Community Central defers interest, dividends on notes, preferreds

By Devika Patel

Knoxville, Tenn., May 14 - Community Central Bank Corp. said it deferred the regularly scheduled interest payments on its outstanding $18 million of junior subordinated notes relating to its trust preferred securities and suspended quarterly cash dividends on its noncumulative series A and cumulative series B preferred stock.

The terms of the notes and the trust documents allow the company to defer payments of interest for up to 20 consecutive quarterly periods without penalty.

During the deferral period, the trust will also suspend the payment of dividends on the trust preferred securities. In addition, the company has suspended the payment of cash dividends on its preferred stock.

The company said it believes that this deferral of interest payments and suspension of cash dividends will preserve approximately $1.8 million per year.

"Improving our capital ratios is essential for ensuring the health of the bank and the company during these difficult economic times and is in the best long-term interest of all of our shareholders," president and chief executive officer David A. Widlak said in a press release.

"We believe the actions we have announced today are the most prudent course for our company. We would expect to resume paying dividends when such payments would be consistent with our overall financial performance and capital requirements."

The failure to make six quarterly dividend payments, whether or not consecutive, with respect to the Series A preferred stock would trigger the right of the holders of the Series A preferred stock to appoint two individuals to the company's board of directors.

Community Central is the holding company for Community Central Bank in Mount Clemens, Mich.

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