Handful of banks accept U.S. relief / LJWorld.com

Archive for Sunday, March 15, 2009

March 15, 2009

Here are the Kansas banks receiving funds from the Troubled Asset Relief Program’s Capital Purchase Program, according to the latest list from the U.S. Treasury Department.

Blue Valley Ban Corp., Overland Park, $21.75 million.

Fidelity Financial Corp., Wichita, $36.28 million.

American State Bancshares Inc., Great Bend, $6 million.

Morrill Bancshares Inc., Merriam, $13 million.

UBT Bancshares Inc., Marysville, $8.95 million.

Equity Bancshares Inc., Wichita, $8.75 million.

The Freeport State Bank, Harper, $301,000.

Bern Bancshares Inc., Bern, $985,000.

Troubled Asset Relief Program funds approved by Congress for the nation’s banks have so far attracted only a few takers in Kansas.

The U.S. Treasury Department’s latest listing of banks accepting TARP funds showed there were eight in Kansas. None was based in Lawrence.

That’s a low number of banks, but not surprisingly low for Kansas, said Robert DeYoung, professor of financial markets and institutions at Kansas University.

“I would imagine that most banks in Kansas would start out with higher capital and stronger deposit bases and wouldn’t have as much need for TARP,” DeYoung said.

Last year Congress approved $350 billion for TARP under President George W. Bush. Since President Barack Obama took office, Congress signed off on another $350 billion. TARP funds are intended to help stabilize the financial system.

It doesn’t cost banks anything to apply and see what’s available through TARP, DeYoung said. Some banks could do that and then decide to reject the funding, he said.

In a news release late last month, Landmark Bancorp Inc. stated that it had received preliminary approval for up to $12 million in capital from the Treasury Department. The financial institution’s board of directors decided not to participate.

Landmark Bancorp is the holding firm for Landmark National Bank, with branches in Lawrence, Topeka and several other Kansas towns.

Landmark faced a deadline to apply for the funding last November and thought it prudent to apply while officials gathered additional information about the program, Landmark President Patrick Alexander said.

“In the final analysis, we felt the benefits of the TARP capital to Landmark did not justify the expense of participating in the TARP Capital Purchase Program,” Alexander said.

Alexander went on to say that Landmark capital levels will allow it to grow, making loans and adding additional branches.

If a bank accepts TARP funds, the Treasury is making an equity investment by buying preferred stock certificates. The bank is not getting a loan. Treasury expects banks to buy back the certificates in a few years.

DeYoung said he wouldn’t be surprised to see more Kansas banks take TARP funds.

“I don’t think it will be a deluge,” he said, noting that the second round of TARP funds have more strings attached to them than the first round did.

Community banks — such as most of those in Kansas — differ from the big Wall Street banks. Wall Street banks are much larger and get much of their funding from public capital and debt markets, DeYoung said. Sources of funding are different from those of community banks.

“Community banks know their customers. They have close relationships with their customers, and the Wall Street bank doesn’t,” DeYoung said.

Discussion

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15 March 2009
at 9:13 a.m.

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Godot (Anonymous) says…

Blue Valley Bank was early in the game on making mortgage loans solicited over the internet. I saw their operation in the 2000 and was shocked and very uneasy about what they were doing.
15 March 2009
at 4:11 p.m.

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srj (Anonymous) says…

I like the fact that Obama made the banks life harder by taking the money. Bush just gave it to them, and they stockpiled it or bought other banks (or companies). Granted we did have banks runs in Sept/Oct that the media I noticed avoided reporting.

And did you notice the big banks making money again? Not only do they they loan money with almost full backing from the government, they get to pay the depositors nothing.