Most Washington banks still owe TARP

The Pak Banker - - Front Page -

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

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