Want to get a handle on the health of the financial sector? Don’t look at the big banks, which have received all kinds of special help from the government. Look at the smaller banks; banks of the size that get seized every Friday by the FDIC. At that level you can see the continued pain and broken-ness of the system.
Now three that have received TARP cash have stopped paying dividends to Uncle Sam (AKA: you).
WSJ: Pacific Capital Bancorp, a Santa Barbara, Calif., lender that got $180.6 million from the Treasury Department in November, has since posted net losses of $49.7 million. Pacific Capital said Monday that it suspended dividend payments on its common and preferred stock as part of a wider effort to save about $8 million per quarter. A bank spokeswoman confirmed that the U.S.’s preferred shares are included in the dividend freeze.
Seacoast Banking Corp. of Florida, of Stuart, Fla., and Midwest Banc Holdings Inc., of Melrose Park, Ill., have also halted their TARP-related dividends, citing the banking industry’s turmoil and a desire to fortify their balance sheets.
Pacific Capital Bancorp (PCBC) looks to be in a world of hurt, with its stock trading at just $3.31, down from a high of over $27 this year, and Moody’s having recently downgraded it.
We enjoyed this bit from the article, as well
Gerard Cassidy, a banking analyst at RBC Capital Markets, said he was surprised that some TARP recipients “already are in such difficult financial situations” that they are no longer making dividend payments. “It goes to show you that the due diligence performed by the Treasury was not sufficient.”
Yes, well, the Treasury wasn’t exactly your typical investor.