After raising capital from its directors, Security Federal Corp. in Aiken, S.C., said it has received approval from the Treasury Department to participate in a capital program designed for community development banks.

The $960 million-asset company said late Wednesday that it exchanged the $18 million it received under the Treasury's Troubled Asset Relief Program for a $22 million infusion from the Community Development Capital Initiative. The deal rested upon Security Federal's ability to raise $4 million of private capital, which it said it did.

The infusion carries an annual dividend rate of 2% for the first eight years, and the rate jumps to 9% after that. The Tarp capital carried a 5% annual dividend rate for the first five years, and would jump to 9% after that. The bank must remain focused on lending in low- to moderate-income areas to maintain the less-expensive coupon.

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