When Security Business Bank of
SBB and lots of other small community banks jumped at the chance to basically refinance their TARP debt through the Treasury's
"It was offered to all community banks, so we elected to take it," Rodeno said. "We viewed it as an insurance policy for surviving in what looked like a crumbling financial sector."
So far the program has worked well for SBB, which recently reported its small business lending increased 28 percent, well above the prescribed 10 percent benchmark set for banks taking funds through the SBLF.
Easing the Debt Burden
The program greatly reduced the annual dividend rate SBB pays Treasury, and will cause a drop in that expense from about
More small banks are scrambling to figure out how to repay their TARP debt in the wake of a letter that the
Rodeno and other local bankers said unlike mega banks such as
"The capital markets are not generous to small community banks whose stock isn't trading above book value," he said. Tangible book value refers to a bank's shareholders' equity (including common and preferred stock), its earnings, less goodwill, divided by the number of outstanding shares.
In SBB's case, its book value as of
Among the 380 banks that have yet to repay their TARP money is
Zions allocated about
An 'Administrative Challenge'
Because of a change in the way its main regulator, the
Yet the regulators nixed that transaction, leaving BSC with a surplus of capital. Rogge said in hindsight, TARP didn't benefit his bank, and has become more an administrative challenge.
The investment by Treasury worked well for First PacTrust, which is in the process of buying two regional banks, and evaluating several other potential deals, Mitchell said.
"It (TARP) was a prudent response in a market of uncertainty that created a bridge for banks and the capital markets, and the public was well-served by it," he said.
Most of the banks that accepted TARP noted while the program has been excoriated in the media as a bailout for some of the nation's biggest banks, it has helped smaller banks as well, and has proved to be a profitable move for Treasury. A letter sent to the banks said the program recovered
"The government made a tremendous profit on this program," said
BANKS THAT REPAID TARP
BANKS THAT HAVE YET TO REPAY TARP
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