First M&F writes off goodwill

KOSCIUSKO — First M&F Corp. has revised its previously announced preliminary loss for 2009 of $44.048 million attributable to common shareholders, which included $17.047 million in intangible write off, or a negative ($4.86) basic and diluted earnings per share, to a loss of $60.655 million, which includes $33.819 million in intangible write off, or a negative ($6.69) basic and diluted earnings per share.

The revision came after the completion of testing of goodwill for impairment, which resulted in the write off of the remaining $16.772 million balance of goodwill. The fourth quarter impairment comes after a first quarter write off of $17.047 million in goodwill and other intangibles due to impairment for a total write down in 2009 of $33.819 million.

For the year, the company’s operating loss, net of the $33.819 million in impairments, was $27.658 million, or negative ($3.05) basic and diluted earnings per share. This loss is compared to earnings of $.522 million, or $0.06 basic and diluted earnings per share for 2008. The goodwill impairment is a non-cash charge to earnings, reducing goodwill and stated equity but has no effect on regulatory capital.

The company said it remains well-capitalized.

Earnings for the fourth quarter ended Dec. 31, 2009, were revised from a loss of $10.881 million, or negative ($1.20) basic and diluted earnings per share, to a loss of $27.488 million, or negative ($3.03) basic and diluted earnings per share, after the goodwill write off. The operating loss for the quarter, excluding the $16.772 million in goodwill write off, was $10.882 million, or negative ($1.20) basic and diluted earnings per share. This loss is compared to a loss of $4.300 million, or negative ($.47) basic and diluted earnings per share, for the fourth quarter of 2008. The fourth quarter loss was largely due to real estate loan impairments and write downs of other real estate.

The fourth quarter, 2009 fall in First M&F’s stock price, the continuing stress on the company’s real estate loan portfolio and general economic conditions were all contributing indicators that goodwill might be impaired. The completion of a Dec. 31 test did find goodwill impaired.

Hugh S. Potts Jr., chairman and CEO, said, “As was the case in the first quarter, the write off of goodwill does not affect cash flow, liquidity or regulatory capital. Neither the strength of the company nor future prospects is affected at all. The impairment is a non-cash charge but is in keeping with conservative financial principles.”

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