In the News: Three Banks Stop Paying TARP Dividends
Three banks (not major players, but still relevant – collectively accumulated $315.4 million in capital infusions) have stopped paying the government its dividends (although I’m sure they want to) because of financial distress and mounting quarterly losses. Pacific Capital Bancorp (received $180.6 million) has suffered losses of nearly $50 million since receiving funds and has decided to stop paying dividends (common and prefferred). Seacoast Banking Corp (received $50 million) and Midwest Banc Holdings (received $84.8 million) have stopped paying dividends as well in an attempt to toughen up their balance sheets. While these three banks are the only ones being talked about today, rumor has it that several more banks may be considering the same path (although names aren’t mentioned), which is clearly a sign that perhaps the times aren’t quite a-changing as quickly as some would like to believe.
In the grand scheme of things, 3, 4, 10 banks stopping their dividend payments out of 600 isn’t astronomical by any means (the three banks that stopped dividend payments would have paid a total of $16 million a year – so far the Treasury has collected about $4.5 billion in dividends). Nevertheless, it does say something for the government, considering these banks were essentially hand picked as the banks to save, rather than be allowed to fail or bought up. As one terribly insightful investor says, “it tells you of the deep problems of community and regional banks.”
