Community Bankers Trust Corporation Conditionally Approves But Defers Dividend On TARP Preferred Stock
GLEN ALLEN, Va., Feb. 15, 2012 /PRNewswire/ -- Community Bankers Trust Corporation, the holding company for Essex Bank (the "Company") (NYSE Amex: BTC), announced today that its Board of Directors has conditionally approved the February 2012 payment of its regular quarterly cash dividend with respect to its Fixed Rate Cumulative Perpetual Preferred Stock, Series A, which the Company issued to the United States Department of the Treasury in connection with the Company's participation in the Treasury's TARP Capital Purchase Program in December 2008. The Company's payment of the dividend is conditioned upon the approval of the Company's federal and state regulators, as set forth in the formal written agreement that has been in place since April 2011. The Company has been advised that the required approval is contingent upon the issuance and review of the final regulatory report from a recently concluded full-scope safety and soundness examination.
Because the Company has not yet received formal regulatory approval, the Company has notified the Treasury that it will defer the payment, which is due February 15, 2012, and that it intends to make the payment if and when it receives formal regulatory approval. The Company has previously deferred six quarterly dividend payments with respect to the Preferred Stock.
Under the terms of the Preferred Stock, the Company is required to pay dividends on a quarterly basis at a rate of 5% per year for the first five years, after which the dividend rate automatically increases to 9% per year. The principal amount of each dividend payment is $221,000. The Company may defer dividend payments, but the dividend is a cumulative dividend that accrues for payment in the future. The failure to pay dividends for six dividend periods trigger the right for the holder of the Preferred Stock to appoint two directors to the Company's board. The Treasury has not requested to exercise this right to date.
In addition, the Company's Board of Directors has conditionally approved, subject to the receipt of formal regulatory approval, the payment of all outstanding interest payments that the Company has deferred under its trust preferred securities since September 30, 2010. This payment is also subject to approval of the Company's regulators, as set forth in the written agreement.Rex L. Smith, III, the Company's President and Chief Executive Officer, stated, "We had a good examination, and it is unfortunate that the timing of formal regulatory approval and the deadline for this TARP payment did not coordinate favorably. We believe that it is important to make it clear that we continue to work very closely with our regulators to actively address every supervisory issue regarding our safety and soundness. While the message of the conditional approval of a dividend payment is not the strong message that we had hoped to send, we believe that our improved financial condition and our ongoing efforts to comply with the terms of the written agreement has put us in the position of focusing more on the key concerns of the Board, management and our stockholders." Mr. Smith added, "We believe that the upcoming payment of the TARP dividend and the deferred trust preferred interest, following formal regulatory approval, is an important step this year in bringing current our obligations with key stakeholders. One of our primary goals is to catch up all payments due, and ultimately to pay off our entire TARP obligation, as earnings and our capital needs permit."
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