Because of the uncertainty surrounding federal taxes next year, Norfolk-based Heritage Bankshares Inc. plans to pay shareholders a special cash dividend of 36 cents a share the day after Christmas.
The special dividend includes “an acceleration” 24 cents in total dividends would have paid in quarterly installments next year plus a an additional 12 cents per share.
“Given the unusual circumstances of the fiscal cliff and uncertainty surrounding federal tax treatment of dividends, we believe that payment of this special dividend of 36 cents per share…is in the best interest of our shareholders,” Michael S. Ives, president and CEO of the company, said in a statement. “It allows us to return capital to our shareholders now so that they can benefit from the lower dividend tax rate that is currently set to expire at the end of the year, while also preserving our conservative capital structure and strong balance sheet.”
The company also has reduced the maximum number of shares it plans to buy in its repurchase program, from 116,000 to about 48,000 shares.
Heritage already has repurchased 30,000 shares of its common stock under the repurchase program. That means fewer than 18,000 shares remain available for repurchase under the program. Other terms and conditions of the program – which was recently extended through March 31 – have not been changed.
Ives said the remaining “headroom” under the repurchase program “provides sufficient potential opportunity for smaller shareholders who may be seeking current liquidity and, coupled with the special dividend, should result in an attractive value proposition for our shareholders.“
The special dividend will be paid Dec. 26 to shareholders of record on Dec. 17.
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