2 Banks Issue Preferred Shares
By: Tim McPartland,
2 smaller banks have issued new preferred shares. They are both non-cumulative with respect to dividends–a requirement for proceeds to be counted as Tier 1 capital. Both issues are redeemable in approximately 5 years, at the option of the issuer. Both new issues pay dividends that are qualified for preferential tax treatment.
Associated Banc-Corp (NYSE:ASB) has sold a new preferred stock with a coupon of 5.375%. ASB is a $29 billion dollar banker with headquarters in Wisconsin. ASB is investment grade rated by Moodys and rated a notch below investment grade by Standard and Poor’s.
This new issue from ASB is now trading on the OTC Grey market under the ticker ASBDP and is trading in the area of $25-$25.20/share. If you desire to trade on the OTC Grey market our short primer on the subject is here.
While we are not thrilled with the coupon on this issue it is a quality issue and for those looking for quality without consideration that the issue will move lower when interest rates move higher this issue should be considered.
Customers Bancorp (NASDAQ:CUBI) has issued a 6% preferred issue. This issue is a fixed-to-floating issue. Fixed-to-floating issues carry a fixed coupon for a set period of time and then the coupon floats at a fixed rate plus 3 month libor.
This new issue from CUBI carries the 6% coupon until 12/2021 and then moves to a floating rate of 3 month libor plus 4.762%. This is the 4th fixed-to-floating rate issue that CUBI has issued in the last 2 years. The other issues have coupons ranging from 6.45% to 7% and they currently are trading at $26.50-$26.75/share. We would expect this new issue to trade up to $25.50-$25.75 in the next 30 days. The issue is currently trading on the OTC Grey market under ticker CTMRP in the $25/share area.
To get more information on preferred stocks, screen them, set up your own portfolio and receive email alerts, go to www.preferred-stock.com now.