First Banks has received approval and funding from the US Department of the Treasury to participate in its troubled asset relief programme’s capital purchase programme authorised by the Emergency Economic Stabilisation Act of 2008 which authorises the Treasury to purchase preferred stock and warrants from US financial institutions.
First Banks issued $295.4 million of senior preferred stock and a related warrant to the Treasury pursuant to the standard capital purchase programme (CPP) terms and conditions for non-public companies as described and set forth in the securities purchase agreement — standard terms.
The company intends to use the proceeds from the sale of the preferred stock for general corporate purposes, including additional capital to expand lending operations and strengthen its balance sheet.
Under the CPP, First Banks issued newly created senior preferred stock at a 5% annual dividend rate for the first five years and a 9% annual dividend rate thereafter. The Treasury also received a 10-year warrant which was immediately exercised, to purchase a separate class of newly created senior preferred stock at a 9% annual dividend rate.
Terrance McCarthy, president and CEO of First Banks, said: With the
$295.4 million, along with previous capital raised through our shareholders, we have added over $400 million of new capital in 2008. As a result, we have greatly strengthened our balance sheet and are well positioned to deploy the additional capital to pursue appropriate loan growth opportunities and to continue to aggressively manage the resolution of problem assets in our loan portfolio.
The significant addition of capital will allow us to continue to pursue attractive loan opportunities within our business segments and our mortgage loan segments which are located in some of the largest and robust financial markets in the nation.
