Lakeland Bancorp has reported the receipt of a $59 million investment by the U.S. Department of Treasury. The investment is part of the Treasury’s capital purchase programme and is in the form of preferred stock.
Lakeland had received preliminary approval of the Treasury’s investment through capital purchase programme (CPP) in December 2008. In order to close on the investment, Lakeland needed to obtain shareholder approval to amend its certificate of incorporation to provide for the issuance of preferred stock.
At its special meeting in January 2009, Lakeland received shareholder approval to issue preferred stock, from which 59,000 shares of preferred stock were issued to the Treasury. As part of the investment, Lakeland issued the Treasury warrants to purchase 949,571 shares of its common stock at an exercise price of $9.32 per share. The warrants are exercisable for a period of 10 years.
Thomas Shara, president and CEO of Lakeland, said: We look forward to putting our new capital to use by providing conservatively underwritten loans to individuals and business owners in the communities and neighbourhoods that we have served for the past 40 years.
The U.S. Treasury’s capital purchase programme is a voluntary programme designed to assist healthy institutions build their capital positions to support the U.S. economy by increasing the flow of financing to the U.S. businesses and consumers. Under the programme, senior preferred stock is issued to the U.S. Department of Treasury. The preferred stock will pay a dividend for the first five years, after which the rate will increase to 9% if the preferred shares are not redeemed by the company.
