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Wednesday, December 15, 2010

123 TARP Banks Miss November's Dividend Payment

Cumulatively, these tardy banks owe Treasury
roughly $161 million in dividends,
according to SNL

By Taylor Allred and Kevin Curry

The number of financial institutions deferring dividends on their TARP preferred stock rose once again in November, as 123 banks and thrifts failed to make their Nov. 15 dividend payment, according to a Dec. 10 Treasury report. This compares to 115 deferrals in August, 91 deferrals in May and 74 deferrals in February.

The 123 institutions that deferred the latest TARP dividend payment received a total of $3.3 billion in Capital Purchase Program funds, which comprises 1.6% of the $204.9 billion received by the 707 institutions under the CPP.

In total, 135 institutions are delinquent on at least one TARP dividend payment. The U.S. Treasury Department invested $3.4 billion in the delinquent companies, which have now racked up a noncurrent dividend balance of $161.3 million.

Of the 123 dividend deferrers in November, 18 institutions missed their first payment since entering the program. This represents a decline in first-time deferrals from the 28 that deferred payment for the first time in August. Fifteen of the 18 first-timers are bank holding companies, which means they must pay cumulative dividends and missed payments accrue.

Banks without holding company status pay noncumulative dividends, and missed payments do not accrue. In some cases, state regulators can restrict banks from paying dividends if their accumulated earnings do not meet a certain threshold. Some banks also must attain shareholder approval before paying dividends.

Some Down and Dirty Facts
  • Eleven institutions paid their November dividends but still have not paid some previously deferred dividends
  • Three banks that had previously missed dividend payments failed during the most recent payment period. Treasury had invested $19.5 million in Tacoma, Wash.-based Pierce County Bancorp; Sonoma, Calif.-based Sonoma Valley Bancorp; and, Tifton, Ga.-based Tifton Banking Co. The companies had missed four, three and one dividend payments prior to failure, respectively.
  • As of Nov. 30, a total of 14 institutions have paid in full all their previously missed dividend payments to the Treasury
  • Complete SNL Report

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