Another bank opts to return TARP money

Bank of Marin has notified the Treasury Department that it intends to redeem the $28 million in preferred stock it sold to the government in December, making it the fifth bank to officially opt out of the Troubled Asset Relief Program.

President Russell A. Columbo said in a letter to customers and shareholders that Bank of Marin agreed to take the money to help stimulate the local economy at a volatile time for the financial markets.

Congress voted in October to authorize $250 billion in government investment in U.S. banks through TARP initiative called the Capital Purchase Program. The capital injections were intended to shore up battered balance sheets and spur lending.

Columbo noted that Bank of Marin, which is based in Novato, Calif., has abided by the spirit of the TARP legislation. It originated $27.1 million in new loans within a month of getting the money, he said.

"However, the rules of the TARP program have changed frequently and have had unforeseen negative implications as to how we can best run our business,'' Columbo said in his letter. "We have operated successfully as an independent institution for nearly 20 years, and while we respect the goals of the TARP program, we believe we are closest to the needs of our local community. As a result, our Board of Directors and senior management team have determined it is in the best interest of our shareholders, customers and employees to end our participation in the Capital Purchase Program and continue to operate independently."

Meanwhile, the president of another San Franciso area bank said it also intended to return its TARP money. Brian Garrett, who runs Community Bank of the Bay in Oakland, told the San Francisco Business Times that its board had authorized the return of $1.75 million it got in January.