The Washington Post last week highlighted the largely ignored fact that earlier this year The South Financial Group missed its quarterly TARP dividend payment.

South Financial, which received $347 million in 2008 from the federal government as part of the Troubled Asset Relief Program, announced in January that to preserve capital it was suspending dividends on all remaining outstanding equity and capital instruments.

The affected securities include the series 2008-T preferred stock issued to the US Treasury Department under TARP.

Dozens of TARP recipients have missed dividend payments over the past year, but what made South Financial unusual was that is one of the largest companies to suspend repayment, the March 18 article in the Post reported. 

With around $12 billion in assets, South Financial is one of the 100 largest bank companies in the country.

South Financial has lost more than $1.3 billion since the beginning of 2008.

According to the Post, many of the community banks still holding aid from the Troubled Assets Relief Program are struggling with losses on real estate development loans.

“The ones that are still in TARP are not as healthy as the ones that left,” Linus Wilson, a finance professor at the University of Louisiana at Lafayette, told the paper. He added that the missed payments suggested the government “probably extended TARP too far, and did not do a lot of due diligence.”

Most banks that got federal aid agreed to pay the government a 5 percent dividend in quarterly installments. In some cases, banks that missed payments must make them up later, but other banks were not required to do so.

On the other side of the coin is SCBT Financial Corp. of Columbia, which last year redeemed the nearly $65 million in preferred shares it issued to the federal government under the Troubled Asset Relief Program.