A local bank has chipped off another chunk of TARP.
Essex Bank and its parent Community Bankers Trust Corp. last week paid $2.5 million for 2,500 shares of its preferred stock from the U.S. Treasury Dept. in the company’s latest step to buy its way out of the government’s TARP Capital Purchase Program.
The Glen Allen-based bank holding company has now bought back about 40 percent of its take in the once-controversial program that was designed to prop up banks during the recession.
The Treasury still owns 10,680 shares of Community Bankers’ preferred stock, representing a value of $10.68 million.
President and chief executive Rex Smith said the company plans to continue to make quarterly payments to Treasury, as long as its earnings allow, until it’s completely free from the program.
“It is determined by earnings, but our plan is to try to stay on that $2.5 mark million each quarter,” he said.
Community Bankers took a total of $17.6 million in TARP capital in late 2008. The company fell behind on its dividend payments to the Treasury after the bank faced heavy losses and came under a restrictive regulatory written agreement. It had been in arrears on seven of its TARP dividend payments to the tune of more than $1 million.
But steady profits have given the bank the wherewithal to work its way back and have Smith feeling good.
“Here we are, fast forward to November 2013, and we’ve paid 40 percent [of TARP] back and we’re no longer in any written agreement,” Smith said. “The story for us is we’re a heck of a turnaround.”
The $1.1 billion bank turned a profit of $1.5 million in the third quarter, according to its earnings reports, and has a profit of $3.8 million through the first nine months of the year. That follows $5.5 million in profit last year.
The bank’s TARP dividend rate will increase to 9 percent from 5 percent after February. Smith said the bank isn’t concerned about the hike.
“We’ll have paid enough down that it’ll be a non-event,” Smith said. The bank’s quarterly dividend payment to Treasury will be about $133,000.
The company also has two real estate deals in the works.
An Essex branch is being planned in Annapolis, Md., and the parent company is planning to relocate from its headquarters in Innsbrook to a new space in Deep Run III.
Smith said the move should be completed in March.