New York Private Bank & Trust, the parent company of Emigrant Bank, has fully repaid its Troubled Asset Relief Program funds.

The $7 billion-asset company paid $283 million for all of its Tarp shares and the dividends accrued this year, it said Wednesday. New York Private issued the Treasury Department $267 million of preferred shares in January 2009 through Tarp.

Banks that hold Tarp funds for more than five years face a mandatory hike in dividend payments, to 9% from 5%. New York Private would have had to start paying the higher dividend in January.

The bank had paid $13.5 million in dividends each year, and a collective $65 million. The 9% dividend would have cost the company more than $25 million annually.

As a result of the payment, New York Private will have a capital ratio of 15.5%, and Emigrant will have a capital ratio of 14.5%.

Emigrant recently sold 29 branches to Apple Bank for Savings in New York, after shopping for buyers for about six months.

The threat of higher Tarp dividends could spur community bank mergers and acquisitions.

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