Hoquiam-based Timberland Bancorp, Inc. reported this week that the Federal Reserve Bank has approved the company's request for permission to redeem the remaining preferred shares originally issued in December, 2008 to the U.S. Treasury Department under the Treasury's Capital Purchase Program.
The shares will be redeemed at the liquidation value of $1,000 per share on December 20.
"We are pleased to be able to redeem the shares using existing balance sheet resources," said Michael R. Sand, Timberland president and CEO, in a release. "During the last fiscal year we paid $710,000 in dividends to preferred shareholders. With the dividend rate scheduled to increase to 9 percent on December 23, the dividend expense on the preferred shares would have increased to $1.09 million annually. The purchase of the preferred shares eliminates this future dividend expense."
Timberland originally issued 16,641 shares of Fixed Rate Cumulative Perpetual Stock, Series A, to Treasury in December 2008. On November 13, 2012 Treasury auctioned the preferred shares to private investors. During the quarter ended March 31, 2013, Timberland redeemed 4,576 of the preferred shares at a $255,000 discount from the liquidation value. The remaining 12,065 shares will be redeemed on December 20 and eliminate all outstanding preferred shares from the company's capital structure.