Community Bankers Trust defers dividend payment on TARP-related stock

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Glen Allen-based Community Bankers Trust Corp. will defer a $221,000 dividend payment on stock issued to the federal government in return for a cash infusion through the Troubled Asset Relief Program (TARP).

Community Bankers, the holding company for Essex Bank, issued preferred stock to the Treasury Department in receiving $17.7 million on Dec. 19 through the TARP Capital Purchase Program. Terms of the agreement require the company to pay a quarterly dividend rate of 5 percent for the first five years and 9 percent after that.

Under the agreement, the company is allowed to defer dividend payments, but money due the government will accrue. Failure to pay dividends for six dividend periods would trigger rights allowing holders of the preferred stock to appoint the company’s board of directors.

Community Bankers suspended quarterly payment of its common stock dividends after February.

The company reported a loss of $19.9 million in the second quarter, down from a loss of $23 million for the same period last year. The loss primarily was caused by $21.3 million in loan loss provisions and an impairment charge of $5.7 million for nontax deductible goodwill.

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