SANTA PAULA, Calif.--()--Santa Clara Valley Bank (SCVBank) (OTC BB: SCVE) Chairman of the Board, Scott K. Rushing, today announced that the United States Department of the Treasury intends to auction SCVBank’s Series A and Series B Fixed Rate Non-Cumulative Perpetual Preferred Stock (the “Securities”). SCVBank previously issued the Securities to the Treasury pursuant to the Treasury’s Troubled Asset Relief Program Capital Purchase Program. The auction is expected to occur in February 2013.
SCVBank has negative retained earnings. Accordingly, the payment of dividends (including dividends with respect to the Securities) constitutes a reduction in capital subject to the restrictions imposed by federal law. Additionally, also under federal law, a national bank may not declare a dividend if the total amount of all dividends (common and preferred), including the proposed dividend, declared by the national bank in any current year exceeds the total of the national bank's net income for the current year to date, plus two preceding years. The dividend payment restrictions above may be waived by the Office of the Comptroller of the Currency (the “OCC”).
Under an agreement with the OCC (the “OCC Agreement”), SCVBank is also prohibited from paying dividends without prior approval of the OCC. SCVBank paid all dividends on the Securities through February 15, 2010. After SCVBank made its payment of the February 15, 2010 dividend on the Securities, the OCC notified SCVBank of its determination that SCVBank should cease the payment of dividends on the Securities until such time as the OCC Agreement has been terminated. Accordingly, SCVBank has not paid dividends otherwise due on the Securities on May 15, 2010, August 15, 2010, November 15, 2010, February 15, 2011, May 15, 2011, August 15, 2011, November 15, 2011, February 15, 2012, May 15, 2012, August 15, 2012 and November 15, 2012.
The terms of the Securities provide that if dividends on the Securities are not paid for six quarters, whether or not consecutive, the holders of the Securities have the right to vote to appoint two members to the board of directors of SCVBank. Also, the special voting rights associated with the Securities allow the holders to vote as a class for directors separate from the owners of the common and other voting securities.
Founded in 1998, SCVBank currently operates three branches in Santa Paula, Fillmore, and Valencia. Under its stock symbol of SCVE, SCVBank’s stock is traded through McAdams Wright Ragen, Raymond James & Associates Inc., and Monroe Securities. The Bank’s web site is www.SCVBank.com.
Santa Clara Valley Bank Corporation Headquarters
901 East Main Street
Santa Paula, California 93060
Statements concerning future performance, developments or events concerning expectations for growth and market forecasts, and any other guidance on future periods, constitute forward looking statements that are subject to a number of risks and uncertainties. Actual results may differ materially from stated expectations. Specific factors include, but are not limited to, the effect of interest rate changes, and the ability to control costs and expenses, the impact of consolidation in the banking industry, financial policies of the United States government, and general economic conditions.