Trust Preferred Security

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Trust Preferred Security

A security that has every feature of a debt security except for the fact that it is not actually debt. That is, TruPS have fixed coupons, a maturity date when the holder receives the face value, and an early redemption option. However, the holder does not lend the issuer money when he/she purchases a TruPS. Some companies favor TruPS to bonds and preferred stock because they are taxed like bonds but may be included as assets (and not liabilities) on a balance sheet.

References in periodicals archive ?

TruPS are a type of hybrid security that has features of both debt and equity.

Will TruPS survive? The reputation of Trust Preferred Securities as a source of bank capital has gone from good to bad to ugly--worrying investors and banks

On July 25, 2014, Asset Backed Alert reported that the Federal Deposit Insurance Corporation (FDIC) had begun to auction its holdings of trust-preferred (TruP) collateralized debt obligation (CDO) securities.

Implications of the FDICs recent sale of trust-preferred CDO securities

incorporating a redemption profile for bank and insurance TruPS; (4)

Moody's requests comments on proposed updates to its approach to rating TruPS CDOs

In any discussion of TruPS issues, it helps to have a historical understanding of TruPS, which begins with the Boards October 21, 1996, press release approving the use of certain cumulative preferred stock instruments in Tier 1 capital for bank holding companies (BHCs).

Housing market overview: challenges to the housing recovery

The paying agent for the redemption of the Series F TRuPS is the Bank of New York Mellon (NYSE: BK).

-Lincoln National Corporation redeems Series-F Trust Preferred Securities

In addition, 12 performing issuers representing $166.8 million across 22 CDOs redeemed their TruPS.

Fitch: US Bank TruPS CDO Portfolio Notional Declines in 2Q18

These entities form trusts to hold pooled TruPS issuances and then issue CDO securities backed by the TruPS to market investors, which have included private-equity firms and financial institutions.

TruPS structure

The Treasury on Wednesday announced the sale of USD2.2bn of trust-preferred securities (TruPS).

-US Treasury to sell more shares in Citigroup

Furthermore, BAC disclosed that the benefit of the TRUPs redemption during the quarter is approximately $140 million in net annual savings.

Bank of America announces solid 2Q18 earnings

According to the firm, 3Q14 net earnings included USD 700,000 of an after-tax gain on the sale of a commercial property held as other real estate an after-tax charge of USD 168,000 on the redemption of the company's Statutory Trust 1 and Capital Securities (TRUPS), and an after-tax charge of USD 256,000 for losses on disposal of fixed assets incurred in the quarter.

MidSouth Bancorp posts 4.3m of 3Q14 net earnings

(NASDAQ: SBFG), a diversified financial services company, has announced the early redemption of USD10.3m in fixed-rate Trust Preferred Securities (TRUPs), effective as of September 7, 2014.