Capital Investments Continue as Firms Exit TARP

The Treasury Department invested another $121.85m in 12 financial institutions through the Troubled Asset Relief Program (TARP) as another four firms returned some $570m by repurchasing stock from the government, according to the department. The investments, made through the Capital Purchase Program (CPP), marked the latest in a series of efforts to bolster banks’ capital and provide liquidity to the financial markets. The only publicly-traded firm to participate in Friday’s daily infusions, Mackinac Financial (MFNC), received $11m. Standard Bancshares received the largest capital injection of the day, $60m, while Business Bancshares and Peoples Bancorporation followed with $15m and $12.66m respectively. The smallest capital purchase of the day, $1.31m, went to Indiana Bank. Three publicly-traded firms and one private firm on April 22 joined the growing number of banks that have repaid their CPP funds. First ULB repaid its $4.9m, Independent Bank (INDB) repurchased its $78.16m in shares, FirstMerit (FMER) repaid its $125m and TCF Financial (TCB)  gave back its $361.17m. The treasury so far funded $198.89bn in total capital purchases and received $1.04bn in returned funds from 11 firms as of April 22 for an adjusted capital purchase total of $197.85bn. The CPP is just one of a number of TARP vehicles designed to stimulate financial markets. The newest addition to the TARP family, the Home Affordable Modification Program, offers dollar incentives to servicers to modify mortgages of at-risk borrowers under the Obama Administration’s Making Home Affordable plan. Two more servicers recently joined the growing list of participators. The treasury granted up to $156m in servicer, lender/investor and borrower incentives to Green Tree Servicing and up to $195m to Carrington Mortgage Services, bringing the department’s total commitment through the TARP to $14.27bn, according to the latest transaction report. Write to Diana Golobay at [email protected]. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments.

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