One approval, one defection

Another bank has been approved for taxpayer capital through the Treasury Department's Troubled Asset Relief Program, which is facing a growing number of defections by prior recipients.

American Community Bancorp Inc., of Evansville, Ind., said it was approved to sell $7.5 million in preferred stock to the government. It is the parent company of the Bank of Evansville. The company reported profits of $1.3 million for 2008, up 157 percent from the prior year. However, it posted a $180,872 loss for the fourth quarter, primarily because of increased loan-loss provisions.

Meanwhile, Sun Bancorp Inc. said it filed notice with the Treasury Department to redeem the $89.3 million in shares it sold to the government through the TARP Capital Purchase Program. Sun Bancorp is based in Vineland, N.J. It has $3.6 billion in assets and operates 70 Sun National Bank branches in its home state.

"When the Capital Purchase Program became available to well capitalized and healthy financial institutions like Sun, it was a positive partnership between the government and business to stimulate the economy through additional lending and support,'' President Thomas X. Geisel said in a prepared statement. "The partnership then became politicized, the rules and regulations changed, and the dynamics of the partnership substantially shifted. These changes significantly restricted the way we support our customers and communities, as well as the way we run our business."

Sun Bancorp is the fourth TARP recipient, out of nearly 500, to notify the Treasury Department of its intent to pull out of the program. Signature Bank, of New York, said Tuesday that it intended to return the $120 million it received.

The chief executive of Independent Bank Corp., which operates Rockland Trust in Massachusetts, said it also might return its $78 million in TARP money. Christopher Oddleifson told The Patriot Ledger in Quincy, Mass., this week that revised compensation rules for banks getting taxpayer capital could make it harder for the company to recruit and retain talented managers.