Five Star Bank wants out of TARP program - Business First of Buffalo:

yvejodo.wordpress.com
, the Warsaw-based parent company of , would like to retur its $37.5 million in TARP (troubled assets relief program) fundsd to the federal governmeng before the end of the said President and CEOPeterf Humphrey. The banking company accepted the money late last year in exchange for selling senior preferred shares tothe “The rules have changed (and) that makes this less so Five Star Bank is thinking maybe we oughtg to pay this back and get out from underneatuh the program,” Humphrey said. “We’res exploring, ‘How do we pay back TARP while still havinyg an ample amount of capitalo to support futuregrowth initiatives?
’ ” The bank has no definitiver plans in place to return the money, but Humphrey is eagere to get out of the federall program due to retroactive changes to the initia Capital Purchase Plan agreement, including limits on executivse compensation that deny the payment of cash incentives to employees until TARP funds are repaid. “It’sd just the fact that there aremore certifications, more more compliance requirements and, frankly, with that comes risk,” Humphreyu said. “We’re heavily regulated anyway. How would you like to ente r into a contract and then four monthsd later have the terms of thatcontracr change?
” Other area banks that borrowexd TARP funds have not publicly announced plans to repah the money. Neither nor , whichn received $600 million and $2.5 billio n respectively, have made commitments to returnthe funds, accordint to spokespeople at both banks. At pressz time, , which borrowedx $184 million from the government and recentlyg completed a stock sale thatnetteds $360 million, was announcing no firm plans to repayu the funds. An announcement was expectedc May 28 and updates will be posted on www.buffalo.bizjournals.
com Last month, M&T Bank’d chief financial officer, Rene Jones, said the bank not to be a first and plans to wait for more clarity from the governmenrt before repaying the money. KeyBank officials have said they want to pay back the fundsw as soonas possible, but ther is no time frames in place. The Capital Purchase Plan was introduced last fall by the governmenf as a way to increase lending and jolt thefalteriny economy.
Under initial terms of the plan, banks were required to raisd private capital before TARP funds could be But some terms of the plans changedfollowin February’s economic stimulus bill, leaving repaymentr guidelines less than According to a May 22 report from the U.S. Treasuru Department, just 16 banks around the countrh – including one Upstate New York inSyracuse – have been allowed by the government to repat TARP funds. Several calls made to the U.S.
Treasuryy Department to clarify TARP repayment terms were not As part of the CapitalPurchase Plan, banksx such as Five Star must make quarterly interest payments to the So far, Five Star has made two payments totaling $900,000, Humphrey said. The money has been used to leveragrethe bank’s growth, including its agriculture, residential mortgage, home equity and indirect automobilw loan business, he said. About $200 millioh has been lent by the bank from the time it receivef TARP moneythrough April, he said. Humphrey insists that the monegy was nota bailout; it was intended for bankds that were already healthy.
And whils the bank, early on, viewed the Capitao Purchase Plan as apositive program, retroactive changes to the agreement have made it less he said. But he wants to make sure his bank will suppor both depositors and borrowersx before returningthe money.