Over the last decade or so, the answer to most community banks' capital needs has been to issue trust preferred securities. Unfortunately, the trust preferred securities market has been almost as volatile as the equity market for banks in the last 12 months. In 2006, pools issued a record-breaking $30 billion in trust preferred securities. During the first half of 2007, the pools were issuing trust preferred securities at a rate that would have surpassed the total in 2006. Entering 2008, the pools are still extremely quiet. Of the five pools in the market, only two are sporadically funding trust preferred securities. The process of issuing public trust preferred securities does require some additional planning. In the former case, following due diligence, company counsel and the investment bank managing the underwriting must draft a public registration statement.
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