The Treasury has approved the purchase of up to $9.2 million in senior preferred stock of Carrollton Bancorp
Carrollton Bancorp, the parent company of Carrollton Bank, has received preliminary approval to participate in the US Department of the Treasury’s capital purchase programme as part of the Emergency Economic Stabilisation Act of 2008.
The Treasury has approved the purchase of up to $9.2 million in senior preferred stock of Carrollton Bancorp with a 5% annual dividend for five years and 9% thereafter. In addition, the Treasury will receive warrants to purchase up to $1.4 million of the Carrollton Bancorp common stock.
With the full amount of the Treasury’s investment through capital purchase programme (CPP), the company’s tier one capital ratio would increase to approximately 13.09% and total risk-based capital ratio would increase to approximately 14.37%, according to Carrollton Bancorp.
Robert Altieri, president and CEO, said: In addition to increasing our capital position, the funds will support our lending activities and provide options to evaluate opportunities that may arise in the future.
The US Treasury recently created the capital purchase programme (CPP) which is part of the troubled assets relief programme to encourage qualifying U.S. financial institutions to increase the flow of financing to businesses and consumers, thereby restoring liquidity and stability to the U.S. financial system. Companies participating in the programme must adopt the Treasury Department’s standards for executive compensation and corporate governance, for the period during which Treasury holds equity issued under this programme. These standards generally apply to the chief executive officer, chief financial officer and the next three most highly compensated executive officers. The approval is subject to certain conditions and the execution of definitive agreements.