A handful of banks that remain in the Troubled Asset Relief Program appear to have very few options for exiting the nearly seven-year-old initiative.

The Treasury Department still holds securities in 21 banks, compared to 707 when the program was at its height. The ranks have shrunk as banks exited the program or had their shares auctioned off to private investors.

Other than the $13 billion-asset First BanCorp in San Juan, Puerto Rico, all remaining participants are smaller community banks, and many of them are still struggling to recover from the financial crisis. Eighteen Tarp banks are behind on anywhere from 10 to 26 dividend payments.

Such difficulties could stymie efforts by the Treasury to finally put an end to the program.

"It's safe to assume that these banks present a unique challenge," said Kevin Petrasic, a lawyer at White & Case and a former Treasury official. "Treasury has to figure out how to offload these as quickly as possible."

That could be easier said than done, as many remaining Tarp participants face tough conditions in their local markets. First BanCorp, for instance, continues to weather difficult financial conditions in Puerto Rico, including high unemployment. The company was able to work out a deal with Treasury to convert is preferred stock into common stock.

Others have been the subject of controversy. OneUnited Bank in Boston made headlines in a few years ago after a congressional ethics probe of Rep. Maxine Waters, D-Calif., and the top Democrat on the House Financial Services Committee. Waters, who was cleared of any violations, had been accused of helping the $642 million-asset OneUnited obtain Tarp funds while her husband owned stock in the bank.

For bankers, being on a short list of banks still taking in possession of bailout funds isn't an enviable position, though several executives said they're doing what they can to get out.

There are "lots of negotiations going on," said Frank Stark, president of Citizens Commerce Bancshares in Versailles, Ky. The $216 million-asset company, which has $6.3 million in Tarp funds, has missed 23 dividend payments, based on Treasury data.

It is unclear what is holding up Citizens' exit; Stark declined to discuss specifics. The company was among a list of American Banker's top-performing community banks this year, with a 10.31% average return on equity over a three-year period.

Cecil Bancorp in Elkton, Md., is putting the finishing touches on a plan to exit Tarp, said Chief Executive Terrie Spiro. "We feel that we're very close to being able to execute around this plan," she said, adding that Cecil will likely make an announcement by the end of this year.

Treasury has moved aggressively in recent years to liquidate its holdings in participating banks. The agency announced a plan in 2012 to auction off shares to private investors. In other instances, Treasury has restructured investments.

"Generally, the process that Treasury has employed has been sort of a triage method in terms of trying to identify the most likely candidates that it can get off the books via auction," Petrasic said.

Treasury has auctioned its shares in 190 community banks, and most were sold at a loss to the agency, according to a recent report. Overall, the Treasury has managed to turn a hefty profit, recovering $226.6 billion in repayments, dividends and interest, compared to its original investment of $204.9 billion.

Liquidating stakes in most remaining banks will be tricky. Most participants have less than $500 million in assets, making it hard to generate enough interest from private investors, industry experts said. In fact, the Treasury twice tried to auction stock in the $539 million-asset Liberty Shares in Hinesville, Ga., but failed to receive a required minimum number of bid.

Given the financial condition of many banks on the list, it could take years for them to build up enough capital through retained earnings to exit on their own.

"The common element among the remaining banks is that they aren't in great shape," said Robert Klingler, a lawyer with Bryan Cave.

"Treasury is continuing to implement the three-pronged exit strategy" for Tarp, a Treasury spokesman said in an emailed statement. "That strategy includes waiting for those banks that are able to repay in full in the near future to do so, restructuring the investments in limited cases, and selling investments through auctions in cases where the bank is not expected to pay in the future."

Another option could involve negotiating a flexible restructuring with bank management, Klingler said. It would likely involve taking a "significant" discount, though he said such a move could attract criticism from lawmakers about taking a potentially steep loss on taxpayer funds, or "playing favorites" in the banking industry.

"I don't know how you otherwise get out of these investments," Klingler said.

While Treasury has succeeded in winding down most of the program, it may be hard-pressed to find a way to liquidate its shares, while also settling on a fair outcome with executives of troubled banks, Petrasic said.

"From a public policy perspective, how do you deal with institutions on the list that have unique circumstances … that are not necessarily of their own doing?" Petrasic said.

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