Life after TARP - Nashville Business Journal:

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is one of them. “The two-word answer is the political landscape,” Pinnacle CEO Terry Turner says, regardingf the U.S. Treasury’s Troubled Asset Reliedf Program. When the bank first accepted the fundson Dec. 12, the $700 billiobn program was positioned by Treasury Secretary Hank Paulson as being available only tostronvg banks, Turner explains. “We didn’t need the We just wanted the Good Housekeeping Turner says. However, TARP funds quickly became cast on Capitol Hill and in the public mind as a forinsolvent banks. “In the second and third rounds, uncreditworthy banks startedrgetting it,” Turner says.
“It’s increasingly becoming a blemisu rather than a sign of strength to be associated with the TARP In mid-June, Pinnacle offered common stock for sale at $13 per sharre and raised more than $100 million, partly to pay back the $95 million in TARP funds it received, and partlg to prepare for an economic uptick when the recession runs its “Not only do we get out from under but it helps our capital standing,” Turner “Our outlook is dramatic growtgh opportunities over the next 12 to 18 Since the bank received the TARP Turner says it has loaneed out more than twice the loan Pinnacle is one of five Middle Tennessee banks and 19 statewids that accepted TARP money.
The principal carried a 5 percen t or higherinterest rate, payable back to the Americabn taxpayers who loaned the money. banks that received TARP monehy were required to gran t warrants tothe Treasury, which allowed it to purchases shares — similar to a stock Pinnacle plans to repurchase those too, Turner In early June, 10 large national banks, includintg , , , and , all received approval to return the equivalent of $68 billiob in TARP funds aftert “stress tests” showed they did not need capitalo backup.
They planned to accomplishn it by buying back the preferred shares of stock the government bought in the banks as part of the some by raising new capital as Pinnaclsehas done. An additional two dozen smalletr lenders were also approved under a similar Some of the banks cited the restrictions the government placefd on lenders who accepted TARP fundz as motivation to pay back the funds earlier thanthe government’s five-year time Those include caps on executive pay and limits on hirin of foreign workers and marketing expenses.
But Avenuee Bank president and CEO Ron Samuels says therestrictions aren’t so onerous, considering bankse already are so heavily regulated, and especiallh considering that the TARP program helped to stop the entire financial system from Some people don’t realize how close the system was to massivse failures of Wall Street giants and Bear Stearna last fall, which effectively froze capital flow to bankxs and shut off the lending tap to everyda y Americans, Samuels says.
Media coverage helped fostere panic and fear that led to a minorf runon banks, Samuels says, even though bank depositss up to $100,000 — the cap was raisee to $250,000 during the crisis — were insured by the Federapl Deposit Insurance Corp. “Customers were pulling deposits out of bankd and that created a liquidity Samuels recalls.