During the month of September, the Treasury completed rounds forty-two, forty-three, forty-four, and forty-five of TARP Capital infusions. In these four rounds, which closed on September 4, September 11, September 18, and September 25, respectively, the Treasury purchased a total of approximately $141 million in securities from 14 financial institutions. Through September 2009, the Treasury had invested in 687 institutions, totaling approximately $204.6 billion.
In these four rounds, Community Bancshares of Mississippi, Inc., Brandon, Mississippi, received the largest infusion, $52 million, and State Bank of Bartley, Bartley, Nebraska, received the smallest infusion, $1.7 million.
During September, seven financial institutions re-paid their TARP capital investments: Valley National Bancorp ($125 million (approximately 42% of the initial investment)), Centerstate Banks of Florida ($27.9 million), Wesbanco Bank, Inc. ($75 million), Manhattan Bank ($1.7 million), CVB Financial Corp. ($32.5 million (25% of the initial investment)), F.N.B. Corporation ($100 million), and Westamerica Bancorporation (approximately $42 million (50% of initial investment)). Valley National and CVB Corp. had already re-paid a portion of their TARP investments, and Valley National still has $100 million remaining. As of the end of September, 2009, 42 financial institutions had re-paid all, or some portion, of their TARP Capital investment, bringing the total amount re-paid to approximately $70.7 billion. At the end of September 2009, Treasury’s outstanding investment equaled approximately $133.9 billion.
We have recently become aware that the OCC is reviewing national bank TARP recipients for their compliance with TARP requirements as part of the formal examination process. As of part of the examination, the OCC is requesting to review certain documents, policies, and other information related to areas impacted by the TARP regulations. In particular, the OCC will review a TARP recipient’s Luxury Expenditure Policy, as well as other compensation-related information.
During the month of August, the Treasury completed rounds thirty-eight, thirty-nine, forty, and forty-one of TARP Capital infusions. In these four rounds, which closed on August 7, August 14, August 21, and August 28, respectively, the Treasury purchased a total of approximately $130 million in securities from 9 financial institutions. Through August 2009, the Treasury had invested in 673 institutions, totaling approximately $204.5 billion.
In these four rounds, U.S. Century Bank, Miami, Florida, received the largest infusion, $50 million, and Bank Financial Services, Inc., received the smallest infusion, $1 million.
During August, three financial institutions re-paid their TARP capital investments: CVB Financial Corporation ($97.5 million (75% of the initial investment)), Bancorp Rhode Island, Inc. ($30 million), and State Bankshares, Inc. ($12.5 million (25% of the initial investment)). As of the end of August, 2009, 37 financial institutions had re-paid all, or some portion, of their TARP Capital investment, bringing the total amount re-paid to approximately $70.3 billion. At the end of August 2009, Treasury’s outstanding investment equaled approximately $134.2 billion.
During the month of July, the Treasury completed rounds thirty-four, thirty-five, thirty-six, and thirty-seven of TARP Capital infusions. In these four rounds, which closed on July 10, July 17, July 24, and July 31, respectively, the Treasury purchased a total of approximately $1.2 billion in securities from 14 financial institutions. Through July, the Treasury had invested in 664 institutions, totaling approximately $204.3 billion.
In these four rounds, Lincoln National Corporation, Radnor, Pennsylvania, received the largest infusion, $950 million, and Plato Holdings, Inc., Saint Paul, Minnesota, received the smallest infusion, $2.5 million. Of note during the July closings, Yadkin Valley Financial Corporation received an additional $13.3 million investment after having received a $36 million investment on January 16, 2009.
During July, two financial institutions repaid their TARP capital investments: First Community Bankshares, Inc., Bluefield, Virginia ($41.5 million); and Old Line Bancshares, Inc., Bowie, Maryland ($7 million). As of the end of July, 34 financial institutions had re-paid all, or some portion, of their TARP Capital investment, bringing the total amount re-paid to approximately $70.2 billion. At the end of July, Treasury’s outstanding investment equaled approximately $134.2 billion.
On June 23, 2009 and June 30, 2009, the Treasury announced the completion of the thirty-second and thirty-third rounds, respectively, of TARP Capital infusions. In these two rounds, which closed on June 19 and June 26, the Treasury purchased a total of approximately $3.7 billion in securities from 26 financial institutions. The Treasury has now invested in 650 institutions, totaling approximately $203.2 billion.
In these two rounds, Hartford Financial Services Group, Inc., Hartford, Connecticut, received the largest infusion, $3.4 billion. Gold Canyon Bank, Gold Canyon, Arizona, received the smallest infusion, $1.6 million.
Of note during the last two weeks of June, 2009, eleven institutions re-paid approximately $68.3 billion. The largest re-payments came from JPMorgan & Chase ($25 billion), The Goldman Sachs Group, Inc. ($10 billion), and Morgan Stanley ($10 billion). As of June 30, 2009, the total amount re-paid under the TARP Capital Purchase Program is approximately $70.1 billion, and Treasury’s outstanding investment equals approximately $133.1 billion.
Also of note, the Treasury provided the warrant disposition information for a number of institutions that had previously re-paid the Treasury (please click here for our discussion of the disposition process). The Treasury disposed of the additional investment of thirteen institutions (10 public (via warrants) and 3 private (via preferred stock)). The proceeds from these dispositions totaled approximately $19.4 million.
As part of the American Recovery and Relief Act of 2009 (a.k.a. the stimulus bill), Congress also adopted the Employ American Workers Act. Under the Employ American Workers Act, TARP recipients are subject to additional requirements if they seek to make a new hire of a foreign national to work under an H-1B petition. While this requirement is unlikely to affect most community bank recipients, it is an important restriction to keep in mind, especially for institutions with an international or ethnic-group focus.
The requirements of the Employ American Workers Act took effect on February 17, 2009, and remain effective until the earlier of: (a) redemption of any TARP investment (exclusive of any outstanding warrants); and (b) February 17, 2011.
Any TARP recipient seeking to hire an H-1B worker is required to make the following attestations to the U.S. Department of Labor:
- it has taken good faith steps to recruit U.S. workers using industry-wide standards and offering compensation that is at least as great as those offered to the H-1B nonimmigrant;
- it has offered the job to any U.S. worker who applies and is equally or better qualified for the job that is intended for the H-1B nonimmigrant;
- it has not “displaced” any U.S. worker employed within the period beginning 90 days prior to the filing of the H-1B petition and ending 90 days after its filing. A U.S. worker is displaced if the worker is laid off from a job that is essentially the equivalent of the job for which an H-1B nonimmigrant is sought; and
- it will not place an H-1B worker to work for another employer unless it has inquired whether the other employer has displaced or will displace a U.S. worker within 90 days before or after the placement of the H-1B worker.
On March 30, 2009, the Wall Street Journal reported that the Treasury Department estimates that about $134.5 billion remains under the Troubled Asset Relief Program, or TARP. In order to reach that figure, the Treasury considered funds already invested under the TARP Capital Purchase Program and then added $25 billion as a “conservative estimate” of funds that the Treasury believes will be paid back shortly.
The New York Times estimate, on the other hand, shows a total of $106.6 billion that is either uncommitted or pending (under the Capital Purchase Program). Assuming that you add the same “conservative estimate” of repayments, that would lead to a total of $131.6 billion remaining, or $2.9 billion less than the Treasury’s estimate.
Neither the Wall Street Journal nor the Treasury has provided a breakdown of how $134.5 billion is remaining out of the $700 billion TARP total. Assuming $134.5 billion would be remaining after $25 billion is redeemed, total expenditures to date should be $589.5 billion. (Assuming The New York Times’ estimate is correct, expenditures to date would be $593.4 billion.)
On March 16, 2009, the Treasury announced the completion of the eighteenth round of TARP Capital infusions. The Treasury purchased a total of approximately $1.5 billion in securities from 19 financial institutions on Friday, March 13, 2009, and has now invested in 510 institutions, totaling approximately $198 billion.
Discover Financial Services, Riverwoods, Illinois, received the largest infusion, $1.2 billion, and was the first institution to receive over $1 billion since the ninth round (1/9/2009). Haviland Bancshares, Inc., Haviland, Kansas, received the smallest infusion: $425,000.
Of note in this eighteenth round, a Washington D.C.-based institution received TARP Capital funds. IBW Financial Corporation received $6 million. To date one territory, Puerto Rico, and the U.S. capital, Washington D.C., and all states except Montana, New Mexico, and Vermont, have institutions that have received TARP Capital.
This round marked the sixth consecutive round where less than 30 institutions received TARP Capital infusions. In fact, other than the eighth round (12/31/2008), where 7 institutions received TARP funds, this round saw the fewest number of TARP closings — this is second round in row where this is the case. As we noted in a previous post, it is unclear what is contributing to or causing this diminishing number of TARP closings.
Click here to view our updated TARP Map.
Click here to view our updated list of TARP Capital recipients and a description of our methodology in compiling the list.
On March 3, 2009, the Treasury announced the completion of the sixteenth round of TARP Capital infusions. The Treasury purchased a total of approximately $395 million in securities from 28 financial institutions on Friday, February 27, 2009, and has now invested in 469 institutions, totaling approximately $196.8 billion.
Of note in this sixteenth round, three institutions received less than $1 million each: First State Bank of Mobeetie, Mobeetie, Texas, received $731,000; Green City Bancshares, Green City, Missouri, received $651,000; and The Victory Bank, Limerick, Pennsylvania, received $541,000. Integra Bank Corporation, Evansville, Indiana, received the largest infusion: $84 million.
This round marked the fourth consecutive round where less than 30 institutions received TARP Capital infusions. In contrast, in the eight rounds from the fifth (12/5/2008) to the twelfth (1/30/2009), only twice did less than 30 institutions receive TARP - 28 institutions in the sixth round (12/12/2008) and 7 institutions in the eighth round (12/31/2008). It is unclear what is causing this apparent slowdown in TARP Capital closings. It could be a change in policy or simply the result of the change in administration causing certain delays. We do, however, think that it is clear that this apparent slowdown has nothing to do with the amount of funds remaining within the TARP Capital program. There is no indication that the Capital program is near exhausting its allocated funds – approximately $50 billion still remains to be allocated under the TARP Capital Purchase Program.
Click here to view our updated TARP Map.
Click here to view our updated list of TARP Capital recipients and a description of our methodology in compiling the list.
In an effort to calm the financial markets, on February 23, 2009, the Treasury, FDIC, OCC, OTS, and Federal Reserve issued a joint statement about the Capital Assistance Program and a “strong presumption” that banks should remain in private hands.
The joint statement also provides additional details about the Capital Assistance Program that was part of the Treasury’s previously announced Financial Stability Plan. The Capital Assistance Program (presumably to become known as CAP, and not to be confused with the CPP, the Capital Purchase Program), will be “initiated” on February 25, 2009. If the “stress test” indicates that an additional capital buffer is needed, institutions will be given an “opportunity” to raise capital privately before the government makes a capital buffer “available” to the institution. The regulators provide that this higher level of capital “does not imply a new capital standard,” although it’s hard to see how that implication is avoided.
Any governmental infusion will be in the form of mandatory convertible preferred securities, and could be retired before conversion if the financial conditions improve. It is not clear whether the preferred securities, prior to conversion, will be treated as Tier 1 capital. The Treasury intends to make prior capital injections under the Capital Purchase Program also eligible to be exchanged for the new mandatory convertible preferred shares.
The joint statement concludes with an argument that widespread nationalization of banks will not occur under the Capital Assistance Program. “Because our economy functions better when financial institutions are well managed in the private sector, the strong presumption of the Capital Assistance Program is that banks should remain in private hands.”