Stockholders' Equity

12 Months Ended

Dec. 31, 2016

Stockholders' Equity [Abstract]

Stockholders' Equity

Note 11 - Stockholders’ Equity

Series A Preferred Stock

As part of the private placement offering discussed in Note 9, the Company issued a total of 437,500 shares of its Series A 8.0% Non-Cumulative Convertible preferred stock (“Series A preferred stock”). The liquidation preference is $8.00 per share.  Holders of Series A preferred stock will not be entitled to any further liquidation distribution on the Series A preferred stock. Each share of Series A preferred stock is convertible at the option of the holder into one share of the Company common stock, subject to adjustment upon certain corporate events. The initial conversion rate is equivalent to an initial conversion price of $8.00 per share of the Company common stock. At the option of the Company, on and after December 31, 2015, at any time and from time to time, some or all of the Series A preferred stock may be converted into shares of the Company common stock at the then-applicable conversion rate.  Costs related to the issuance of the preferred stock totaled $247,000 and were netted against the proceeds.

If declared by the Company's board of directors, cash dividends at an annual rate of 8.0% will be paid quarterly in arrears on the last day of March, June, September and December commencing December 31, 2008. Dividends will not be paid on the Company’s common stock in any quarter until the dividend on the Series A Preferred Stock has been paid for such quarter; however, there is no requirement that the Company's board of directors declare any dividends on the Series A Preferred Stock and any unpaid dividends shall not be cumulative.  On June 30, 2016 and September 30, 2016 and December 31, 2016, the Company declared and paid dividends on the Series A Preferred Stock in the amount of $70,000 each.  Prior to that, the Company had not paid a dividend on the Series A Preferred Stock since the first quarter of 2012.

Series B Preferred Stock

On November 21, 2008, the Company entered into an agreement with the United States Department of the Treasury (“Treasury”), pursuant to which the Company issued and sold (i) 23,393 shares of its Series B Fixed Rate Cumulative Perpetual preferred stock, par value $0.01 per share and liquidation preference $1,000 per share, (the “Series B preferred stock”) and (ii) a warrant (the “Warrant”) to purchase 556,976 shares of the Company’s common stock, par value $0.01 per share, for an aggregate purchase price of $23,393,000.  Costs related to the issuance of the preferred stock and warrants totaled $45,000 and were netted against the proceeds.  On September 25, 2013, the Treasury sold all of its 23,393,000 shares of Series B preferred stock to outside investors as part of their ongoing efforts to wind down and recover its remaining investments under the Troubled Asset Relief Program (“TARP’).  The terms of the Series B preferred stock remained the same.  The Treasury continues to hold the Warrant.

The Series B preferred stock qualified as Tier 1 capital and paid cumulative compounding dividends at a rate of 9% per annum. The Series B preferred stock was redeemable by the Company.

On May 11, 2016, the Company redeemed 10,000 shares of the Series B Preferred Stock for a payment of $10,000,000 and on September 8, 2016, the Company redeemed the remaining 13,393 shares for $13,393,000.

On April 15, 2016, the Company paid all unpaid cumulative dividends and interest in arrears on the Series B Preferred Stock totaling $7,590,000.  On May 11, 2016, the Company declared and paid a dividend of $326,000 on the Series B Preferred Stock, on August 11, 2016 it declared and paid a dividend of $301,000 and on September 8, 2016 a final dividend of $77,000 was paid.

The Series B Warrant

The Warrant has a 10-year term and is immediately exercisable at an exercise price of $6.30 per share of Common Stock.   The exercise price and number of shares subject to the Warrant are both subject to anti-dilution adjustments. Pursuant to the Purchase Agreement, Treasury has agreed not to exercise voting power with respect to any shares of Common Stock issued upon exercise of the Warrant. The warrant expires November 21, 2018

Dividend Restrictions

The Company’s ability to declare dividends on its common stock is limited by the terms of the Company’s Series A Preferred Stock and previously Series B Preferred Stock.  The Company may not declare or pay any dividend on, make any distributions relating to, or redeem, purchase, acquire or make a liquidation payment relating to, or make any guarantee payment with respect to its common stock in any quarter until the dividend on the Series A Preferred Stock has been declared and paid for such quarter, subject to certain minor exceptions.