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First Northern Community Bancorp (OTCQB:FNRN), the parent company of First Northern Bank, announced today that it has received an investment of $22.8 million in the Company’s preferred stock from the U. S. Department of Treasury under the Small Business Lending Fund (SBLF).
The SBLF is a voluntary program intended to encourage small-business lending by providing capital to qualified community banks at favorable rates. The initial dividend rate on the preferred stock is 5%. Depending on the Bank’s success in meeting certain loan growth targets, the dividend rate could go as low as 1% for a period of time. Based on current loan levels, First Northern will continue to pay the 5% rate. The Bank’s participation in the SBLF was authorized by shareholders at a special meeting on September 14.
“We are pleased to have been selected among healthy financial institutions to participate in this important program. We have completed the SBLF capital infusion in support of our small-business lending operations and have repaid the CPP investment,” said Louise A. Walker, President and CEO of First Northern. “Our participation in the SBLF program is a great opportunity for our company to continue to meet the credit needs of small businesses in the communities we serve.”
Simultaneously with the receipt of the SBLF funds, the Bank redeemed $17.4 million of shares of preferred stock issued to the Treasury in March 2009 under the Capital Purchase Program (CPP), a part of the Troubled Asset Relief Program (TARP). “Funding under CPP allowed added protection to shareholders and depositors at a time when there was much uncertainty in the financial markets,” Walker explained.
The Treasury continues to hold a warrant to purchase 352,977 shares of the Company's common stock at a price of $7.39. “The Bank will attempt to repurchase these warrants from Treasury in the coming weeks,” she added.