F&M buys back stock
By Emily Ford
SALISBURY - F&M Bank bought back nearly all of its stock auctioned off last week by the U.S. Treasury Department, bank President Steve Fisher said.
As part of the government's strategy for winding down the remaining Capital Purchase Program bank investments, U.S. Treasury sold preferred stock in four institutions, including F&M Bank. The Capital Purchase Program is part of the Troubled Asset Relief Program, or TARP.
F&M Bank and F&M Financial Corp. participated in the auction and re-purchased most of the $17 million invested in F&M in 2009 by U.S. Treasury, Fisher said.
"F&M is fortunate to be the purchaser of the vast majority of these shares and looks forward to retiring these securities at the close of auction and completing its exit from the Capital Purchase Program," Fisher said in a statement.
By Friday, F&M will have paid back the Treasury Department its capital investment of $17 million, plus an additional $3.2 million in dividends for an annualized return of 5.3 percent, Fisher said.
The treasury shares are non-voting investment securities that were part of the 2009 initiative to inject capital into financially stable banks to help support lending and guard against a prolonged recession.
F&M Bank and F&M Financial Corp. plan to retire the securities following the close of the auction process, Fisher said.
The auction held Thursday marked the sixth sale of Capital Purchase Program securities by the treasury over the past several months. Although the program was designed to be an investment of up to 10 years, the department has initiated an effort to wind down the program after three years to eliminate management costs, Fisher said.
Part of the winding down strategy includes the auctioning of Capital Purchase Program securities in the open market.
Overall, the government has recovered $266 billion from TARP's banks through repayments, dividends, interest and other income, compared to $245 billion originally invested, U.S. Treasury said.
Fisher said the Capital Purchase Program was a win-win for the community banking industry and for taxpayers.
"F&M chose to participate in the program in 2009 because the economic uncertainty at the time eliminated many of the traditional sources of capital for community banks," he said. "Given F&M's loan growth for the five-year period leading up to 2009, F&M needed additional capital to continue to meet the needs of our community."
Due to the economic uncertainty at the time, the additional capital also provided an "insurance policy" if the economy had continued to deteriorate, he said.
With U.S. Treasury as the only capital source available at the time, F&M chose to participate in the Capital Purchase Program, Fisher said.
"Throughout the prolonged recession, F&M was fortunate not to have to tap any of these additional capital resources and carried them simply out of an abundance of caution," Fisher said. "As the U. S. Treasury sought to wind down the program early, F&M simply accelerated its plan to exit the program."
F&M is a 103-year-old locally owned financial institution with 11 locations throughout Rowan and Cabarrus counties.
Contact reporter Emily Ford at 704-797-4264.