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Fund facts: N.H. banks in federal program see a lending boost.

The six New Hampshire community banks that took federal stimulus money in 2010 lent far more money than most banks that shunned the funds, according to data released recently by the U.S. Treasury's Small Business Lending Fund program.

The six New Hampshire banks lent a total of about $178 million more--or 23.8 percent--above the "baseline" amount of lending in 2010, when the SBLF was created as part of the Small Business Jobs Act of 2010. That's below the 32.2 percent median increase nationwide among SBLF banks, but far above the 5.7 percent increase for representative peer group of those banks that didn't accept the money.

The SBLF is the successor to the Capital Purchase Program (CPP), which was part of the Troubled Asset Relief Program (TARP).

The CPP was aimed at smaller, secure banks, but many shied away from it, not wanting to be perceived as troubled, and that reputation also tarnished SBLF to a lesser degree.

Unlike CPP, SBLF is tied to increased lending. The bank has to pay its preferred investor (the Treasury) a dividend that decreases as the bank increases its lending to small businesses.

That has translated into a 1 percent effective interest rate for the banks.

According to the Treasury report, The Nashua Bank increased its lending by 60 percent over baseline--the biggest increase in New Hampshire, followed by Centrix (32 percent), Berlin-based Northway Bank (which took $26.6 million and was 26 percent over baseline), Lake Sunapee (15 percent), First Colebrook Bank ($8.6 million, 15 percent over baseline) and Woodsville Guaranty Bank ($7 million, 10 percent above baseline).

The six banks have paid some $2.64 million in dividends on the $86.7 million they borrowed, but nobody has paid back a penny of capital, and it is unlikely they will until interest rates go up to 9 percent around the end of 2015.

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Title Annotation:New Hampshire
Author:Sanders, Bob
Publication:New Hampshire Business Review
Article Type:Brief article
Geographic Code:1U1NH
Date:Jan 25, 2013
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