The Treasury Department released the term sheet and answers to frequently asked questions for applications to its Capital Purchase Program (CPP) by certain privately held financial institutions. Treasury announced the extension three days after the CPP deadline for publicly traded Qualifying Financial Institutions (QFIs).

The new term sheet for privately held institutions does not cover S-Corporations and mutual organizations. “These structures are still under consideration,” Treasury stated in its FAQ for Privately Held Institutions.

Applications for the private CPP program must be filed by December 8. Applicants must complete the application and follow the procedures that can be found on the applicable federal banking agency website or on the Treasury website at http://www.treasury.gov/initiatives/eesa/application-documents.shtml.

The term sheet for privately held banks covers the same ground as its counterpart for publicly held banks, including dividend requirements and restrictions, redemption and repurchase ground rules, executive compensation restrictions, and warrant terms.

Under both programs, a QFI may issue an amount of preferred shares equal to not less than 1% of its risk-weighted assets and not more than the lesser of (i) $25 billion and (ii) 3% of its risk-weighted assets.

The FAQs provide a discussion addressing institutions that have a bank or thrift holding company application pending with a federal bank regulator. An applicant company must apply for approval to become a bank or thrift holding company through ownership of a U.S. bank or savings association that was in existence on or before December 8, 2008. Final approval of the holding company application must be granted by the applicable federal banking agency by January 15, 2009.

“Funding will not be provided prior to consummation of the transaction for which bank or thrift holding company status was necessary,” Treasury noted.