First BancTrust, a holding company that owns all of the capital stock of First Bank & Trust, has received approval to participate in the US Treasury’s capital purchase program.
As a result of the approval, the company issued $7.35 million in senior preferred stock series A to the Treasury. This preferred stock issue will bear an annualized dividend rate of 5% for the initial five years it is outstanding, after which, the dividend rate will increase to 9%.
In conjunction with the issuance of this stock and in compliance with the terms of the capital purchase program (CPP) for private institutions, the company has issued $368,000 in senior preferred stock series B which will bear an annualized dividend rate of 9% until it is redeemed. Both series of preferred shares are callable at par in whole or in part after three years or at any time prior to this with regulatory approval.
The company has said that it is not required to issue warrants for common stock to the Treasury; therefore, there will be no dilution of ownership for common stock holders.
Jack Franklin, president and CEO of First BancTrust, said: First Bank remains committed to serving the needs of Edgar, Clark, and Champaign counties. Our expectation is to use the funds to generate additional loans that will enhance the economic activity in the markets we serve.
Our management team prepared a thorough, five-year financial projection which guided our decision to accept these funds. We believe that the utilization of these funds will help promote greater economic growth in the communities we serve and result in a stronger, more profitable financial institution by the time we completely redeem both series of preferred shares.
