World financial news

The meltdown of Fannie Mae’s stock has hit one local bank’s portfolio.

Pulaski Financial Corp. announced that it sold its holdings in the mortgage-finance firm for an after-tax loss of $5.2 million, or 51 cents per diluted share.

In its most-recent quarterly report, Pulaski disclosed that it held 350,000 shares of Fannie Mae preferred stock. At that time, the bank valued the shares at $8 million. The bank was already reporting a loss on the investment, as it listed the total amortized cost of the stock at $8.9 million.

Pulaski said that management determined that the decline in value was not other than temporary, but since since the end of its last fiscal quarter on June 30, the market value of the securities had declined significantly.

The Treasury Department announcement on Sunday that it was placing Fannie Mae into conservatorship and eliminating dividends on its common and preferred securities caused Fannie Mae shares to plummet on Monday cash advances. Pulaski said the shares no longer met its investment criteria.

Despite the loss on the investment, Pulaski said the capitol ratios of its bank are expected to remain above the amounts necessary to be categorized as "well-capitalized" under current regulatory requirements.

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