Grand Mountain Bank in Granby, Colo., finally has the Troubled Asset Relief Program off its back.

The $102 million-asset bank said in a press release last week that it raised $7.1 million by issuing stock and debt. As part of the recapitalization, underwritten by FIG Partners, Grand Mountain retired all of the $3.9 million in Tarp debt that had been on its books for more than eight years.

Spurred by the high cost of funds, including a dividend that spiked from 5% to 9% in 2013, most banks exited Tarp years ago.

For a variety of reasons, a handful struggled.

In Grand Mountain’s case, it took time to repair the damage caused by severe credit-quality issues. Its status as a small, privately held bank serving a largely rural market also proved to be an issue for many potential investors, said Greg Gersack, co-leader of FIG’s investment banking team.

“Not many banks this size get access to the capital markets,” Gersack said. “It was the largest bank in the county, but it had gone through some difficult times.”

Efforts to reach Grand Mountain CEO Frank Delay were not successful.

At the height of its troubles, between 2010 and 2012, more than 11% of Grand Mountain’s loans were on nonaccrual status, according to the Federal Deposit Insurance Corp. Between 2009 and 2010, the bank lost $8.4 million.

Since then, Grand Mountain has returned to profitability; it slashed nonaccrual loans to 1.1% of total loans as of June 30. It has also managed to hold on to its position as the leading bank in Grand County, holding nearly 30% of the market’s $320 million in deposits.

Grand Mountain’s turnaround was intriguing enough for investors to oversubscribe its recapitalization, structured as $5.6 million in stock and $1.5 million of senior notes. In addition to paying off Tarp, the bank used funds to restructure other debts and replenish its capital accounts. At some point, it plans to list its stock on the OTC market, Gersack said.

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