Why Issue Trust Preferred Securities vs. Common Equity?
Trust Preferred Securities Common Stock Time to Issue: As soon as one week Undetermined Cost to Issue: 0%-3% Placement Fee Approximately $10,000 for legal. Initial Trustee fees of $4,250 and $3,000 annually, thereafter. Certain issuers may be eligible for the underwriters to reimburse legal costs (up to $10,000) and pay for trustee fees for life of security. Up to 6-7% Placement Fee Documentation for public common offering can cost up to $300,000 Shareholder Dilution: Trust Preferred Securities are not convertible into common stock and therefore are a non-dilutive form of Tier 1 capital. -No control issues -No negative impact on ROE Existing Shareholders are diluted by the amount of the offering Filing Requirements: No filing requirements Public filing required Tax Deductibility: Trust Preferred Securities are a tax-deductible form of Tier 1 regulatory capital for Bank Holding Companies. No tax deductibility for dividend payments Regulatory Capital Treatment: Trust Preferreds can accou
