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Berkshire Bancorp Inc. Message Board

  • obamaboy1 obamaboy1 Nov 14, 2011 9:39 PM Flag

    question about 10Q

    Why is it that they weren't allowed to pay dividends on the preferred stock for the last 3 quarters?

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    • The NY Fed told them not to pay it earlier in the year without their approval. Note that it has been accrued so once it is paid it won't affect earnings in any way. To my knowledge they didn't provide specifics on why it can't be paid, but there are generally limitations such as in the NY Banking Law that prohibit the payment of dividends if there isn't sufficient profitability to pay it. Profitability is, I believe, determined as one would on the income statement and not on a cash basis. So given that BERK had big losses the past couple of years the NY Fed probably required that they not pay dividends so that they can shore up their finances. They are obviously in great shape but likely need a full year's profitability in order to reinstate the dividends without going through a big administrative hassle. I'm not sure on the last point, but I believe it is correct.

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