Farmers Capital Bank (FFKT) in Frankfort, Ky., has received regulatory approval to repurchase some of its preferred stock.

The $1.8 billion-asset company said Friday that the Federal Reserve Board approved a request to buy 10,000 shares of preferred stock for $10.2 million. The redemption will take out a third of Farmers Capital's Series A preferred stock outstanding.

Farmers Capital said it expects to repurchase the shares during the second quarter.

"We are pleased to be able to repay a portion of our outstanding preferred stock," Lloyd Hillard Jr., the company's president and chief executive, said in a press release. "Repurchasing the shares not only lessens the impact of the recent increase in the dividend rate, it is also indicative of the continual progress we've made in strengthening the overall financial condition of the company."

Farmers Capital will buy the shares, which is issued under the Troubled Asset Relief Program, from private investors. Hillard, discussing the shares earlier this month, said the higher dividend makes it harder to defend his company's independence, though he added that management had a plan to buy back the stock.

"We feel confident that a partial redemption would offset the impact of the [dividend] increase that took place on" Feb. 15, he said.

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