Two stories on Trust Preferred -
First - a local bank that we know went out and found who owned their Trust Preferred. They then indicated that they wanted to buy the bond ($6mm) back. The good news is that they got the attention of the holders. The bad news is they wanted to refinance the debt. When the Trust Preferred came on the market for bid they did not bid enough. They got really tight and did not think thru the true cost of what they had done. Thus they did not get the issue.
Now the rest of the story – Someone bought the debt and started to cause problems. I think they wanted to acquire the bank for a song and dance. They decided to sale the bank. So be careful and seek advice from a professional who has experience.
Second – as a partner in a local firm before I moved to First Century, a Bank (Client) reached out to a big issue that had fallen in price due to failing banks in the issue. They were told that they could not buy theirs back due to size of issue (believe First TN did the issue). My understanding is they paid it off at first opportunity. Based on my knowledge of the Bank, they had to get creative on how they financed the payoff. However they did improve after the downfall in 2008 and could have pulled it off.
Just some thoughts
Andy
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| Jack A. (Andy) Bonner, Jr, CPA, CGMA |
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| Tazewell | New Tazewell | Harrogate | Maynardville | Sneedville | Maryville | Emory Road | |
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Have any of you been able to dive down into your trust preferred and been able to find who owns with the sole purpose of approaching them to negotiate a discounted early prepayment ? Did you use a broker to assist and was that beneficial ? Any thoughts or recommended parties to work with would be great.
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Gordon Johnson
President & CFO
American Bank
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