By missing a sixth quarterly dividend payment, due in May under the Treasury's Troubled Asset Relief Program, a Southern California bank became poised to test how the government will treat repeat delinquencies in the program.
Saigon National Bank, a Westminster, Calif., institution focused on lending to the area's Vietnamese business community, has not paid dividends since obtaining $1.55 million in Tarp funds in December 2008.
"We can't pay a dividend without OCC approval, and they haven't approved payment of the dividend," said Saigon's chief financial officer, Roy Painter, referring to the Office of the Comptroller of the Currency, which regulates the bank.
Saigon National is so far the only Tarp recipient to have missed six dividend payments, a milestone that triggers the Treasury's right to appoint two directors to a bank's board.
A dozen others are coming close, but it is unclear whether the agency will exercise its right to appoint directors.
The government is considering its options, David Miller, the chief investment officer for the Treasury's office of financial stability, told lawmakers at a hearing last month.