Private shareholders and the federal government were getting dividends as part of Troubled Asset Relief Program, or TARP.
The government had invested $30 million in Tennessee Commerce, and like other small and regional banks, Tennessee Commerce has not repaid that money.
Ceasing dividend payments to the government could also trigger a provision in the TARP program that would allow the government to appoint two people to the banks board.
The banks stock fell by 60 cents this morning to $6.10 per share in trading on the Nasdaq.
Tennessee banks are last in to some of the problems and hopefully, theyll be the first out, said Paula Johannsen, managing director for the Tampa office of investment bank The Carson Medlin Co.
The bank is in the middle of trying to raise $60 million in common stock.
The bank has stated that capital is not being raised out of concerns of potential credit losses in our portfolio. Instead, the bank said it could use the money for a variety of reasons: including growth, acquisitions of other banks or paying off $8.75 million in debt.
Tennessee Commerce reported Tuesday that credit trends actually are improving and that it made a $1.5 million profit in the second quarter.
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