California United Bank has decided not to accept an $8.3 million capital investment for which the bank recently received preliminary approval as part of the U.S. Department of the Treasury’s capital purchase programme.
David Rainer, president and CEO of California United Bank, noted that given the short timeframe between the release of the capital purchase programme (CPP) guidelines and agreements and the application deadline, the bank felt that the prudent course of action was to submit its application to participate in order to preserve its options and then take the opportunity to carefully consider all aspects of accepting funds awarded through the CPP.
The bank said that in making its decision, the board reviewed the cost of this capital, particularly in light of the current and expected near-term interest-rate environment, as well as the bank’s ability to effectively and profitably deploy the capital while still adhering to its conservative and prudent lending standards.
Mr Rainer added: While California United Bank fully supports the overall purpose of the CPP, upon careful analysis our Board and management concluded that the CPP features and costs are not consistent with our strategic goals, and that participation in the CPP would not be in the best interests of the company and its shareholders.
