Private banks get public capital

The Treasury Department announced a new wave of bank investments, including stakes in the first privately held institutions to get taxpayer money through the $250 billion Capital Purchase Program.

BailoutSleuth has turned up 23 new participants, approved for a total of $626 million in taxpayer capital. Of those, 13 are privately held companies and one is classified as a community development financial instutition.

S&T Bancorp., of Indiana, Pa., said it was approved to sell $109 million in preferred stock to the government.  The bank, with 55 branches within Pennsylvania, has $4.5 billion in assets. It posted a profit of $44.4 million for the first nine months of 2008, up 3.7 percent.

PlainsCapital Corp. of Dallas was approved for $87.6 million in taxpayer investment and has already received the money. The privately held company is the parent of PlainsCapital Bank, which specializes in serving middle-market companies and high-net worth individuals. It lists its assets at $3.4 billion.

It announced in November that it had agreed to buy First Southwest Holdings Inc., a financial advisory and investment banking firm.

Other privately held companies getting investments from the Treasury Department include Exchange Bank, of Santa Rosa, Calif.; Bridgeview Bancorp Inc., of Bridgeview, Ill., and Fidelity Financial Corp., of Wichita, Kan.

Exchange Bank got $43 million in taxpayer capital, Bridgeview got $38 million and Fidelity Financial got $36.3 million.

S.Y. Bancorp Inc., of Louisville, Ky., said it was approved to sell $43 million in preferred stock to the Treasury Department. The parent company of Stock Yards Bank & Trust said it also raised $28.5 million through a private stock sale.

Smithtown Bancorp of Smithtown, N.Y., said it was approved for $37.8 million in government money. Marquette National Corp., of Chicago, was approved for $35.5 million, and Royal Bancshares of Pennsylvania Inc., based in Narberth, Penn., was approved for $30 million.

The Capital Purchase Program is part of the broader $700 billion Troubled Asset Relief Program. The preferred stock that the publicly traded banks are selling to the government pay an annual dividend of 5 percent for the first five years and 9 percent thereafter. The Treasury Department also gets warrant to buy common stock, which could provide a return to taxpayers if the shares increase in value.

The Treasury Department did not outline the terms of its investments in the privately held banks. A summary sheet reported only that the government received warrants to buy preferred stock, which it exercised immediately.