United Community Banks has become the latest Georgia bank to participate in the U.S. Treasury Department's Capital Purchase Program.
The Blairsville-based holding company plans to issue $180 million of senior preferred stock to the Treasury, along with warrants to purchase $27 million in common stock. Final closing of the transaction is expected within 30 days and is contingent upon standard closing documents.
"This investment by the Treasury will further strengthen the company's capital position," said Jimmy Tallent, president and chief executive officer. "United's Tier 1 Risk-Based Capital ratio of 8.66 percent at quarter-end was already well above the regulatory requirements of 6 percent for a ‘well-capitalized' institution. With this new capital, United's Tier 1 ratio will increase to 11.60 percent. Also, United's Total Risk-Based Capital ratio of 11.40 percent would improve to 14.30 percent, both well in excess of the regulatory requirement of 10 percent for a ‘well-capitalized' institution."
The bank, which has six offices in Hall County, is the third largest Georgia based bank. SunTrust and Synovus, the two largest, already have announced their participation in the Capital Purchase Program, part of the U.S. Treasury's Troubled Asset Relief Program, designed to encourage U.S. financial institutions to build capital and increase the flow of financing to the nation's businesses and consumers.
SunTrust received a $3.5 billion federal investment while Synovus received $973 million.
Like many community banks, United has suffered losses as a result of the sluggish housing market. In the third quarter, United reported a $39.9 million loss, much of which was attributed to economic pressures on the housing market, particularly in the Atlanta area, where United has expanded in recent years.
In Tuesday's announcement, Tallent hinted that United may be looking for opportunities to expand.
"United was already above the well-capitalized levels, but we have been looking for cost-effective opportunities to add to our capital base," Tallent said. "The significant increase in capital will add to an already successful strategy of supporting the growth within our communities through smart, responsible lending to both existing and new customers. It also enables us to consider other strategic opportunities that may arise to expand our franchise."
United Community Banks has assets of $8.1 billion and operates 27 community banks with 108 banking offices located throughout North Georgia, the Atlanta region, coastal Georgia, western North Carolina and east Tennessee.