|Trust Preferred Stock
Trust preferred shares are shares issued by a trust which a corporation forms exclusively to purchase subordinated
debt of the corporation.
It generally works like this---
1) The trust issues shares of preferred stock.
2) From the proceeds of the sale the trust purchases a debt issue from the forming corporation.
3) The corporation then pays the trust interest payments which are passed on to you.
Because the forming corporation is now paying interest (instead of dividends) the payments are tax deductable to
the corporation. The payments received by you are not dividends--they are interest--thus they are NOT
eligible for the 15% qualified dividend tax rate.
Most of the issues are $25.00 issues and generally are callable at $25.00 5 years from the date of issue. Interest
is paid quarterly on most of these issues.
Note that the issuer generally has the right to defer interest payments on most of these issues. Payments are
cumulative, but they can be deferred---generally for up to either 20 or 40 quarters without have a default This does
not generally take place with solvent issuers---if they start deferring--they likely will be out of business soon.
Unlike regular preferred shares which generally have no maturity date---most trust preferred shares do have
maturity dates (based upon the underlying debt maturity)
Note that most Trust Preferred Stocks are Bank Trust Preferred Stock
CAUTION---a YELLOW CELL in the 'Earliest Call Date" column means that the issue is NOW CALLABLE
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Clicking on the security description will bring you to a page with an issue recap and the offering Prospectus