Colony Bankcorp Inc. in Fitzgerald, Ga., will suspend paying a dividend on preferred stock that the Treasury Department holds and interest payments on some junior debt.
The $1.2 billion-asset company said Monday that it can defer dividend payments for up to six consecutive quarters on the $28 million preferred stock issued to the Treasury under the Troubled Asset Relief Program. The company had been paying a dividend of $350,000 per quarter. During the deferral period, the payment will be reported as a preferred dividend requirement that will be deducted from income available to common shareholders.
The company also has deferred its interest payments on all of its junior debt relating to trust preferred securities, which has an outstanding principal of $24.2 million. Under the terms of the trust documents, the company may defer interest payments up to 20 consecutive quarters. The interest payments will be reported as an expense for financial reporting.
Colony did not say why it was suspending the payments and a call to the company was not immediately returned. It did note in its fourth-quarter earnings announcement, however, that it expects chargeoffs and problem assets to “be elevated above historical levels” for the foreseeable future as it contends with real estate values in its markets.
The company, which had suffered steep losses on real estate loans in recent years, has reported modest profits of late as loan-loss provisions have declined. At Dec. 31 its capital ratios were well above “well-capitalized” levels.
