Most Washington banks still owe TARP
WASHINGTON: A majority of Washington area community banks that tapped the federal Troubled Assets Relief Program (TARP) have yet to repay their balances, while several of their larger counterparts are closing out their debts.
According to a monthly summary recently released by the Treasury Department, 10 of the 11 small banks based in the metropolitan region have $3 million to more than $41 million in outstanding debt from the program. Even as profits at these institutions rebound, many are still contending with mounds of troubled commercial and residential loans that weigh heavily on their books.
Deep-pocketed banks that benefited from the government's largess were in a rush to hand back the funds, and had the financial means to do so. Citigroup, for instance, repaid $20 billion of the $45 billion it owed at the end of last year. Treasury converted the remaining balance to an ownership stake that it has been selling off since the spring, and stands to make a $12 billion profit on the deal. A few other big banks, such as Bank of America, turned to the public markets to raise the capital to settle up.
Bethesda-based EagleBank concluded its stock offering in September, garnering $51.8 million in proceeds, $15 million of which was used to pay down its TARP bill. The bank has yet to pay the remaining $23.2 million, even as it has strengthened its capital position. At the end of the third quarter, Eagle had posted net income of $4.8 million, up 74 percent from a year earlier. The amount of troubled loans, however, has hovered around $29.2 million for the past two quarters.
"The cost of capital is still very low and $23 million isn't a lot of money," said Ronald D. Paul, chairman and chief executive of Eagle. -PB News