The preferred stock carries a 5% annual dividend yield for five years and 9% thereafter
Sun Bancorp, the parent company of Sun National Bank, has completed the sale of 89,310 shares of preferred stock, series A under the U.S. Treasury Department’s capital purchase programme for $89.3 million.
The investment represents 3% of total risk-weighted capital as of September 30, 2008. The preferred stock carries a 5% annual dividend yield for five years and 9% thereafter. In addition, the U.S. Treasury received a warrant to purchase up to 1.54 million shares of Sun Bancorp common stock at an exercise price of $8.68.
Thomas Geisel, president and CEO of Sun Bancorp, said: This investment by the Treasury provides an attractive and lower cost source of funds to enhance our capital position. We continue to actively support the financial needs of our customers and communities. The additional capital strength provided through this programme will further support our lending activities and the expansion of services into our communities, as well as provide flexibility to evaluate future opportunities that may arise.
The U.S. 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.