No longer wary of the stigma of receiving capital injections from the federal government, privately held community banks are lining up to participate in the Treasury Department's Troubled Asset Relief Program.
Banc Investment Group, a consulting arm of Pacific Coast Bankers' Bancshares in San Francisco, said 56% of 188 community banks it surveyed this month told it they have applied for Treasury money or intend to do so before a Dec. 8 deadline. Three percent said they had already been approved for the funds.
In last month's survey, only 8% of bankers said they intended to seek Treasury funds, and 66% said they were unlikely to do so.
Chris Nichols, Banc Investment Group's chief executive, said in a press release Tuesday that many banks that were previously skittish about accepting government aid have become more comfortable with the idea as more and more "quality" banks get approval for Tarp funds. The "precipitous drop in the economy" has also caused many bankers to change their views, he said.
Twenty-nine percent of bankers seeking Treasury capital said they would use it to support organic growth; 28% said they would use it help absorb loan losses; 11% said they would try to improve capital ratios; and 8% said they would put it toward acquisitions. The rest were undecided or had not yet determined a specific use for the capital.