Community Bankers Trust Corp., which got $17.7 million in TARP aid in December 2008, has skipped its
latest dividend payment to the government.
The Glen Allen, Va.-based company is the holding company for Essex Bank. It was slated to pay $221,000 to the Treasury Department this week as a quarterly dividend, but announced Friday that it would defer the payment.
This has been another difficult
year for Community Bankers Trust. The company suffered
a $19.8 million second quarter loss, bringing its total loss for the first
half of the year to $22.9 million. That compares with a loss of $13.2 million
in the first half of 2009.
Community Bankers Trust said
its loss for the latest quarter reflected an additional $21.3 million in
loan loss provisions and a significant write-down in goodwill. The company suspended the quarterly
dividend to its common stockholders after the payment of a cash dividend in
February.
Under TARP's Capital Purchase
Plan, companies that sold preferred stock to the government in return for
taxpayer capital are permitted to defer dividend payments on the shares, but
not without consequences. The
dividend is cumulative and accrues for payment in the future. Additionally, failure to pay six
dividends gives Treasury the right to appoint two of its representatives of the
company's board of directors, giving it a bigger say in a company's
activities.
Community Bankers Trust says
that, given its financial challenges, retaining capital is crucial. Indeed, according to George M. Longest,
Jr., president and chief executive officer, it is of the "utmost priority until
such time as we experience a return to consistent quarterly profitability." He also cited the assessment of each
branch in light of the franchise, as well as unspecified "expense reductions,"
as keys to restructuring and steadying the balance sheet.
Community Bankers Trust posted a $29.3 million loss for all of 2009, yet increased the total compensation of both its chief executive officer and chief financial officer. Longest saw his salary rise by more than 18 percent, to $250,000. He also got a $35,000 bonus, up from $25,000 in 2008.