Strata Bank Expects Lehman, AIG Hit
Service Bancorp Inc., parent company of Medway-based Strata Bank, has not only seen its $7.2 million preferred stock in Fannie Mae and Freddie Mac become nearly worthless, but expects to write down its $5 million in Lehman Brothers and AIG holdings, as well.
As of Sept. 24, Service Bancorp's $2 million in Lehman securities were worth $183,000 and its $3 million in AIG securities were worth $1.8 million, the company said in its annual report filed with the U.S. Securities and Exchange Commission. Lehman has filed for bankruptcy. AIG has been taken over by the Federal Reserve.
The company expects to take major non-cash charges and write downs during the quarter ended today related to the relative worthlessness of its Fannie, Freddie, Lehman and AIG holdings . The company expects the bank to "incur a substantial loss for that quarter."
Service said the charges would render the bank "undercapitalized," which requires it to file a capital restoration plan with the FDIC.
Should the plan the bank is formulating not be accepted by the FDIC, the bank would be classified as "significantly undercapitalized," the company said.
The company reported a net loss of $2.6 million for its fiscal year ended June 30 compared to net earnings of $1.2 million the previous year.
Friday, Strata announced that bank CEO Pamela Montpelier had left the bank on a personal leave and that Edward A. Hjerpe III, former head of Connecticut-based Webster Bank's Massachusetts and Rhode Island operations had taken her place.
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