U.S. banks paying back TARP funds?

On Tuesday several small regional banks announced they have already paid back TARP money given to them previously by the government as a federal aid. All of the banks said they repaid their rescue loans by redeeming all of the preferred shares of stock they sold to the Treasury Department in December as part of the Troubled Asset Relief Program, which was confirmed by the Treasury Department. The announcements are the first instances of banks paying back TARP money.

Thus IberiaBank of Lafayette, La., repaid $90 million; Old National Bancorp of Evansville, Ind., paid back $100 million; Signature Bank of New York repaid back $120 million; and Bank of Marin Bancorp of Novato, Calif., paid back $28 million.

CEO of Bank of Marin Russell A. Colombo said in a statement it was in the “best interests of our customers, shareholders and employees” to pay back the money due to operating restrictions placed on his bank for participating in TARP. He also added by participating in TARP, his bank “did our part to help stimulate the local economy during a volatile time for the financial markets.”

IberiaBank Chief Executive Daryl G. Byrd anticipates to incur a $2.2 million charge in the first quarter in the form of an accelerated deemed dividend to account for the difference between the amount at which the preferred stock sale was initially recorded and its redemption price. He says that repurchasing of the preferred stock will enable the bank to continue to fulfill its mission of serving as a community partner with integrity. 

President and CEO of Signature Bank Joseph DiPaolo believes that the return of these funds will let the bank continue implementing its business model throughout the metropolitan New York area.