At least four banking companies announced Tuesday that they had returned the government's capital.
Iberiabank Corp. in Lafayette, La., Old National Bancorp in Evansville, Ind., Signature Bank in New York, and Bank of Marin Bancorp in Novato, Calif., said they have redeemed all the preferred shares they issued to the Treasury Department.
The economic stimulus package enacted on Feb. 17 made it easier to pay back funds received under the Troubled Asset Relief Program. As originally designed, banks had to raise equivalent funds from private investors before repaying Tarp money. That requirement has been dropped, but financial institutions still must receive approval for any payback from their primary federal regulator. Treasury published guidelines explaining the process on March 25.
Other banking companies have announced that they will return the capital they received as soon as possible, including the $16.3 billion-asset TCF Financial Corp. in Wayzata, Minn., and the $82 billion-asset Northern Trust Corp. in Chicago.
The Treasury agreement requires 30 days' notice before the redemption, and the $5.4 billion-asset Iberia is believed to be the first to officially give that notice. It did so late last month.
On Tuesday, it was also the first to say it had repaid the money.
Many healthy Tarp recipients have become disenchanted with the program, saying that the political climate shifted from one where they were encouraged to take the money to help stimulate the economy to one where they are being treated punitively.
Iberia had received $90.6 million in government capital in December, Old National, $100 million; Signature, $120 million; and Bank of Marin, $28.2 million.
Iberia said it would incur $3.3 million in dividend charges in the first quarter due to the redemption: $2.2 million to account for a difference in the redemption price and the amount at which the initial stock sale was recorded; and $1.1 million for a previously scheduled cash dividend.
Iberia said it also intends to repurchase the warrant it issued as part of the Tarp transaction. The warrant is for up to 138,490 shares of Iberia's common stock.
The company said that it would account for the warrant repurchase in the second quarter, but that it does not anticipate any negative financial impact.
Daryl G. Byrd, Iberiabank's president and chief executive officer, has complained that the public feels Tarp recipients are troubled and deserve to have new requirements imposed on how they do business.
"When we decided to accept funds under this program, we believed we were the type of healthy bank that could employ the funds in the manner consistent with the goals initially set out by Congress and the Treasury in supporting the expansion of credit to the markets we serve," Byrd said in a press release when Iberia announced its plan to exit Tarp.
"We believe recent actions, interpretations, and commentary regarding various aspects of the program places our company at an unacceptable competitive disadvantage. Our board of directors has determined that continued participation in this program is no longer in the best interest of our company and its shareholders."
