The Hartford Insurance Group announced plans to acquire a Central Florida thrift, and simultaneously applied for a thrift charter and federal funds under the government’s Capital Purchase Program.
The Hartford said it estimates that it would be eligible for a capital infusion of between $1.1 billion and $3.4 billion under existing Treasury guidelines. The final amount of capital requested will be determined following approval by Treasury, Hartford officials said.
Under the Capital Purchase Program, Treasury will buy up to $250 billion of senior preferred shares of qualifying U.S.-controlled banks and savings institutions to help create liquidity to ease the credit market crunch and bolster the economy.
“We are taking these actions as a strong and well-capitalized financial institution looking for maximum flexibility and stability,” said Ramani Ayer, The Hartford’s chief executive officer.
“Securing capital at the terms available through the capital purchase program could be a prudent course in this market environment and would allow us to further supplement our existing capital resources,” he added.
The thrift being acquired is Federal Trust Company, based in Sanford, Fla. Mr. Ayer said the Hartford has agreed to pay $10 million for the thrift, and will also provide an “additional amount” to recapitalize the bank–although it declined to say how much.
“The completion of this acquisition will satisfy a key eligibility requirement for participation in [the Capital Purchase Program],” Mr. Ayer said.
The Hartford said its purchase of Federal Trust Corp. is contingent on:
o Treasury’s approval of The Hartford’s participation in the program.
o Approval of the acquisition by the shareholders of Federal Trust Corp.
o Approval by the Office of Thrift Supervision of The Hartford’s application to become a savings and loan holding company.