants’ meltdown has an effect on M&T Bank
M&T Bank Corp. said in a regulatory filing that it will take an “other-than- temporary” impairment charge in the third quarter for its holdings of Fannie Mae and Freddie Mac preferred stock.
The Buffalo-based bank said it owns $162 million in preferred shares of the two mortgage giants, which were seized by the government Sept. 6 and put into a conservatorship.
As part of the government rescue plan, the common and preferred shares were left outstanding but have been rendered virtually worthless by the expectation that they will suffer heavy losses.
On June 30, the preferred stock owned by M&T was down to $120 million in fair value, and it has “declined significantly” since then, the bank said in its filing Friday with the Securities and Exchange Commission. The final amount of any noncash charge, and any tax benefit that may result, will be determined at the end of the third quarter on Sept. 30.
Even so, the bank said, M&T expects its regulatory capital ratios — which measure its ultimate cushion against losses — “will not be significantly different” than what was reported at June 30.
