UPDATE 2-City National, two others see GSE-related charges

jueves 11 de septiembre de 2008 18:57 CEST

(Recasts throughout; adds details, share movement)

BANGALORE, Sept 11 (Reuters) - California lender City National Corp CYN.N and smaller banks like LSB Corp LSBX.O and Gateway Financial Holdings Inc GBTS.O joined a host of U.S. banks which may incur impairment charges from the decline in the value of their investments in the mortgage giants.

LSB and Gateway also expressed concern about their capital levels. LSB said its regulatory capital level will be reduced by the charges, but expects to remain "well capitalized" at Sept 30.

Gateway said it will raise cash to remain "well capitalized" under regulatory standards by the end of third quarter.

Holders of preferred shares issued by Fannie Mae FNM.N and Freddie Mac FRE.N have been hit by the federal bailout of the mortgage giants that called for the Treasury Department to take equity stakes in the companies through new senior preferred shares and eliminated dividends on existing preferred shares, pushing the latter farther down the capital structure.

Earlier this week, big U.S. banks like Wells Fargo & Co (WFC.N: Cotización), Sovereign Bancorp Inc SOV.N and U.S. Bancorp (USB.N: Cotización) said they expect writedowns and non-cash impairment charges related to their exposure to Fannie and Freddie.

City National, the parent of City National Bank, expects to incur a non-cash charge of $12 million to $13 million in the third quarter related to its exposure to Fannie and Freddie.

LSB sees "significant" writedown of investments in the government-sponsored enterprises (GSEs), and expects its net interest income to be "adversely impacted" in the coming quarters.

The parent of River bank said its Freddie and Fannie preferred securities, which had a cost of $10.1 million in June, had a fair value of $1.1 million on Sept 9.   Continuación...