Salisbury Bancorp Inc., the holding company for Salisbury Bank and Trust Co. in Lakeville, has accepted $8.8 million from the Treasury Department’s Capital Purchase Program, becoming at least the fifth Connecticut bank to participate in the program which aims to encourage lending by boosting banks’ capital.
Salisbury Bank chairman and CEO John F. Perotti said the bank didn’t need the money, but took it anyway to protect itself from the shockwaves of the current economic conditions.
“The bank has capital ratios in excess of those required to be considered ‘well-capitalized’ under FDIC regulations,” Perotti said. “Nevertheless, in order to strengthen our capital position during these uncertain times, we determined to accept this additional capital under the CPP.”
Perotti said his bank will use the money to make more loans in the community.
Salisbury Bank’s acceptance of the money comes at a time when many Connecticut banks are having second thoughts about participating in the CPP due to concerns that the federal government will impose new conditions on those who take the money.
The Hartford Business Journal reported last month that at least 20 Connecticut banks that were interested in CPP funds are now questioning whether it’s worth participating in the program because the terms of it are open-ended and banks that agree to take the money must comply with any future changes made to it.
Meanwhile, several Connecticut banks have come out publicly and said that they don’t want the money, including Rockville Bank, Wethersfield-based Connecticut River Community Bank and Bridgeport-based Peoples’ United Bank.
Regardless, shareholders of Salisbury Bank approved issuing 25,000 shares of preferred stock to the Treasury March 10.
As part of the program, Salisbury Bank issued to the Treasury a 10-year warrant to purchase 57,671 shares of common stock at a price of $22.93 per share. If the warrant was fully exercised, the company estimates that the ownership percentage for the current shareholders would be diluted by about 3.3 percent.
As of Dec. 31, Salisbury Bank had $495 million in assets and about $38 million in capital.
Other Connecticut banks that have taken CPP funds are: Waterbury-based Webster Bank ($400 million); First Litchfield Financial Corp. ($10 million); and The Connecticut Bank and Trust Company in Hartford ($5.4 million).
Shareholders of Simsbury Bank & Trust Co. recently approved the issuance of preferred stock, which will allow it to receive $4 million from CPP.
Perotti Set To Retire
Salisbury Bank also recently announced that Perotti will be retiring as CEO of the bank effective June 8.
According to a statement released by the bank, Perotti’s retirement “is pursuant to his long-held personal plans which he has discussed with the Board of Directors for several years. Perotti selected his retirement date to coincide with the expiration of his term as president of the Connecticut Community Bankers Association.”
Perotti will be replaced as CEO by Richard J. Cantele Jr., 49, who is currently president and chief operating officer of the bank.
Net Loss For Rockville Bank Parent
Rockville Financial Inc., the holding company for Rockville Bank, posted a net loss of $1.6 million for 2008, compared to net income of $8.3 million for 2007, a decline of 119 percent.
Rockville Financial was weighed down by soured investments in Fannie Mae and Freddie Mac, the quasi-government entities that finance most of the nation’s mortgages and were bailed out by federal regulators in September.
In 2008, Rockville Bank recorded an other-than-temporary impairment charge of $11.6 million related to its preferred stock investments in Freddie and Fannie.
Despite the losses net loans and deposits increased at the bank last year.
Greg Bordonaro is a Hartford Business Journal staff writer.
