Remember TARP, the Troubled Asset Relief Program? Since its inception, 742 banks have gained “relief”. Under TARP, a bank gets funds in return for preferred shares and a dividend that goes from 5% to 9% after four years.
A banker told me that TARP money is expensive and unnecessary – “I can get Home Loan Bank funds for less.” And most banks that still have TARP money got it in late 2008. That means the dividend (really an interest payment) will shortly be 9%. That is really expensive money.
And we think the banking crisis is behind us? Think again. There are still 382 banks that have made no repayments on TARP money as yet. The top twenty in terms of TARP funds outstanding are given in Table 1.
Table 1. – Banks with Largest Balances That Have Made No TARP Repayments
Bank | TARP Outstanding ($ mil.) |
Regions Financial Corporation (RF) | 3,500 |
Zions Bancorporation (ZIONW) | 1,400 |
Synovus Financial Corp. (SNV) | 968 |
Popular, Inc. (BPOP) | 935 |
First BanCorp (FBP) | 424 |
Sterling Financial Corporation (STSA) | 303 |
Citizens Republic Bancorp, Inc. (CRBC) | 300 |
UCBH Holdings, Inc. (UCBHQ) | 299 |
First Banks, Inc. | 295 |
New York Private Bank & Trust Corporation | 267 |
Flagstar Bancorp, Inc. (FBC) | 267 |
Cathay General Bancorp (CATY) | 258 |
PrivateBancorp, Inc. (PVTB) | 244 |
International Bancshares Corporation (IBOC) | 216 |
MB Financial Inc. (MBFI) | 196 |
Pacific Capital Bancorp (PCBC) | 195 |
United Community Banks, Inc. (UCBI) | 180 |
M&T (Provident Bancshares) (MTB) | 152 |
Dickinson Financial Corporation II | 146 |
Banner Corporation (BANR) | 124 |
Source: US Treasury
In addition to these banks, there are 13 that have made partial repayments. These banks are listed in Table 2.
Table 2 – Banks That Partially Repaid TARP (in mil. $)
Bank | Original TARP | Outstanding Balance |
M&T Bank Corporation (MTB) | 600 | 230 |
Central Pacific Financial Corp. (CPF) | 135 | 99 |
Pinnacle Financial Partners, Inc. (PNFP) | 95 | 71 |
First South Bancorp, Inc. (FSBK) | 50 | 37 |
First American Bank Corporation | 50 | 35 |
StellarOne Corporation (STEL) | 30 | 23 |
The Bank of Kentucky Financial Corporation (BKYF) | 34 | 17 |
The First Bancorp, Inc. (FNLC) | 25 | 13 |
C&F Financial Corporation (CFFI) | 20 | 10 |
Citizens First Corporation (CZFC) | 9 | 7 |
First BancTrust Corporation (FIRT) | 7 | 4 |
Patterson Bancshares, Inc | 4 | 3 |
Beach Business Bank (BBBC) | 6 | 2 |
Source: US Treasury
I repeat the question posed earlier: Is the bank crisis behind us? With more than 50% of the banks that took TARP money still owing the US Treasury nearly $17 billion, the answer is no. A bank that is paying 9% for its money is not a healthy bank.
Other Articles by Elliott Morss
| analysis blog | opinion blog | investing blog |
About the Author
Elliott Morss has a broad background in international finance and economics. He holds a Ph.D. in Political Economy from The Johns Hopkins University and has taught at the University of Michigan, Harvard, Boston University, Brandeis and the University of Palermo in Buenos Aires. During his career he worked in the Fiscal Affairs Department at the IMF with assignments in more than 45 countries. In addition, Elliott was a principle in a firm that became the largest contractor to USAID (United States Agency for International Development) and co-founded (and was president) of the Asia-Pacific Group with investments in Cambodia, China and Myanmar. He has co-authored seven books and published more than 50 professional journal articles. Elliott writes at his blog Morss Global Finance.
