Dearborn Bancorp Inc. in Michigan said it plans to take nearly $40 million in noncash pretax impairment charges for last year's fourth quarter to better align its book value with its tangible book value.
The $1 billion-asset company also said it is no longer seeking a capital infusion from the Treasury Department's Troubled Asset Relief Program.
Dearborn said in a Dec. 31 news release that it planned to take a $34 million impairment charge against goodwill incurred from its 2004 acquisition of the Bank of Washtenaw and its 2007 acquisition of Fidelity Financial Corp. of Birmingham, Mich. The $34 million charge would leave the company with no remaining goodwill.
It said it plans to take a $5.5 million impairment charge against core deposit intangibles and borrower relationship intangibles for the quarter, clearing about half of the intangibles with the remaining $4.5 million expected to amortize over the next 11 years. Those charges are also related to the acquisitions.
Dearborn did not say how the charges would affect fourth-quarter earnings, but it said the noncash charges would have no impact on capital and would better reflect the company's book value.
In the fourth quarter of 2007 the company earned $398,000, or a nickel a share.
Also on Dec. 31, in a filing with the Securities and Exchange Commission, Dearborn said that on Dec. 19 it had withdrawn its application to receive funds from the Treasury, citing among other reasons the severe dilution the company would have incurred from the issuance of warrants. There is no evidence the company was ever approved to receive Tarp money.
Late Monday, Dearborn's stock was down nearly 13% from Friday's closing price, to $1.79. It is down about 40% from early November, when the company announced it was applying for Treasury funds, and nearly two-thirds from a year ago.
Dearborn said that at least part of the downward pressure on the stock has been caused by the goodwill and intangibles.
"The current market price of the company's stock indicates that shareholders may have already discounted the value of its intangible assets," Michael J. Ross, Dearborn's president and chief executive, said in the news release. Mr. Ross said Monday that the company plans to announce its fourth-quarter results Jan. 20.