TARP Capital and Community Banks

December 30, 2008

Authored by: Robert Klingler

On December 23, 2008, the Treasury issued a press release announcing that “Treasury Provides TARP Funds to Local Banks.”  Through December 23, 2008, the Treasury had purchased preferred stock and warrants from 207 financial institutions, totaling $162.5 billion dollars (plus an additional $10 billion to Merrill Lynch pending its sale to Bank of America).

Out of the 207 completed TARP Capital transactions through December 23, 2008, the Treasury has completed 34 transactions for a total investment of $469.9 million under the private TARP Capital terms.  While this still represents a minuscule number of the private financial institutions that should be eligible for TARP Capital investments, these private transactions were all completed in the last two rounds of capital infusions (December 19 and December 23).

Eight financial institutions have received TARP Capital infusions of $4 million or less, as indicated in the table below (all dollar figures are in millions).

Financial Institution Location Date TARP Type Assets
Manhattan Bank, N.A. El Segundo, CA 12/5/08 $1.7 Public $71.8
Santa Lucia Bank Atascadero, CA 12/19/08 $4.0 Public $253.5
Monadnock Community Bank Peterborough, NH 12/19/08 $1.8 Private $110.6
Seacoast Commerce Bank Chula Vista, CA 12/23/08 $1.8 Private $75.0
Saigon National Bank Westminster, CA 12/23/08 $1.5 Private $55.0
Citizens National Bank Dayton, OH 12/23/08 $2.0 Private $96.1
First Federal Community Bucyrus, OH 12/23/08 $2.6 Private $143.1
TNBank Oak Ridge, TN 12/23/08 $3.0 Private $204.1

Based on the FDIC’s September 2008 Quarterly Banking Profile, there were 8,343 insured depository institutions in the United States.  The FDIC has now completed TARP Capital transactions with less than 3% of the outstanding depository institutions.  The numbers for community banks are even lower.  As of September 30, 2008, there were 3,240 institutions with less than $100.0 million in total assets, four of which have received TARP Capital, or a completion rate of approximately 0.1%.  Stated in another way, 38.8% of depository institutions had less than $100.0 million in total assets at September 30, 2008, but those banks represent only 1.9% of the institutions that have received TARP Capital.