SCBT to use new capital to support mortgage refinancing, student loan access

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SCBT to use new capital to support mortgage refinancing, student loan access


By Ashley Fletcher Frampton
aframpton@scbiznews.com
Published Jan. 22, 2009

Through its sale of $64.8 million in stock to the U.S. Treasury, S.C. Bank and Trust will provide money to the S.C. Student Loan Corp. and help homeowners refinance mortgages, bank officials said.

The bank received preliminary approval in December for the sale of stock through the federal government’s financial industry rescue program. SCBT announced its plans for using the money this week, when the sale closed.

Tighter credit is squeezing access to college

SCBT did not need the money for stability but saw the additional low-cost capital as a way to help stimulate the local economy, said Donna Pullen, vice president of public relations and special projects.

With interest rates lower than they have been in recent years, SCBT can use the capital to refinance mortgage loans for its customers, Pullen said.

On average, owners of $100,000 homes could save about $100 a month, with rates 1.5% lower than many borrowers are paying now, she said.

“This helps stimulate the economy by producing additional disposable income,” Pullen said.

In addition, SCBT is using $25 million of its capital to help the S.C. Student Loan Corp. provide federal student loans.

The money is a bridge loan, required under a new federal financing plan for student loan providers, said Chuck Sanders, president and CEO of the S.C. Student Loan Corp.

In the past, the student loan agency issued bonds to raise the money it had to front for federal loans, but the market for those bonds has diminished, Sanders said. The federal government repays the agency for the loans after they have been disbursed to schools, he said.

In response to market changes, Congress passed laws in 2008 allowing student loan providers to work with banks to acquire the initial money.

The agreement with SCBT was finalized in December, Sanders said. The S.C. Student Loan Corp. arranged a similar line of credit in November with BB&T for $175 million.

“They have both come to our help here,” Sanders said of the two banks. “And, truthfully, it’s difficult to get a line of credit in this environment.”

The S.C. Student Loan Corp. still has no money available for private student loans, Sanders said.

Banks are obligated to repay the capital they receive through the government program known as the Capital Purchase Program and the Troubled Asset Relief Program.

“SCBT Financial Corp. has been one of the top-performing banks in the country, and we continue to have a very strong capital position,” CEO Robert R. Hill Jr. said in a news release. “Therefore, we felt we could be part of a solution in helping our customers and communities face challenging economic times by participating in the Capital Purchase Program.”