STURGIS, Mich., April 13 /PRNewswire-FirstCall/ -- Sturgis Bancorp Inc.
(OTC Bulletin Board: STBI), holding company for Sturgis Bank & Trust Company,
announced that the Company will not participate in the U.S. Treasury's Capital
Purchase Program (CPP). On March 05, 2009 the Company was notified it
received preliminary approval for participation in this program. Under the
approval the U.S. Treasury would have purchased $7.2 million of preferred
stock with a dividend rate of 5.00%. In addition the U.S. Treasury would have
been granted an additional $360,000 in preferred shares with a dividend rate
of 9.00%. This approval was subject to the Company executing agreements with
the U.S. Treasury.
Eric L. Eishen, President/CEO of Sturgis Bancorp Inc., stated, "We were
pleased the U.S. Treasury granted this preliminary approval of our application
to participate in this program. This program was designed to help healthy
U.S. Banks form capital during these challenging capital market conditions.
At the time this program was introduced, we believed it had great potential
for helping our economy recover. We filed an application to participate for
this reason. Unfortunately, the press has labeled this program as a bank
"bail-out" and public sentiment is very negative related to any governmental
investments. We are concerned that participation could damage our reputation
as a strong financial service provider. Participation required the Company to
sign agreements with the U.S. Treasury that would allow the terms and
conditions of participation to change on an on-going basis. The agreement is
one sided and grants Congress the ability to modify the conditions of the
agreement at any time. These ever-changing conditions are of great concern.
There are numerous requirements that have already been added to the program
since inception. Management believes the additional requirements already
imposed, as well as the uncertainty of additional requirements, may be
detrimental to the long-term success of the Company. The Bank was profitable
in 2008 and our capital levels exceed Regulatory requirements. Bank
Management has reviewed asset quality and projected financial performance for
2009. Based on this review, the Board of Directors feels confident we have
sufficient resources to meet our capital needs."
This release contains statements that constitute forward-looking
statements. These statements appear in several places in this release and
include statements regarding intent, belief, outlook, objectives, efforts,
estimates or expectations of Bancorp, primarily with respect to future events
and the future financial performance of the Bancorp. Any such forward-looking
statements are not guarantees of future events or performance and involve
risks and uncertainties, and actual results may differ materially from those
in the forward-looking statement. Factors that could cause a difference
between an ultimate actual outcome and a preceding forward-looking statement
include, but are not limited to, changes in interest rates and interest rate
relationships; demand for products and services; the degree of competition by
traditional and non-traditional competitors; changes in banking laws and
regulations; changes in tax laws; changes in prices, levies, and assessments;
the impact of technological advances; government and regulatory policy
changes; the outcome of any pending and future litigation and contingencies;
trends in consumer behavior and ability to repay loans; and changes of the
world, national and local economies. Bancorp undertakes no obligation to
update, amend or clarify forward-looking statements as a result of new
information, future events, or otherwise. The numbers presented herein are
unaudited. For additional information, visit our website at
http://www.sturgisbank.com .
