Premier Financial Bancorp, the parent company of the downtown bank formerly known as Consolidated Bank & Trust, said last week that it received approval to once again begin paying dividends on the $22 million it owes in TARP money.
The company for months had been barred from paying any dividends, whether to the government or to its regular shareholders, because of Consolidated Bank’s recent troubles with bad loans.
In July, those troubles caused Consolidated, and thereby Premier, to become subject to a written agreement with bank regulators. One of the many provisions of that agreement was having to seek approval before paying a dividend.
It left Premier, which owns multiple banks in Kentucky, Ohio, Virginia and West Virginia, in a tough spot, because it has remained profitable despite Consolidated’s troubles.
Getting out from under the agreement was one of the motivating factors in pushing ahead with its plan to create Premier Bank, the new bank brand into which Consolidated was merged in April. https://richmondbizsense.com/2011/04/19/new-bank-makes-its-richmond-premier/
The idea was that by doing away with Consolidated Bank as a standalone bank, the written agreement could be eventually eliminated and shareholders could once again be paid a dividend.
So far, the plan seems to be working.
“We believe that our actions to merge Consolidated Bank and Trust and Adams National Bank into the newly formed Premier Bank on April 8, 2011 helped to facilitate the regulatory approval of the dividend payment,” Premier President and CEO Robert W. Walker said in a prepared statement.
The federal government became a Premier shareholder in October 2009 when the company received $22.25 million in TARP funds through the Capital Purchase Program.
As a result, the U.S. Treasury owns 22,252 preferred shares of Premier, on which a quarterly dividend is supposed be paid on the 15th of February, May, August and November.
Premier had been denied its request to pay its two previous TARP dividends in November and February. Now that it can once again make the payments, Premier will pay more than $800,000 to the Treasury for the accrued missed payments and its current payment.
The next step for Premier will likely be to get released from the written agreement altogether.
“We are hopeful that the Federal Reserve Bank will continue to analyze our company and determine that there is no longer any need for the July 29, 2010 written agreement and it can be terminated,” Walker said.