Through CPP the treasury intends to invest $25 million in senior preferred stock of Shore Bancshares
Shore Bancshares has received preliminary approval to participate in the US Treasury Department’s Capital Purchase Programme (CPP).
Through this Capital Purchase Programme the treasury intends to invest
$25 million in senior preferred stock of Shore Bancshares with a 5% annual dividend yield for the first five years and 9% thereafter. In addition, the treasury will receive a warrant to purchase $3.75 million of the company’s common stock at a price to be determined at closing.
The closing of the transactions is subject to execution of standard documents which are available for review on treasury’s website and the transaction is expected to occur in the month of January in 2009.
As of September 30, 2008, Shore Bancshares’ capital position was well capitalised by all regulatory standards. With the treasury’s investment, the company’s leverage capital ratio would increase to approximately 12.42% and the total risk-based capital ratio would increase to approximately 15.41%.
Moorhead Vermilye, president and CEO of Shore Bancshares, said: This investment by the treasury provides an attractive and lower cost source of funds to enhance our capital position, further support our lending and the expansion of services into our communities, and provide flexibility to evaluate future opportunities that may develop.