United American Bank has obtained preliminary approval of its application to sell $8.7 million of preferred stock and preferred warrants to the U.S. Treasury Department under the troubled assets relief programme capital purchase programme.
According to United American Bank, this investment will elevate its already strong tier two total risk based capital ratio to an even healthier ratio of approximately 13.50%.
Margaret Taylor, chairman of the board of directors at United American Bank, said: This additional capital will strengthen our already strong capital position to meet the needs of the communities we serve, and enhance our ability to support our customers in these difficult times.
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.
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. Because Community Bank of the Bay is a designated community development financial institution, no warrants as with other banks, is required.
