First United (FUNC) in Oakland, Md., has received regulatory approval to catch up on interest payments for certain obligations.
The $1.3 billion-asset company said in a regulatory filing Wednesday that the Federal Reserve Board will allow it to make interest payments in March on some of its debt. First United and the Fed entered into an agreement in December 2010 that required the company to defer interest payments.
The agreement had prevented First Union from making regulator interest payments on about $31 million on junior subordinated debt and roughly $11 million in trust-preferred securities, the filing said.
First United said that next month it will pay out $7.3 million to its creditors to address current and deferred interest. But it cautioned that the Fed's approval only applied to March and "no assurance can be given" that it will secure approval to make interest payments in future periods.
The company added that its ability to make future quarterly interest payments on the trust-preferred securities depends on it getting approval from the Federal Deposit Insurance Corp. and its state banking regulator to receive a dividend from its bank. For now, those regulators are allowing the dividends to flow up to the company this year.