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First M&F obtains approval to participate in US Treasury CPP

First M&F is expected to participate in the Troubled Asset Relief Programme's Capital Purchase Programme

First M&F, a bank holding company, has received preliminary approval of the US Treasury Department to participate in the Troubled Asset Relief Programme’s Capital Purchase Programme (CPP).

 

The company’s participation is subject to standard closing conditions. The Troubled Asset Relief Programme provides for an investment in the company by the treasury of up to 3% of risk-based assets in the form of preferred stock with common stock warrants of 15% of the preferred investment. The company applied for approval of up to $40 million in non-voting senior preferred shares.

 

The Capital Purchase Programme is intended to increase the flow of credit to worthy borrowers and to restore confidence in the nation’s banking system.

 

The issuers under this capital programme will pay a 5% dividend for the first five years and 9% thereafter unless redeemed. The preferred stock may be redeemed after a minimum of three years. The stock warrants issued will be
10-year warrants.

 

Hugh Potts, Jr, CEO and chairman of First M&F, said: This programme will further strengthen our already well-capitalised balance sheet. We view it as a defensive measure against further weakening in the economy and as an offensive measure, allowing us to grow loans as the opportunities
present themselves.