MONEY MATTERS: Dubuque-based banking company to use "bailout" money - KWWL - Eastern Iowa Breaking News, Weather, Closings

MONEY MATTERS: Dubuque-based banking company to use "bailout" money

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Dubuque (KWWL) -- Heartland Financial is now one local company that's a part of what we've come to know as the $700 billion bailout, or Troubled Asset Relief Program under the federal Emergency Economic Stabilization Act.

The government's goal is to help banks better balance their debt to capital ratio. Heartland executives say that means they will be able to lend more money and help in stimulating the economy.

Heartland financial is a Dubuque-based company that has 61 banks in eight states. For the company, participation in the federal program will mean getting $81.7 million by issuing company shares to the government.

It's part of the Troubled Assets Relief Program: the biggest chunk of the 700 billion dollar bailout plan. Despite the name of the program authorizing the money, Heartland executives say they're hardly troubled.

"What the government's look at is they want to give to the most stable banks first and foremost. They thought that if they give it to the stable banks, they're the ones that are most likely to go out and make additional loans," Heartland Executive Vice President John Schmidt said.

As required, Heartland will use the money in specific ways, in this case lending or acquisitions.

Executives say taxpayers should feel at ease with the program, they say the government would likely make money over time by investing in banks.

"The biggest opportunity for the government in a long term basis is certainly that we stimulate the economy which then creates additional income which then creates additional jobs which then ultimately increases the tax base," Schmidt said.

More immediately, when the company issues shares to the government, the government is guaranteed a five percent return every year for five years, increasing to nine percent after that if the company stays in the program. Heartland will also issue stock warrants to the government equal to fifteen percent of the value of the issued stocks

Executives say the hope is for the economy to improve, and they would reacquire the shares before that return percentage increase after five years.

It's not a done deal yet; the company must still meet certain conditions and finalize agreements.

Online Reporter:  Jamie Grey

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