UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 25, 2010
Capital Crossing Preferred Corporation
(Exact name of registrant as specified in its charter)
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Massachusetts
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000-25193
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04-3439366
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(State or other jurisdiction
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(Commission File Number)
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(IRS Employer
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of incorporation)
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Identification No.)
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1271 Avenue of the Americas
46
th
Floor
New York, New York 10020
(Address of principal executive offices, including zip code)
(212) 377-1503
(Registrants telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following provisions (See General
Instruction A.2 below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b))
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Pre- commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c))
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TABLE OF CONTENTS
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain Officers.
Effective January 29, 2010, Lana Franks, the President of Capital Crossing Preferred
Corporation (the Company) will retire from her position. Ms. Franks will continue to serve as a
director of the Company.
On January 25, 2010, the Board of Directors of the Company (the Board) unanimously appointed
Thomas OSullivan, 42, the Companys current Chief Financial Officer, as the Companys President.
Mr. OSullivans appointment is effective January 29, 2010. Mr. OSullivan currently serves as the
Companys Chief Financial Officer and as the Chief Financial Officer of Aurora Bank FSB (Aurora
Bank), the parent of the Company. Mr. OSullivan has
served in a variety of capacities at Aurora
Bank, its predecessor, Lehman Brothers Bank FSB and its parent Lehman
Brothers Holdings Inc. since 2000. The Board also voted to have Mr.
OSullivan continue to perform the duties of Chief Financial Officer until the Board appoints a
permanent replacement.
Item 8.01. Other Events.
As previously announced, the Office of Thrift Supervision (the OTS) has notified Aurora Bank
that the prior approval of the OTS is currently required before payment by the Company of dividends
on its 8.50% Non-Cumulative Exchangeable Preferred Stock, Series D (the Series D preferred stock)
as a result of the cease and desist order entered against Aurora Bank on January 26, 2009, and the
prompt corrective action directive issued to Aurora Bank on February 4, 2009.
Aurora Bank has made a formal request to the OTS to approve the payment of future dividends on
the Series D preferred stock and responded to requests from the OTS for additional information on
the payment of these dividends, however, the OTS has not yet ruled on this request. Accordingly, on
January 25, 2010, the Board voted not to declare or pay the
Series D preferred stock dividend that would
have been payable on February 15, 2010.
There can be no assurance that approval for the payment of future dividends on the Series D
preferred stock will be received from the OTS or when or if such OTS approval requirement will be
removed. Furthermore, any future dividends on the Series D preferred stock will be payable only
when, as and if declared by the Board. The terms of the Series D preferred stock
provide that dividends on the Series D preferred stock are not cumulative and if no dividend is
declared for a quarterly dividend period, the holders of the Series D preferred stock will have no
right to receive a dividend for that period, and the Company will have no obligation to pay a
dividend for that period, whether or not dividends are declared and paid for any future period.
In order to continue to qualify as a real estate investment trust, or a REIT, under the
Internal Revenue Code of 1986, as amended, the Company generally is required each
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year to distribute to its stockholders at least 90% of its net taxable income, excluding net
capital gains. As a REIT, the Company generally is not required to pay federal income tax if it
continues to meet this and a number of other requirements. If the OTS does not grant approval to
the Company to pay dividends to its stockholders in an amount necessary to retain the Companys
REIT qualification, the Company will fail to qualify as a REIT and, as a result, will be subject to
federal income tax.
Forward-Looking Statements
This Current Report on Form 8-K contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. Those forward-looking statements include all statements other than those
made solely with respect to historical fact. Numerous risks, uncertainties and other factors may
cause actual results to differ materially from those expressed in any forward-looking statements.
Forward-looking statements should not be unduly relied upon because they involve known and unknown
risks, uncertainties and other factors, some of which are beyond the control of the Company. Such
risks, uncertainties and other factors include, but are not limited to: limitations by regulatory
authorities on the Companys ability to implement its business plan and restrictions on its ability
to pay dividends; the risk that the failure of the Company to maintain its status as a REIT would
result in the Company being subject to federal income tax, including any applicable alternative
minimum tax and excise tax; the risk that the Company could be disqualified from treatment as a
REIT for the four taxable years following the year during which qualification was lost; further
regulatory limitations on the business of Aurora Bank that are applicable to the Company; the risk
that a decline, or a perceived decline, in Aurora Banks capital situation may result in the
Series D preferred stock being subject to an automatic exchange into preferred shares of Aurora
Bank; the risk that Aurora Banks capital ratios may fall below certain specified levels and that
Aurora Bank may be forced to merge with or be acquired by another entity or begin voluntary
dissolution; the risk that the Series D preferred stock will in the future be delisted from The
NASDAQ Stock Market or will otherwise cease to trade on The NASDAQ Stock Market; the risk that the
Series D preferred stock may not otherwise retain value and/or liquidity; the risk that the Company
may not have adequate cash available, including as a result of the Company being subject to federal
income tax, to pay dividends with respect to the Series D preferred stock; negative economic
conditions that adversely affect the general economy, housing prices, the job market, consumer
confidence and spending habits which may affect, among other things, the credit quality of the
Companys loan portfolios (the degree of the impact of which is dependent upon the duration and
severity of these conditions); the level and volatility of interest rates; changes in consumer,
investor and counterparty confidence in, and the related impact on, financial markets and
institutions; legislative and regulatory actions which may adversely affect the Companys business
and economic conditions as a whole; the impact of litigation and regulatory investigations; various
monetary and fiscal policies and regulations; changes in accounting standards, rules and
interpretations and the impact on the Companys financial statements; changes in the nature and
quality of the types of loans held by the Company; and risks relating to the Companys business
discussed in its
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filings with the Securities and Exchange Commission. These risks, uncertainties and other factors
may cause the actual results, performance or achievements of the Company to be materially different
from the anticipated future results, performance or achievements that are expressed or implied by
the forward-looking statements. Forward-looking statements speak only as of the date they are made,
and the Company undertakes no obligation to update any forward-looking statement to reflect the
impact of circumstances or events that arise after the date the forward-looking statement was made.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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CAPITAL CROSSING PREFERRED CORPORATION
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Date: January 29, 2010
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By:
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/s/ Lana Franks
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Name:
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Lana Franks
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Title:
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President
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