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Weststar Financial not to participate in U.S. Treasury’s CPP

The company's capital ratios are higher than the well-capitalised regulatory ratios

Weststar Financial Services, the parent company of Bank of Asheville, has declined to participate in the capital purchase programme of the U.S. Treasury’s troubled asset relief programme.

In January 2009, the company received notice that its application for $5.1 million in capital under the capital purchase programme (CPP) had received the U.S. Treasury’s preliminary approval.

The company’s capital ratios are substantially in excess of the well-capitalised regulatory ratios and its asset quality has been significantly better than the industry average, said Weststar Financial.

Gordon Greenwood, president and CEO, said: We have performed due diligence and concluded that the significant expense of the programme and challenge to prudently and profitably deploy the capital were inconsistent with our long-term strategic objectives and that participation in the CPP would not be in the best interest of the company’s shareholders.

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.