Two Missouri-based banks that received bailout funding have decided to defer making dividend payments to the government.
First Banks Inc., which got $295.4 million through the Troubled Asset Relief Program, and Centrue Financial Corp., which got $32.7 million, said they held on to the dividend payments due Aug. 17 to preserve needed cash.
"This is part of First Bank's capital optimization plan to preserve capital through this next cycle," Peggy Lents, a bank spokeswoman, told the St. Louis Business Journal.
The securities that banks issue to the government in return for TARP aid pay an annual dividend of 5 percent.
Under TARP rules, participating banks can defer accrued dividends for up to six quarters. If six quarters pass without dividend payments, the Treasury has the right to appoint to members to the banks' boards of directors.
The decision not to pay the dividends now suggests that the banks plan to stay with the bailout program for the foreseeable future. Other banks, upset at regulatory restrictions that come with taking government money, have in recent months attempted to leave the program as quickly as possible.
Since the banking bailout began, the Treasury Department has given banks and other financial institutions $204 billion in assistance. So far, they have returned $70.7 billion.
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