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  • inlet_boater inlet_boater Dec 14, 2008 11:20 PM Flag

    No dividend increase

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    • I'm not sure it has been discussed very thoroughly. Of the 20-something threads on the link you provided, only three seemed to understand that there will be no dividend increases or stock buybacks for the next three years. So I guess my question is this: How does the fact that there will be no dividend increases or stock buybacks for the next three years affect the value of the stock to the folks on this discussion board?

      Thanks!

      • 3 Replies to phillipmdickens
      • There is nothing in TARP that says there can not be ANY dividend increases or stock buy backs. What TARP does stipulate is that the Treasury's permission must be obtained prior to any increase or buy back. The one black hole, though, is that there's no indication of what criteria the Treasury will use to make their decision, at least not in the releases I've seen.

        Common dividends: The UST’s consent shall be required for any increase in common dividends per share until the third anniversary of the date of this investment unless prior to such third anniversary the Senior Preferred is redeemed in whole or the UST has transferred all of the Senior Preferred
        to third parties.
        Repurchases: The UST’s consent shall be required for any share repurchases (other than (i) repurchases of the Senior Preferred and (ii) repurchases of junior preferred shares or common shares in connection with any benefit plan in the ordinary course of business consistent with past practice) until the third anniversary of the date of this investment unless prior to such third anniversary the Senior Preferred is redeemed in whole or the UST has transferred all of the Senior Preferred to third parties. In addition, there shall be no share repurchases of junior preferred shares, preferred shares ranking pari passu with the Senior Preferred, or common shares if prohibited as described above under “Restrictions on Dividends”.
        http://www.treas.gov/press/releases/reports/document5hp1207.pdf

      • How many times is thoroughly? Seems to me 1 time is plenty for those who know how to read. Should we have pictures and a slide show?

        Unless BB&T buys back the preferred shares from the govt they have to get permission to raise the dividend or do stock buybacks. What does one need to know beside that?

        As to your last question as to how it affects price. We all threw our crystal balls into the garbage, they just didn't work.

      • I think there is no negative affect on the price of the stock as long as the dividend is not cut. That may be easier said than done in this challenging environment as we face decreasing net income and increasing loan loss reserves. It's not easy to find a "safe" 7% yield these days.

 
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