The deadline for TARP CPP recipients who received capital infusions prior to June 15, 2009 are required to have adopted an Excessive or Luxury Expenditures Policy by Monday, September 14, 2009.  In addition to adopting such a policy, TARP CPP recipients are required to submit the policy to Treasury and their primary federal banking regulator, and post the policy on their website.  (Subsequent TARP CPP recipients are required to adopt and post a policy within 90 days after the completion of their capital infusion.)

We have collected a list of posted Excessive or Luxury Expenditure Policies.  This list is complied for informational purposes only to offer examples, and is not intended to be complete list of posted policies.  In addition, we may not identify when a bank has filed a revised policy.  Inclusion (or exclusion) from the list does not represent a recommendation of any policy.  Clients of Bryan Cave should contact us to further discuss an appropriate Excessive or  Luxury Expenditures Policy.

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This list of sample Excessive or Luxury Expenditures Policies is complied for informational purposes only to offer examples, and is not intended to be complete list of posted policies.  In addition, we may not identify when a bank has filed a revised policy.  Inclusion (or exclusion) from the list does not represent a recommendation of any policy.  Clients of Bryan Cave should contact us to further discuss an appropriate Excessive or Luxury Expenditures Policy.

The following list identifies bank or bank holding company name, state, amount of TARP CPP funds received, and whether they are a public or private company.  We have also attempted to identify policies that appear to be based on the same model, and indicated accordingly.  (List Updated as of May 2011 to remove links to firms that have removed their Excessive or Luxury Expenditures Policy from their website, presumably due to a redemption of their TARP CPP funds.)

• Bank of the Ozarks – Arkansas – $75 Million  – Public
• Riverside Bank – Arkansas – $1 Million – Private (Model A)
• Simsbury Bank – Connecticut – $4 Million – Private Company
• First Community Bank of America – Florida – $11 Million – Public (Model B)
• Two Rivers Financial Group – Iowa – $12 Million – Private
• First Merchants Corporation – Indiana – $116 Million – Public (Model A)
• NBRS Financial Bank – Maryland – $6 Million – Private (Model B)
• EagleBank – Maryland – $38 Million – Public (Model B)
• Bar Harbor Bank & Trust – Maryland – $19 Million – Public (Model B)
• FirstBank – Michigan – $33 Million – Public (Model B)
• The Little Bank – North Carolina – $8 Million – Private
• State Bank of Long Island – New Jersey – $37 Million – Public
• First Federal Community Bank – Ohio – $3 Million – Private
• CFBank – Ohio – $7 Million – Public
• York Traditions Bank – Pennsylvania – $5 Million – Private (Model B)
• First State Bank of Mobeetie – Texas – $1 Million – Private
• Washington Trust Bank – Washington – $110 Million – Private
• Community First Bank – Wisconsin – $6 Million – Private (Model B)

As a reminder, under the Treasury’s Interim Final Regulations, an Excessive or Luxury Expenditures Policy must:

1. address four categories of expenditures: entertainment or events; office and facility renovations; aviation or other transportation services; and other similar items, activities, or events;
2. be reasonably designed to eliminate excessive and luxury expenditures;
3. identify the types or categories of expenditures which are prohibited;
4. identify the types or categories of expenditures for which prior approval is required;
5. provide reasonable approval procedures;
6. require principal executive and financial officers to certify that such approval procedures were followed;
7. require the prompt internal reporting of violations to an appropriate person; and
8. mandate accountability for adherence to the policy.

On August 14, 2009, Bryan Cave LLP submitted a comment letter on the Treasury Department’s Interim Final Rule on TARP Standards for Compensation and Corporate Governance.

In addition to several technical revisions, we have recommended that Treasury:

• permit TARP recipients to implement new commission compensation programs;
• treat single-trigger change in control payments as retention awards as opposed to golden parachute payments;
• add a $100,000 floor for consideration of an employee as a “most highly compensated employee;”
• permit smaller reporting companies to use the SEC’s smaller reporting company rules for determining their senior executive officers;
• modify its restrictions on tax gross-up payments;
• clarify that the say on pay provisions do not apply to private companies; and
• either clarify or eliminate the 162(m)(5) requirement.

The comment letter is currently being processed by the Treasury Department before being added to the public docket for the regulation, but you can read the complete comment letter here.

• FDIC Press Release
• FDIC Financial Institution Letter
• Temporary Liquidity Guarantee Program – Interim Rule – PDF

The rule is immediately effective, although comments will be taken for a 15-day period.

The FDIC strongly encourages banks to remain in the program.

Opt Out Information. Any institution desiring to opt out must do so by 11:59 p.m. on November 12, 2008.  An institution may opt out of the FDIC’s guarantee of either or both the newly-issued senior unsecured debt or noninterest-bearing transaction deposit accounts.  The FDIC will post on its website a list of those entities that have opted out of either component, and each eligible entity must make clear to relevant parties whether it has chosen to participate in the program.

All insured depository institutions must post a prominent notice in the lobby of its main office, and each branch must clearly indicate whether the institution is participating in the transaction account guarantee program.  If it is, the notice must state that funds held in noninterest-bearing transaction accounts are insured in full by the FDIC.  If the institution uses sweep arrangements, the institution must disclose those actions to the affected customers and clearly advise them, in writing, that such actions will void the FDIC’s guarantee.  (However, note the exception below for sweeps to noninterest-bearing savings accounts.)

Newly Issued Senior Unsecured Debt Guarantee Information. Senior unsecured debt generally includes federal funds purchased, promissory notes, commercial paper, and unsubordinated unsecured notes.  Senior unsecured debt does not include, among other instruments, obligations from guarantees or other contingent liabilities, derivatives, derivative-linked products, debt paired with any other security, convertible debt, capital notes, the unsecured portion of otherwise secured debt, or negotiable certificates of deposit.

The FDIC will guarantee newly issued unsubordinated debt in a total amount up to 125 percent of the par or face value of the senior unsecured debt outstanding, excluding debt extended to affiliates, as of September 30, 2008, that was scheduled to mature before June 30, 2009.  The maximum amount guaranteed is calculated for each individual participating entity in a holding company structure and cannot be transferred between a bank and its holding company or between banks in a multi-bank holding company structure.  All entities will be required to provide the amount of outstanding senior unsecured debt as of September 30, 2008 to the FDIC via FDIConnect.

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