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Tag Archives: TARP

President Obama Announces Additional TARP Capital for Community Banks

On October 21, 2009, President Obama announced the broad outlines of a new program to provide additional capital to community banks in an effort to spur lending to smaller business.

Actual facts about the new program are currently very sparse.  A review of the currently available information does provide some details that may be attractive to community banks that current have TARP CPP funds, as well as those that currently do not have funds.  However, it does not appear that there will be any change in the Treasury’s determination of which community banks are eligible for TARP funds; participating institutions appear to still need to be viable without the funds.

There are three basic sources of official information:

  1. the text of President Obama’s speech in Landover, Maryland;
  2. the press release announcing the speech; and
  3. a fact sheet on the President’s Small Business Lending Initiatives.

Known Facts

  • The funds will be available to “viable banks with less than $1 billion in assets.”  The announcement does not give any indication that the Treasury will alter its existing viability standards.
  • Participants will be required to submit a small business lending plan explaining how the additional capital will allow them to increase lending to small businesses, and will be required to submit quarterly reports detailing their small business lending activities.
  • The initial dividend rate will be 3% rather than the 5% required under the current TARP Capital Purchase Program.  The dividend will rise to 9% after five years, consistent with the existing TARP Capital Purchase Program.  Presumably, Subchapter S institutions will receive a comparable reduction in the rate paid on the subordinated debt.
  • The amount of capital is limited to 2% or the institution’s risk-weighted assets.  This is less than the 3% permitted under the existing TARP Capital Purchase Program, and less than the 5% currently permitted for institutions that are less than $500 million in total assets.
  • The Treasury is working to finalize program terms “in the coming weeks.”
  • The Treasury will also determine how to handle existing Capital Purchase Program participants to allow them to replace existing capital with investments under the new program (effectively reducing their dividend costs in exchange for a commitment to increase small business lending).
  • Community Development Financial Institutions (CDFIs), including CDFI credit unions, will be able to apply for funds with a dividend rate of 2% for eight years, after which it will increase to 9%.

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Email This Content Email This Content Posted in Small Business, TARP Capital. Tagged with , , , . By Rob Klingler - Wednesday, October 21, 2009

September TARP Capital Infusions – TARP Map and List of Recipients Updated

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.

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Email This Content Email This Content Posted in TARP Capital. Tagged with , , , , . By Dustin Hall - Monday, October 5, 2009

OCC Reviewing TARP Recipients for Compliance with TARP Requirements

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.

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Email This Content Email This Content Posted in TARP Capital. Tagged with , , . By Dustin Hall - Thursday, September 24, 2009

August TARP Capital Infusions – TARP Map and List of Recipients Updated

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.

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Email This Content Email This Content Posted in TARP Capital. Tagged with , , , , . By Dustin Hall - Friday, September 4, 2009

News Roundup — August 6, 2009 to August 14, 2009

Recent Litigation

The August 2009 issue of Selling Prepaid E-Magazine is now online. Particularly noteworthy is a news capsule that mentions Bryan Cave LLP‘s successful representation of Green Dot Corp. in the matter of Every Penny Counts, Inc. v. American Express Company, et. al. (2008-1434).

Resolution was recently reached in an appeal for the U.S. Court of Appeals for the 8th Circuit in the matter of Deanthony Thomas et. al. v. U.S. Bank, National Association ND et. al. The court held that the Depository Institutions Deregulation and Monetary Control Act (DIDA), 12 USC @ Section 1831d does not preempt state law usury claims against a federally-insured state-chartered bank. Congress very clearly intended the preemptive scope of the DIDA to be limited to particular circumstances. The court reversed trial court and ordered the case to be remanded to state court for consideration under Missouri usury law.

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Email This Content Email This Content Posted in News Roundup. Tagged with , , , , , , , , , , , , , , , , , , , , , . By Stan Santos - Friday, August 14, 2009

July TARP Capital Infusions – TARP Map and List of Recipients Updated

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.

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Email This Content Email This Content Posted in TARP Capital. Tagged with , , , , . By Dustin Hall - Monday, August 10, 2009

News Roundup — July 6, 2009 to July 10, 2009

Checks and Check Cashing

An article published on FinExtra on July 8, 2009 highlighted a rising trend in fradulent activity. Several members of a New Jersey street gang have recently been arrested by authorities and accused of using laptops and digital cameras with the intention of creating counterfeit checks worth over $650,000 for a period of over two years.

Payments and Interchange

NYCE Payments Network LLC expects to begin testing Internet-based debit transactions by the end of 2009 and to commence offering a commercial service by mid-2010. The service will rely on single-use debit card technology from Verient Inc., a technology company located in San Jose, California.

A sweeping new report from a Canadian Senate committee recommends the federal government create a payment-system oversight board, ban percentage-based debit card interchange for three years, and permit merchants to surcharge for card transactions. Many of the proposals in the report are similar to the issues now working their way through the U.S. Congress.

7-Eleven Inc. has gathered between 1 million and 1.2 million signatures on in-store petitions asking Congress to regulate interchange rates, and expects to have 3 million customer signatures by the time the petition drive ends Aug. 10, according to an interview with a marketing executive with the Dallas-based convenience-store chain.

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Email This Content Email This Content Posted in News Roundup. Tagged with , , , , , , , , . By Stan Santos - Tuesday, July 14, 2009

Rounds 32 and 33 of TARP Capital Infusions – TARP Map and List of Recipients Updated

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. 

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Email This Content Email This Content Posted in TARP Capital. Tagged with , , , , . By Dustin Hall - Monday, July 6, 2009

Employ American Workers Act – A Lesser Known TARP Requirement

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.

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Email This Content Email This Content Posted in TARP Capital. Tagged with , , . By Rob Klingler - Thursday, June 25, 2009

News Roundup — June 8, 2009 to June 12, 2009

Credit Cards

Adam Levitin blogs about the overall trend in credit card line reductions and eliminations, some of which is not necessarily attributable to the Credit CARD Act of 2009.

This WaPo article examines how Capital One has decided to restructure itself as a result of the Act.

TheFinanceBuff makes an argument for more standardization of credit card contracts in light of the Credit CARD Act of 2009.

TARP

On Tuesday, June 9, 2009, the Congressional Oversight Panel released a report entitled “Stress Testing and Shoring Up Bank Capital”. The report examines the recent stress tests conducted on America’s 19 largest bank holding companies and makes recommendations as to whether the stress tests should be repeated in the future.

Data Security

A security flaw in the online payment service PayPal means sensitive information is at risk and customers could lose control of their accounts, according to this article at Stuff.co.nz.

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Email This Content Email This Content Posted in News Roundup. Tagged with , , , , , , , , , , . By Stan Santos - Tuesday, June 16, 2009