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Regulators' attempt to carve out an exemption for small banks from a key part of the Volcker Rule satisfied most institutions that feared getting swallowed up in the Dodd-Frank Act provision, but left others still vulnerable to the regulation and facing significant losses.
January 16 -
Several more banks have disclosed financial hits because they hold securities that regulators declined to exempt from the Volcker Rule. Many of the bankers are upset because they are taking impairment charges on performing securities.
January 21
SB Financial in Defiance, Ohio, has
The $664 million-asset bank will pay a $400,000 penalty to redeem the fixed-rate securities, which were set to mature in September of 2030.
"The early redemption of these securities is a significant step towards achieving our strategic goal of becoming a top-quartile financial services company," said Mark Klein, SB Financial's president and chief executive, in a press release Monday. "Our net interest margin will improve by replacing this high-interest regulatory capital instrument with funding that is substantially more cost-effective."
SB Financial used both cash and a term loan to finance the transaction. The bank has one remaining issuance of variable-rate trust-preferred securities, worth approximately $10.3 million, set to mature in September of 2035.
Trust-preferred securities allow banks to defer interest payments for up to five years. The combination debt and equity instrument was a popular
The securities have faced increasing scrutiny, however, following the financial crisis. Under the Dodd-Frank Act, trust-preferred securities