Wave of Fannie Writedowns for Smaller Banks?

First Place Financial Corp., a small Ohio thrift, says it will write down the value of its Fannie Mae preferred stock by $1.3 million and, according to one stock analyst, "a wave of writedowns could be coming for smaller banks." FPFC of Warren, Ohio, declared that its investment in Fannie Mae preferred stock is now in a category called "other-than-temporary," which means it will take a loss on the shares that will flow through to earnings, thus reducing its net income. If FPFC felt it could recover its investment in Fannie's preferred stock it would not have to label the investment "other than temporary" and could avoid taking the charge to earnings. The writedown affects the thrift for the period ending June 30. Daniel Arnold, a stock analyst who covers FPFC for Sandler O'Neill, told MortgageWire that the thrift is not the first financial institution to take a hit on its investment in Fannie Mae's preferred shares, noting that "some big banks have taken hits, but the little ones have not."