FNB United, the bank holding company for CommunityONE Bank, and its wholly owned subsidiary, Dover Mortgage Company, has received $51.5 million as a participant in the U.S. Treasury Department’s capital purchase programme.
The company issued 51,500 shares of senior preferred stock and a related warrant for 2.21 million shares of FNB United common stock to the U.S. Treasury which represents 15% of the senior preferred stock or $7.725 million.
The capital purchase programme (CPP), created by the U.S. Treasury, is a voluntary programme in which selected, healthy financial institutions are encouraged to participate. Approved use of the funds includes providing credit to qualified borrowers, either as companies or individuals, among other things. Such participation is intended to support the economic development of the community and thereby restore the health of the local and national economy.
The preferred stock issued by the company will pay a 5% dividend for the first five years, after which the rate will increase to 9% if the company does not redeem the preferred shares. These preferred shares do not carry voting rights, except in certain limited circumstances. Terms and conditions of the transaction and the preferred stock will conform to those provided by the U.S. Treasury.
Michael Miller, president and CE of FNB United, said: These funds will strengthen our balance sheet, providing the capital we can use to support our communities not only with loans to qualified borrowers, but to assist customers, on a case-by-case basis, to cope with a diminished capacity to repay their loan obligations. The CPP funds help healthy, well-capitalised banks like ours maintain an active lending role in this challenging environment.
