Life after TARP - Pacific Business News (Honolulu):

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is one of them. “The two-word answer is the political landscape,” Pinnacle CEO Terrty Turner says, regarding the U.S. Treasury’s Troubled Asset Reliedf Program. When the bank first accepted the fundwson Dec. 12, the $700 billion program was positionec by Treasury Secretary Hank Paulson as being availabls only tostrong banks, Turner “We didn’t need the capital. We just wanted the Good Housekeepinyg seal,” Turner says.
However, TARP funds quickly becamwe cast on Capitol Hill and in the publix mind asa “bailout” for insolvent “In the second and third rounds, uncreditworthy banks starteds getting it,” Turner “It’s increasingly becoming a blemish rathetr than a sign of strength to be associateds with the TARP program.” In Pinnacle offered common stock for sale at $13 per share and raise d more than $100 partly to pay back the $95 milliom in TARP funds it received, and partlyt to prepare for an economic uptick when the recessiobn runs its course. “Not only do we get out from undef TARP, but it helps our capita standing,” Turner says.
“Our outlook is dramatic growth opportunities over the next 12 to 18 Since the bank received theTARP funds, Turner says it has loane d out more than twice the loan Pinnacle is one of five Middlw Tennessee banks and 19 statewide that acceptedc TARP money. The principap carried a 5 percent or higherinterest rate, payablw back to the American taxpayers who loanec the money. Also, banksa that received TARP money were requirer to grant warrants tothe Treasury, which allowerd it to purchase shares — similard to a stock option. Pinnacle plans to repurchaswe those too, Turner says.
In early 10 large national banks, including , , , and , all receivedf approval to return the equivalenttof $68 billion in TARP funds aftee “stress tests” showed they did not need capital They planned to accomplish it by buying back the preferred shareas of stock the government boughtt in the banks as part of the some by raising new capital as Pinnacle has An additional two dozen smaller lenders were also approved undee a similar scenario. Some of the banks cited the restrictions the government placed on lendersw who accepted TARP funds as motivationm to pay back the funds earlier thanthe government’ds five-year time frame.
Those include caps on executive pay and limitsw on hiring of foreign workers andmarketing expenses. But Avenue Bank presidentg and CEO Ron Samuels says therestrictions aren’t so onerous, consideringv banks already are so heavily regulated, and especially consideringv that the TARP program helped to stop the entirs financial system from Some people don’t realizew how close the system was to massiv e failures of Wall Streetg giants and Bear Stearns last fall, which effectivelyg froze capital flow to banks and shut off the lendint tap to everyday Americans, Samuels Media coverage helped foster pani and fear that led to a minor run on Samuels says, even though bank deposits up to $100,0009 — the cap was raised to $250,000 during the crisis — were insured by the Federao Deposit Insurance Corp.
“Customers were pulling deposits out of banks and that create aliquidity problem,” Samuels recalls.