Community Bankers Trust pays back TARP Preferred
On Friday Community Bankers Trust announced that they would pay back the dividend that they owed on the preferred shares they issued in relation to getting into the TARP program a few years ago. They had been deliquent of the past 6 payments on the preferred. The stock shot up a rather surprising 23% on Friday after the news. The company said:
“We are pleased to have the ability to begin making our TARP payments again, and to bring all interest payments on our trust preferred securities current at the same time. It shows the excellent progress that the Company continues to make, as well as the close relationship that we have with our regulators to actively address every supervisory issue regarding our safety and soundness. We believe that this is the first step towards more substantive relief under our written agreement and definitely the path to fulfill our TARP obligations. We will continue our efforts towards reducing non-performing loans and increasing profitability to ensure success. At this point, our trends certainly point in the right direction.”
I have to admit I was a little surprised by the move in the stock. I’m not sure I understand the significance of the announcement. I mean, it was inevitable right? The company was stabilizing the business and was getting past the worst of the nonperforming book. I really thought that the market had seen this coming and had it already priced in. Apparently not.