The US Treasury Department has made another investment of US$1.15 billion in 42 banks from the US$700 billion financial bailout package, the Treasury said in a statement on Tuesday.

Now a total of 359 banks in 45 states and Puerto Rico has received over US$195.33 in support.

To date, the largest investment was US$25 billion and the smallest investment was approximately US$1 million.

According to the Treasury's Capital Purchase Program (CPP), the Treasury will purchase up to a total of US$250 billion  of senior preferred shares from healthy US financial institutions such as those announced on Tuesday.

Institutions that participate in the CPP must comply with restrictions on executive compensation during the period that the Treasury holds equity issued through the CPP and agree to limitations on dividends and stock repurchases.

Banks participating in the CPP will pay the Treasury a five percent dividend on senior preferred shares for the first five years following the investment and a rate of nine percent per year thereafter.

Banks may repay the Treasury under the conditions established in the purchase agreements, and the Treasury may sell these shares when market conditions stabilize.

Among the most recent banks to receive the Treasury funding was Legacy Bancorp of Milwaukee, Wisconsin, a CDFI founded by African-American women and one of the fastest growing community banks in the nation. CDFIs such as Legacy provide vital credit and financial services to low-income areas that are often unavailable from commercial banks.

Farmers and Merchants Bank, which primarily serves farms and rural businesses, became the first Nebraska bank to receive the Treasury investments through CPP.

With additional capital, banks are better able to meet the lending needs of their customers, and businesses have greater access to the credit that they need to keep operating and growing, said the Treasury in the statement.

"We believe this investment will enable our institution to take advantage of opportunities to further strengthen our position in the marketplace," said Gerry Dunlap, president and chief executive of Country Bankshares, Inc., the bank holding company of Farmers and Merchants Bank.

"In particular, we believe the investment will increase Farmers & Merchants Bank's lending capacity, thereby enhancing our ability to assist our core customers in meeting the challenges of a recessionary environment while positioning them to take full advantage of an economic recovery," he added.

(Xinhua News Agency February 4, 2009)