The Virginian-Pilot
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TowneBank said Friday that it received $76.5 million of capital from a new Treasury Department program designed to spur business lending.
The bank, the largest based in Hampton Roads, said it simultaneously redeemed $76.5 million of preferred stock that it issued three years ago for capital from the Treasury's Capital Purchase Program, a part of the Troubled Asset Relief Program.
The Capital Purchase Program made capital available to healthy banks as a way to foster lending during the financial crisis. TowneBank said in 2009 that it had been able to significantly increase its lending in 2008's fourth quarter because of the capital it received from the Treasury.
However, participation in the Treasury program includes a prohibition on payments of bonuses and limits on executive compensation. Among some investors, use of the Treasury funds raised questions about a bank's financial strength.
A handful of other banks in Virginia, including Norfolk-based Heritage Bankshares Inc. and Xenith Bankshares Inc. in Richmond, have signed up for the Treasury's new Small Business Lending Fund. The $30 billion fund, part of the Small Business Jobs Act of 2010, makes capital available to qualified community banks with assets of less than $10 billion.
The price that a bank pays for the Treasury funds declines as the volume of its small-business lending increases. The dividend that a bank pays on the Treasury capital starts at 5 percent and can drop to 1 percent.
Banks can use capital from the fund to support loans as large as $10 million to businesses with as much as $50 million in annual revenue. The types of loans that are eligible include commercial and industrial loans and loans for owner-occupied non-farm, non-residential real estate.
Tom Shean, (757) 446-2379, tom.shean@pilotonline.com
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Partnership
The last time Towne Bank received millions in TARP funds that were supposed to be leant to the community, they bought a real estate company and spent a large amount of money for front page advertisements in the Pilot. It seems very odd this has never been mentioned in the paper. I wonder if the money given to the Pilot influenced this silence?
This is nothing more than an
This is nothing more than an ad for Towne Bank. This paper has no credibility.
is this not a bail out? Not a sba loan program?
TowneBank said Friday that it received $76.5 million of capital from a new Treasury Department program designed to spur business lending.
The bank, the largest based in Hampton Roads, said it simultaneously redeemed $76.5 million of preferred stock that it issued three years ago for capital from the Treasury's Capital Purchase Program, a part of the Troubled Asset Relief Program.
pilot ...who writes your headlines?
This story has little to nothing to do with the headline.
What you are not told
is the strictest of requirements that apply, the fees and interest rates. Funny, not anywhere in the article did it mention that this is SBA money, which is specifically targeted to Small businesses. Find an SBA lender..and by the way there are some out there that are not banks and those are the ones that you want to deal with. There are only 14 Federally issued SBA Preferred Lender licenses in the US. You can get that list by contacting the SBA or you can email me at sjg12sbriar@gmail.com.