Hyperion Bank has announced that the US Treasury has purchased $1.5 million of preferred stock in the bank
Hyperion Bank has announced that the U.S. Treasury Department, under a section of the original $750 billion troubled assets relief programme called the capital purchase programme, has purchased $1.5 million of preferred stock in the bank.
Under the capital purchase programme (CPP), $250 billion is to be used to purchase preferred stock of healthy banks for the purpose of aiding those banks in increasing the lending that had slowed down as the economy stumbled.
Joseph Matisoff, president and CEO of Hyperion Bank, said: Our capital ratios are such that we would not be able to continue growing the loan portfolio for very long without raising additional capital and the CPP offers an efficient and cost-effective manner to do that, especially since the market for selling bank stock is very poor right now. We will use the CPP funds for exactly the purpose that congress and the U.S. Treasury intended, i.e., to make more loans.
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.