Essex to Cut Quarterly Dividend In Anticipation of Added Reserves
VIRGINIA BEACH, Va. - Essex Financial Partners said it has decided to cut the quarterly dividend on each of its Class A cumulative preferred units to 25 cents, from 40 cents, in recognition of the earnings impact of expected additions to loan-loss reserves.
The reduced dividend is payable Aug. 15 to holders of record July 1. The previous 40-cent payment was made May 15.
Noting that it is undergoing an annual examination by federal and state regulators, Essex said it anticipates that its savings banks will make additional second-quarter allowances for loan portfolios in general and, in some instances, specific valuation allowances for certain residential real estate loans.
Valuation allowances are taken by management for potential, but yet unrealized, loan losses.
$7.5 Million in Reserves
Based on preliminary discussions with regulators, management believes these additional reserves will be about $3 million, bringing total reserves to about $7.5 million. Actual chargeoffs have been less than $80,000 for the first quarter, Essex said.
Lawrence N. Smith, chairman of the partnership, said continuing declines in short-term interest rates have improved net interest margins.