January 2009 Archives

Regulators shut down three more banks Friday, and sold the remains of two of them to financial institutions that had received taxpayer capital through the Treasury Department's $700 billion Troubled Asset Relief Program.

The Federal Deposit Insurance Corp. said there were no takers for the operations of the third bank, MagnetBank of Salt Lake City.

Regulators have closed six banks so far this year, compared with 25 for all of 2008. Of the six that failed, four were taken over by other insitutions whose balance sheets were bolstered with TARP money. The original legislation creating the $700 billion aid program for the financial services industry did not list those types of deals as a goal.

The Comptroller of the Currency closed Ocala National Bank, of Ocala, Fla., on Friday. It had $205.2 million in deposits and $223.5 million in assets. The FDIC was named receiver, and sold the deposits to CenterState Bank of Winter Haven, Fla.

Ocala National's four branches will open Monday as CenterState branches.

CenterState's parent company, CenterState Banks of Florida Inc., got $27.9 million in new capital from the Treasury Department in November by selling preferred stock to the government.

The Office of Thrift Supervision shut down Suburban Federal Savings Bank, of Crofton, Md., at the end of last week. Its deposits went to Bank of Essex, based in Tappahannock, Va.

Suburban Federal had deposits of $302 million and assets of $360 million. The FDIC said that, in addition to taking over Suburban Federal's deposits, Bank of Essex agreed to buy roughly $348 million of the thrift's assets at a $45 million discount.

Suburban Federal's seven branches reopened Saturday as Bank of Essex branches. 

Bank of Essex's parent company, Community Bankers Trust Corp., got $17.7 million in taxpayer capital in December through the Treasury Department's stock-purchase program. A few weeks earlier, it had taken over the deposits and four branches of another failed bank, Community Bank of Loganville, Ga.

Community Bank had deposits of $611.4 million and assets of $681 million. Bank of Essex paid a premium of  $3.2 million to take over those deposits, and also bought $84.4 million of the bank's assets. 

MagnetBank in Salt Lake City had deposits of $292.9 million and assets of $282.8 million at the start of December. Because the FDIC was unable to find anyone to take over the bank's operations, it will return the deposits to customers.   

The Government Accountability Office said in a new report that oversight of the $700 billion Troubled Asset Relief Program has improved, but still needs better mechanisms for tracking the flow and impact of the money.

The GAO said in its report that, to better track the use of taxpayer dollars being invested in U.S. banks, the Treasury Department now requires the 20 largest recipients to report each month on their loan balances and originations.

The banks also are required to provide a narrative account of trends in their lending activities and to describe any changes they have made in their lending standards.

Through Jan. 23, the Treasury Department had distributed $293.7 billion in TARP funds. The bulk of that money went to 317 U.S. banks that sold preferred stock to the government as part of a plan to strengthen their balance sheets and spur lending.

As it did in its first report last month, the GAO called on the Treasury Department to more clearly articulate its strategy and goals for the program. And it recommended that officials take steps to ensure that the banks and other companies getting government aid comply with the program's restrictions, which include limits on executive compensation, stock buybacks and dividend increases for other shareholders.

To read the full report, click on this link.

Four more banks have announced their approval to receive taxpayer capital through the Treasury Department's $700 billion Troubled Asset Purchase Program. But a growing number of financial institutions are opting not to take the government money.

At least five banks said this week that they had decided against selling preferred stock to the government. They included United Bankshares Inc., which was approved for $197.3 million in aid, and Bridge Bancorp Inc., which was approved for $15 million

United Bankshares said that although it was honored to be selected for the Treasury Department's stock-purchase program, it decided that going forward with the deal would not have been in the best interests of shareholders.

"The program's restrictions on possible future dividend increases, the dilution to earnings, and the uncertainty surrounding future requirements of the program outweighed the benefits of United's participation,'' Chairman Richard Adams said.

The new additions to the Treasury Department's aid list included PremierWest Bancorp, of Medford, Ore, and German American Bancorp of Jasper, Indiana. PremierWest was approved to sell $41 million in preferred stock to the government; German American, the holding company for a group of small banks, was approved for $25 million.

PremierWest said Thursday it lost $3.09 million in the fourth quarter of 2008, compared to a profit of $3.75 million in the same period in 2007. Its net income for the full year was $648,000, down 96 percent from the prior year.

German American earned $3.5 million in the fourth quarter, up 25 percent from a year earlier. It said profits for the year totaled $13 million, an increase of 38 percent. The bank noted that its territory, Southern Indiana and parts of Kentucky, had not been as badly hurt by the economic and housing crisis as other parts of the country.

Ameriana Bancorp, of New Castle, Ind., said it was approved for as much as $9.79 million in taxpayer capital. Heritage Bankshares Inc. of Norfolk, Va., was approved for $5.7 million.

The Treasury Department said Wednesday that it would make public the completed investment contracts with every company that has received taxpayer assistance through the $700 billion Troubled Asset Relief Program.

As the first step in its effort to boost transparency and accountability, the Treasury Department posted on its web site the stock purchase agreements it signed with the nine major banks that got the first wave of funding, totaling $125 billion.

The Treasury Department also posted other contracts covering aid packages it provided to Citigroup Inc., American International Group Inc., General Motors Corp., Chrysler LLC and GMAC LLC.

In announcing its revised transparency policy, the department said it still planned to redact confidential or propriety information from the public copies of the agreements. It said it would post new investment contracts within five to 10 business days of their signing. It said it would add older contracts on a rolling basis over the coming weeks.

The Treasury Department did not say whether its new emphasis on transparency would extend to the services contracts it signed with nine financial, accounting and legal firms that are providing advice on its TARP investments.

The copies of the contracts posted on the agency's web site last year had blacked out or redacted sections where information about compensation rates or other financial details should have been. The contract with Bank of New York Mellon -- the master custodian for the $700 billion that will flow through TARP - obscured the total value of the deal, as well as the formula used to determine the company's compensation.

BailoutSleuth filed requests with the Treasury Department for unredacted versions of the contracts under the federal Freedom of Information Act. We still are awaiting a decision.

Here are links to the contracts posted Wednesday on the Treasury Department's site:

Bank investments

Citigroup Inc.

JP Morgan Chase & Co.

Wells Fargo & Co.

Bank of America Corp.

Merrill Lynch Inc.

Goldman Sachs Group Inc.

Morgan Stanley

Bank of New York Mellon

State Street Corp.

Rescue packages

Citigroup Inc.

American International Group Inc.

Auto industry investments

General Motors Corp.

GMAC LLC

Chrysler LLC

The Treasury Department said Tuesday it completed investments in 23 more banks, including 18 that had not previously been announced as recipients of taxpayer capital.

The latest deals accounted for $386 million of the $700 billion allocated for the Troubled Asset Relief Program. All but a few of the banks in the latest round of investments are privately held.

Liberty Bancshares Inc., of Jonesboro, Ark., got the biggest chunk of money, selling $57.5 million in stock to the government.

Princeton National Bancorp Inc., of Princeton, Ill., got $25.1 million, according to the summary of transactions released by the Treasury Department. Princeton National is the publicly held parent company of Community First National Bank. On Monday, the company reported a profit of $7.33 million for 2008, up 8.2 percent from 2007.

BankFirst Capital Corp., of Macon, Miss., sold $15.5 million in preferred stock to the government. Three other banks also got more than $10 million each in the latest round of deals. The remainder got amounts ranging from $1.04 million to $8.75 million.

Stonebridge Financial Corp., of West Chester, Pa., sold just under $11.0 million in stock. Crosstown Holding Co., which operates 21st Century Bank in Blaine, Minn., got $10.6 million, and Midland States Bancorp Inc., of Effingham, Ill., got  $10.2 million.

Follow the link to the rest of the story to see the other banks that got taxpayer capital.

PrivateBancorp Inc. announced its approval for $244 million in taxpayer capital from the Treasury Department on Monday, the same day it posted a $62 million loss for the fourth quarter.

PrivateBancorp took $119.3 million in loan-loss provision in the three months that ended Dec. 31, with most of the charge offs tied to residential real estate. The quarterly loss was the company's fifth in a row. It lost $91.5 million for all of 2008.

PrivateBancorp is based in Chicago and has offices in nine states. It says on its web site that it caters to middle-market commercial and commercial real-estate companies, as well as business owners, executives, entrepreneurs and wealthy families.

The bank has more than $10 billion in assets and embarked on a major growth initiative in 2007. The company said Monday that it added $4 billion in new loans to its portfolio last year, including $700 million in the fourth quarter.

PrivateBancorp will sell $244 million in preferred stock to the Treasury Department through the $700 billion Troubled Asset Relief Program. The stock will pay an annual dividend of 5 percent for the first five years and nine percent thereafter.

"This additional capital infusion will allow us to continue to meet the lending needs of our clients,'' said Larry D. Richman, president and chief executive officer. "We reported strong loan growth throughout 2008, a sign that clients appreciate and value our relationship focus particularly in the current market environment.''

The Treasury Department also will get warrants to buy an additional 1.29 million shares of PrivateBancorp's common stock, at $28.35 a share. The bank's stock plunged 22.2 percent after Monday's earnings announcement, closing at $15.32 a share.

PrivateBancorp said about half of its loan portfolio is now concentrated in the commercial and industrial segment, including owner-occupied commercial real estate. It said the bulk of its charge offs on residential real estate were in Atlanta and Michigan, two of the states hit hardest by the economic crisis and housing slump.

It said that $33 million of its Atlanta residential development loans were impaired, or 39 percent of its total there. It said $12 million of its Michigan residential development loans were impaired, or 29 percent of its total there.

Another bank, Southern Bancorp Inc. of Arkadelphia, Ark., got $11 million in TARP money last week. Its focus is on community development in rural Arkansas.

Three small banks have announced their acceptance into the Treasury Department's $700 Troubled Asset Relief Program.

United American Bank, a publicly held company in San Mateo, Calif., said Friday it was approved to sell $8.7 million in preferred stock to the government. The bank's earnings for the third quarter of 2008 were off 89 percent from a year earlier. The bank attributed the drop to lower interest rates and a handful of problem loans.

Metro City Bank, of Doraville, Georgia, said it was approved for $7.7 million in taxpayer capital. The bank, in Atlanta's northeastern suburbs, primarily serves that area's Asian-American population.

Rockport National Bancorp Inc., of Rockport, Mass., said it was approved for $3 million from the Treasury Department.

The preferred stock that the banks are selling pays an annual dividend of 5 percent for the first five years, and 9 percent thereafter. The Treasury Department also gets warrants to additional stock, which could provide extra returns to taxpayers.

For the second time this month, regulators shut down a struggling bank and turned its remains over to another financial institution that had received millions of dollars in taxpayer support through the Troubled Asset Relief Program.

The California Department of Financial Institutions took over 1^st Centennial Bank, of Redlands, on Friday. 1^st Centennial Bancorp, its publicly traded parent company, had   warned earlier in the week that the six-branch bank was "critically undercapitalized'' and would either need to find a buyer or cease operations.

The Federal Deposit Insurance Corp. was appointed as receiver for the failed bank. It  sold most of the deposit to First California Financial Group Inc., of Westlake Village. The 1^st Centennial branches will open Monday as First California branches.

First California was selected by the Treasury Department in December to receive $25 million in taxpayer investment through the $700 billion TARP initiative. The Treasury Department has been injecting capital into U.S. banks in an effort to strengthen their balance sheets and stimulate lending. So far, it has doled out nearly $200 billion.

On Jan. 16, regulators shut down the Bank of Clark County, in Vancouver, Wash., and turned its deposits over to Umpqua Bank. Its parent company, Umpqua Holdings Corp., got $214.2 million in TARP money.

1^st Centennial lost $19.8 million in the first nine months of 2008, compared with a profit of $6.25 million in the same period of 2007. Much of the red ink -- $15.5 million - came in the quarter that ended Sept. 30. The bank boosted its loan loss provisions by 24.9 million, noting that its non-performing loans had risen to $105.8 million, up from $15.3 million at the start of the year.

1^st Centennial had $223.7 million in loans for real estate construction and development at the end of September, or roughly 42 percent of its loans outstanding. It had another $191.6 million in loans on commercial property and multi-family property.

Earlier this month, the bank reported $803.3 million in total assets and $676.9 million in total deposits.

First California Financial Group has more than $1.1 billion in assets. It posted a profit of $5.23 million for the first nine months of 2008, up 18.1 percent from the same period of 2007.

The Treasury Department said Thursday it had finalized an additional $1.5 billion in bank investments, including stakes in 17 institutions that were new to BailoutSleuth's running tally.

Those 17 companies got a total of $363 million in taxpayer capital.

Dickinson Financial Corp. II, of Kansas City, Mo., got $146 million. The privately held company operates Bank Midwest, Armed Forces Bank and several other banks. Its chief executive, Rick L. Smalley, recently completed his second three-year term on the board of directors of the Federal Reserve Bank of Kansas City.

Old Second Bancorp Inc., of Aurora, Ill., got $73 million in taxpayer capital, while State Bancshares Inc., based in Fargo, N.D., got $50 million. 

Citizens & Northern Corp., of Wellsboro, Pa., got $26.4 million, Baraboo Bancorporation, of Baraboo, Wis., received $20.7 million, and BNCCORP Inc., of Bismarck, N.D. got $20.1 million.

The Treasury Department is injecting capital into the banks through the purchase of preferred stock. Those shares pay annual dividends of 5 percent for the first five years, and 9 percent thereafter.

Publicly traded banks also give the government warrants to buy shares of their common stock, which could provide a return to taxpayers if they increase in value.  Privately traded institutions give the government warrants to buy more preferred stock. The Treasury Department has been exercising those warrants immediately.

Other banks getting money in the new wave of investments include Centra Financial Holdings Inc., of Morgantown, W.Va., which got $15 million, and Morrill Bancshares, of Merriam, Kan., which got $13 million.

First Manitowoc Bancorp Inc., of Manitowoc, Wis., got $12 million, while TCB Holding Co., of The Woodlands, Tex., got $11.7 million.

Follow the link for the remainder of the new recipients.

Five more banks have announced their acceptance into the Treasury Department's $700 billion Troubled Asset Relief Program, amid reports that political influence is helping guide some of the agency's decision making.

The five banks were approved to sell a total of $55.5 million in preferred stock to the government. The Treasury Department has now picked more than 250 companies to receive taxpayer capital.

The Wall Street Journal reported Wednesday night that some of those financial institutions were included in the program after intense lobbying -- as well as direct intervention -- by certain members of Congress.

As examples, the paper cited Colonial BancGroup Inc., based in Montgomery, Ala., which was approved for $550 million in TARP money, and OneUnited Bank of Boston, which got $12.1 million. The Journal said Colonial and other Alabama banks benefitted from lobbying by two members of their Congressional delegation who sit on key committees.

The paper said OneUnited was aided by U.S. Rep. Barney Frank of Massachusetts, who heads the House Financial Services Committee. He acknowledged that he wrote a provision into the TARP legislation with the specific goal of helping the bank, which has been hurt by investment losses.

OneUnited, one of the largest African-American owned banks in the country, was chosen for the TARP program in December. Two months earlier, it reached an agreement with the Federal Deposit Insurance Corp. on a cease-and-desist order aimed at reining in what regulators called "unsafe and unsound banking practices."

One of the problem areas cited by the FDIC was excessive executive compensation, including benefits and perks. The Boston Business Journal reported that the FDIC objected to OneUnited's purchase of a 2008 Porsche that was registered at the address of the bank's chief executive, Kevin Cohee.

The FDIC ordered OneUnited to sell all bank-owned vehicles. It also told the bank to stop paying a housing allowance on a beachfront house in Santa Monica, Calif., used by Cohee and his wife, Teri Williams. She is OneUnited's president. OneUnited has bank branches in the Los Angeles area.

OneUnited neither admitted nor denied the FDIC's allegations. The settlement required it to raise additional capital, revise its executive compensation policies and reduce investment risk by diversifying its portfolio.

The newest banks approved for TARP money include Carver Bancorp, of New York, which sold just under $19 million in preferred stock to the government, and ECB Bancorp Inc., of Englehard, N.C., which sold $17.9 million worth.

Somerset Hills Bancorp, of Bernardsville, N.J., said it was approved for $7.41 million in taxpayer capital. WashingtonFirst Bank, of Reston, Va., was approved for $6.6 million, and OptimumBank Holdings Inc., of Fort Lauderdale., Fla., got $4.6 million.

Discover Financial Services has been approved for $1.2 billion in taxpayer capital through the Treasury Department's Troubled Asset Relief Program.

Nine other financial-services companies also announced that they were selected for aid. Collectively, those companies were cleared to sell more than $150 million in preferred stock to the government.

Discover, which is based in Riverwoods, Ill., and is known primarily as a credit-card issuer, announced its acceptance into the $700 billion TARP effort in a filing with the Securities and Exchange Commission.

Texas Capital Bancshares Inc., of Dallas, said it was approved to sell $75 million in preferred stock to the government. United Bancorp Inc., of Tecumseh, Mich., said it was approved for $20.6 million.

Texas Capital Bancshares's earnings for the third quarter of 2008 were off 14 percent from a year ago, in part because of higher loan-loss provisions. It had announced in November that it would seek as much as $130 million through the TARP fund.

United Bancorp's earnings for the third quarter were down 83 percent, also because of higher loan-loss provisions for residential construction and development loans.

Guaranty Federal Bancshares Inc., of Springfield, Mo., said it was approved to sell $17 million in preferred stock to the government. The bank's earnings for the third quarter fell 81 percent, primarily because of loan. Guaranty Federal is the second Springfield bank to be approved for TARP aid

Horry County State Bank, in Loris, S.C., was approved for $12.9 million in taxpayer capital. Salisbury Bancorp Inc. of Lakeville, Conn., got $8.82 million, and Bank of the James Financial Group Inc, of Lynchburg, Va., got $7.7 million.

Treaty Oak Bancorp of Austin, Tex., will get as much as $3.3 million in TARP money,  while Community Bank of the Bay, in Oakland, Calif., will get $1.75 million.

Liberty Bank & Trust Co., based in New Orleans, said it also was accepted into the Treasury Department program. The bank did not specify how much money it was allocated, but its asset base would appear to qualify it for more than $10 million.

Liberty Bank is one of the few African-American owned banks to have received TARP approval. It took over the assets of Douglas National Bank in Kansas City, Mo., last January after that institution become the first of 2008's 25 bank failures.

Regulators shut down two banks Friday, turning over the deposits of one of the failed institutions to a rival that had received taxpayer capital under the Treasury Department's Troubled Asset Relief Program

The Bank of Clark County, in Vancouver, Wash., was closed by regulators in that state after loan losses, tied primarily to real estate, left it with perilously low levels of capital. Its $366.5 million in deposits were assumed by Umpqua Holdings Corp.

Umpqua, which is based in Roseburg, Ore, got $214.2 million from the Treasury Department in November as part of its program to inject capital into U.S. financial institutions through the purchase of preferred stock.

Umpqua is much larger than the bank it took over, with roughly $6.5 billion in deposits. It has 148 branches stretching along the Pacific Coast, from northern California to northern Washington.

The federal Comptroller of the Currency also shut down National Bank of Commerce in Berkeley, Ill., on Friday. Its deposits were purchased by Republic Bank of Chicago, which had headquarters in Oak Brook, Ill.

National Bank of Commerce's two branches reopened today as Republic Bank branches. The failed bank had $402.1 million in deposits. Republic Bank has not received any federal money through the TARP initiative.

The bank closings were the first this year. They followed 25 failures last year, most of which occurred between June and December, after the economic crisis intensified. The FDIC said the two new regulatory actions would cost its deposit insurance fund between $217.1 million and $242.1 million.

The federal government agreed to provide an additional $20 billion to Bank of America Corp., just hours before it announced a $1.79 billion loss for the fourth quarter.

The Treasury Department and the Federal Deposit Insurance Corp. said in a press release issued just after midnight that they also would cover most of the potential losses on a portfolio of $118 billion in troubled assets.

In a separate development, Citigroup Inc. announced an $8.29 billion loss for the fourth quarter and said it would split itself into two companies, dubbed Citicorp and Citi Holdings. The first would operate the company's global banking business. The second would operate Citigroup's other businesses, including its consumer finance and mortgage units, which hold many of its troubled assets.

Bank of America received $25 million in taxpayer capital in the first wave of Treasury Department investments in U.S. financial institutions, announced last October. Part of that money was to help the bank absorb Merrill Lynch Inc.

In the initial transaction, the Treasury Department bought preferred stock that pays an annual dividend of 5 percent and also came with warrants to buy additional shares of Bank of America's common stock. The new investment also involves preferred stock, but those shares carry an annual dividend of 8 percent.

Citigroup also got $25 billion in public investment in October. It received another $20 billion as part of an expanded bailout package that also includes government guarantees on $306 billion in troubled assets.

The Treasury Department is providing Bank of America with additional aid in large part because of Merrill Lynch's deteriorating finances. The bank said preliminary results for Merrill Lynch indicate that it lost $15.3 billion in the fourth quarter.

According to the term sheet for the government's guarantee plan, the pool of assets will include $118 billion of securities backed by residential and commercial real estate, derivative transactions tied to such securities, hedges connected to those investment and certain other financial instruments.

The Treasury Department said the pool will be divided into what it called "cash assets,'' with a current book value of up to $37 billion, and a derivatives portfolio with maximum potential losses of $81 billion.

Bank of America would absorb the first $10 billion in losses. The Treasury Department and FDIC would cover 90 percent of any additional losses, up to $10 billion. Beyond that, the government would provide the bank with loans from the Federal Reserve.

As a fee for providing the protection, Bank of America will issue the government an additional $4 billion in preferred stock paying an annual dividend of 8 percent, plus warrants for more shares.

Bank of America also announced Friday that it was all but eliminating the quarterly dividend on its common shares, reducing the rate to 1 cent a share from 32 cents a share. The move will save the company more than $5 billion a year.

The Senate voted to authorize another $350 billion in spending on the Troubled Asset Relief Program, putting aside objections to the Treasury Department's handling of the first $350 billion.

Fifty two Senators voted to release the funds, while 42 voted to block them. Numerous Republicans who had voted in favor of the TARP legislation in October voted Thursday to block the second half of the funding, as did a few Democrats. It appears that the Senate imposed no new requirements or restrictions on the Treasury Department or the TARP recipients as a condition of releasing the funds. 

The Treasury Department has fully allocated the initial $350 billion, with $250 billion of the money targeted for capital investments in U.S. banks and other lending institutions. Officials overseeing the bailout of the financial services industry also have provided a separate $20 billion to shore up Citigroup Inc., and $40 billion to support a broader rescue of American International Group Inc., a big insurance and investment firm.

More than 300 banks have either received taxpayer capital through the TARP program or been chosen to receive it. Banks participating in the program sell preferred stock to the government that pays an annual dividend of 5 percent for the first five years and 9 percent thereafter. The government also gets warrants to buy additional stock, which could provide a return to the public if the banks' shares rise in value.

The Senate approved the second half of the TARP money on the same day reports surfaced that Bank of America Corp. may be seeking billions in additional aid to help solve the problems it inherited when it absorbed Merrill Lynch Inc.

Bank of America and Merrill Lynch were given $25 billion of the $250 billion targeted for bank investments.

Several large insurance companies are seeking to acquire financial institutions and convert to bank holding companies to tap into the second half of the TARP money. That could claim billions more of the new money.

Donald L. Kohn, the vice chairman of the Federal Reserve, said in testimony to Congress this week that the second $350 billion should be used to reduce foreclosures and strengthen banks, so they will become more willing to make loans.

Kohn also suggested that some of the money could be used for the original purpose of the TARP program - to buy distressed assets from banks to take them off of their balance sheets. After Congress passed the bailout legislation, Treasury Secretary Henry M. Paulson Jr. decided that injecting capital directly into banks would have a more immediate impact on their fortunes, and on the financial markets.

New York Community Bancorp Inc. has declined $596 million in taxpayer capital it was chosen to receive through the Treasury Department's Troubled Asset Relief Program.

"We believe that our current capital position is sufficient to support the communities we serve and to enhance shareholder value by growing our assets, our franchise, and our earnings capacity,'' Chairman Joseph R. Ficalora said in a press release.

The company, based in Westbury, N.Y., said Dec. 31 that it had been approved to particpate in the Treasury program, designed to spur lending and stabilize the financial markets by injecting at least $250 billion in new capital into U.S. financial institutions.

The program calls for the banks to sell preferred stock to the government.

Another banking company that was authorized to receive $30 million said it also had opted out. Pacific Continental Corp., of Eugene, Ore., decided instead to raise $9.6 million through a private placement of shares.

Meanwhile, Anchor BanCorp Wisconsin Inc., said it had been approved for $110 million in taxpayer capital. Anchor posted a loss of $23.3 million in the quarter that ended Sept. 30, 2008, compared with a profit of $9.3 million a year earlier.

It said its loan-loss provisions for the quarter were $47 million, versus $2.1 million a year earlier, primarily because of troubled real estate loans. Anchor is Wisconsin's largest thrift. It said its net loss for the first half of its fiscal year totaled $17.8 million, versus a profit of $19.2 million a year earlier.

Sun Bancorp Inc., of Vineland, N.J., said it was approved to sell $89.3 million in stock to the government. WSFS Financial Corp., of Wilmington, Del., said it was approved for $78.9 million but expected to take only $53 million.

Two more banks also said this week they were turning down TARP money.

CNB Financial Corp., based in Clearfield, Penn., said it opted against taking its $21.4 million allotment. California United Bank, of Encino, Calif., said it had decided not to accept the $8.3 million it was authorized to receive.

Another company called CNB Financial Corp., this one in Worcester, Mass., was previously approved for $7 million in TARP money.

The Treasury Department has made investments in 20 additional banks, adding $539 million to the amount of taxpayer money it has committed to U.S. financial institutions.

Few, if any, of the banks had previously announced their participation in the program. The details of the investments were disclosed Tuesday in a summary of transactions that the Treasury Department included in a press release.

In another bailout-related development, the Office of Thrift Supervision authorized  two big insurance and investment companies, The Hartford Financial Services Group Inc., and Lincoln National Corp., to convert to bank holding companies. Both are seeking to buy savings and loans so they can tap into the $700 billion Troubled Asset Relief Program (TARP).

The Treasury Department said Tuesday that it invested $267.3 million in New York Private Bank & Trust Corp., based in New York City. It also invested $100 million in F.N.B. Corp., of Hermitage, Penn.

According to the Treasury Department summary, one bank that had previously announced its approval for $248 million in TARP money took only about half that amount. The bank, FirstMerit Corp. of Akron, Ohio, opted for $125 million.

In other new deals, First Security Group Inc., of Chattanooga, Tenn., sold $33 million in stock to the government. Community Trust Financial Corp., of Ruston, La., got $24 million, and First Financial Service Corp. of Elizabethtown, Ky., got $20 million.

The Treasury Department invested $16.5 million in Codorus Valley Bancorp Inc., of York, Pa.; $13.4 million in LCNB Corp., of Lebanon, Ohio; and $12 million in The Queensborough Co., of Louisville, N.C.

To see the other banks that got smaller amounts of TARP money, follow the link for the rest of the story.

Want to spend a few minutes in Henry Paulson's shoes?

BailoutSleuth heard last week from Blue Earth Interactive LLC, a Minnesota company that has used information from this site and others to create The Bailout Game. The game provides an amusing, multimedia retrospective of the measures that the Treasury Department and the Federal Reserve have taken in response to the economic crisis.

Players get to guide Treasury Secretary Paulson and Federal Reserve Chairman Ben Bernanke down Wall Street, making decisions about which institutions to save and which to let fail.

The game changes with the choices a player makes. The goal is to make it all the way across the board without running out of bailout money or ushering in a recession -- or worse. Players who get stuck can even seek advice from former Federal Reserve chief Alan Greenspan.

Test your bailout skills here: http://www.thebailoutgame.us

The Treasury Department's latest financial report on the Troubled Asset Relief Program includes no specifics on how much the agency is paying each of the outside contractors it hired to provide financial or legal advice.

Nor does it explain why the total amount of money the agency is projected to spend on outside services this month far exceeds the publicly announced dollar value of its agreements with those contractors.

The report could provide a clue about how much the Treasury Department is paying Bank of New York Mellon Corp., the master custodian for all of the assets that will flow through the $700 billion TARP fund.

The Treasury Department has never put a value on that deal, or disclosed the compensation structure. A spokesperson for the agency did not respond to BailoutSleuth's request for an explanation of the projected spending.

The Treasury Department said in its report that January obligations for what it labeled "other services" are $24.4 million. That category includes the contracts for financial and legal advice, as well as a contract with an outside human resources provider. It does not include rent, utilities, communications, travel, supplies or equipment, which are separate line items.

The total obligations for the administration of the TARP program this month were estimated at $26.6 million. The Treasury Department reported that it paid $7.76 million to its financial agents and legal firms in December. It said in its previous monthly report to Congress that it paid the contractors $5.35 million from Oct. 6 through Nov. 30.

The Treasury Department did not explain why the payments to its financial and legal advisers would be rising or what specific activities would account for the increase in monthly expenditures.

According to the report, the agency has nine outside financial or legal advisors. The list includes the law firm of Kirkland & Ellis LLP, which apparently was hired Dec. 18 to work on TARP-related issues. Neither the Treasury Department nor Kirkland & Ellis put out a press release announcing that contract.

The Treasury Department's other financial and legal advisers are Bank of New York Mellon, EnnisKnupp and Associates Inc., PricewaterhouseCoopers LLP, Ernst & Young, Simpson Thacher & Bartlett LLP, Hughes Hubbard & Reed LLP, Squires Sanders & Dempsey LLP and Thacher Proffitt and Wood LLP.

In addition to winning the master custodian contract, Bank of New York Mellon got $3 billion in taxpayer investment as part of the Treasury Department's plan to inject $250 billion in capital into U.S. banks.

When the Treasury Department announced the appointment of Bank of New York Mellon Corp. in October, the estimated dollar value of the contract was blacked out in the copy of the agreement posted on the department's web site. So was the section that described the formula used to determine Bank of New York Mellon's fees.

The press releases that the Treasury Department issued about its contracts with the seven other firms in the above list put the combined value of their deals at just under $15 million, with much of that money spread out over six months or a year.

The department hired Hughes Hubbard and Squires Sanders to work on what has become the biggest part of the TARP initiative - providing capital injections to U.S. banks through government purchases of preferred stock. It said when the contracts were announced in early November that they would run for six months and be worth $5.5 million to each firm.

The Treasury Department hired EnnisKnupp in October to provide advice on purchasing distressed assets from banks and investment companies. It said the contract would run for a year and be worth $2.5 million.

The department hired Simpson Thacher in October to provide advice on its equity purchases in banks. It said that deal would run for six months and be worth $300,000.

The Treasury Department hired PricewaterhouseCoopers and Ernst & Young in October to provide internal controls and general accounting and consulting. It said the initial terms of their contracts would be worth $191,469.27 and $492,006.95, respectively.

The Treasury Department did not specify how long the initial terms were, and the financial details of its deal with the firms were either blacked out or redacted from the agreements it made public.

The Treasury Department hired Thacher Proffitt in mid-December to provide advice on the purchase of asset-backed securities, one of that firm's specialties. It said the contract would run for six months and be worth no more than $500,000.

Bailoutsleuth has filed requests under the federal Freedom of Information Act for unredacted versions of the Treasury Department's contracts with the financial and legal advisers. The agency says it is still evaluating our request.

The panel said confidence in the financial markets can be restored only when information is transparent and reliable. It added that no clear mechanism exists to value certian TARP assets or to ensure that the dangers posed by toxic assets have been addressed.

The panel noted that although the Treasury Department has been steering the taxpayer investments to what it describes as "healthy'' banks, that label depends heavily on the accurate valuation of each institution's assets.

"If the banks have not yet recognized losses associated with over-valued assets,

then their balance sheets - and Treasury's assessment of their health - may be suspect,'' the panel said in its report.

The panel complained that the Treasury Department has not yet taken any steps to use TARP funds to address foreclosure issues or develop plans to "maximize assistance to homeowners'' -- one of the mandates of the TARP legislation.

Finally, the panel said its concern is mounting that the department does not have a coherent strategy or set of goals for the use of the TARP funds. To read the full report, on on this link: http://cop.senate.gov/documents/cop-010909-report.pdf

BailoutSleuth welcomes your comments or observations on the panel's findings.

Six banks added their names to the list of financial institutions approved for taxpayer capital through the Treasury Department's $250 billion stock purchase program.

The total amount authorized for the six was $161 million.

Mechanics Bank, a privately held company based in Richmond, Calif., said it was approved to sell $60 million in preferred stock to the government.

Two other California banks also announced their acceptance in the Treasury's stock purchase program, part of the broader $700 billion Troubled Asset Relief Program. Heritage Oaks Bancorp, of Paso Robles, said it was approved for $21 million in taxpayer capital. The bank warned recently that it would post a loss for the fourth quarter of 2008, after taking $6 million in charges for troubled loans. First Northern Community Bancorp, of Dixon, said it was approved for $17.5 million in TARP money. First Northern's profits also have been hit hard by higher loan-loss provisions.

OceanFirst Financial Corp., of Toms River, N.J., said it was approved to sell $38.3 million in preferred stock to the Treasury Department. The company reported a profit of $3.72 million for the third quarter of 2008, up 19.1 percent from a year earlier.

Bridge Bancorp Inc., of Bridgehampton, N.Y., was approved to sell $15 million in preferred stock to the government. Carrollton Bancorp, of Baltimore, was approved for $9.2 million.

Four more banks have announced their acceptance into the Treasury Department's stock purchase program, while two others who were already on the list said they had opted not to take any taxpayer money.

The four banks that were approved to sell preferred stock to the government through the $700 billion Troubled Asset Relief Program would get a combined $41.9 million.

The two banks that decided against participating in the program - Dime Community Bancshares Inc. of New York and S.Y. Bancorp Inc. of Louisville, Ky. -- had been approved last month for a total of $120.3 million.

Access National Corp., based in Reston, Va., said Monday it had won approval to sell $16 million in preferred stock to the Treasury Department. First Southern Bancorp Inc., of Boca Raton, Fla., said it was approved for $10.9 million.

Oak Ridge Financial Services Inc., of Oak Ridge, N.C., said it was approved for $7.7 million in taxpayer capital. And Citizens Bancshares Corp., of Atlanta, said it could get as much as $7.3 million.

Dime Community Bancshares, the parent company of Dime Savings Bank of Willamsburgh, said it concluded that participating in the Treasury Department's Capital Purchase Program was not in the best interests of shareholders.

"We have consistently applied prudent underwriting standards to the loans in our mortgage portfolio, which consists primarily of rent-regulated multifamily residential dwellings located in New York City,'' Chairman Vincent F. Palagiano said in a prepared statement. "We believe that these assets have enough inherent stability to ensure that the bank will continue to be well capitalized.''

The bank had been approved for $77.3 million.

S.Y. Bancorp, the owner of Stock Yards Bank & Trust in Louisville, expressed similar sentiments. The company also raised concerns about some of the limitations that the Treasury Department places on recipients of the government money.

"The program's restrictions on possible future dividend increases, the dilution that could result from the associated warrants, and the uncertainty surrounding some details of the program represent unnecessary burden and risks for the company and its shareholders,'' said Chairman David Heintzman, whose bank was approved for $43 million.

The preferred stock the Treasury Department is buying carries an annual dividend of 5 percent a year for the first five years and 9 percent thereafter. The agency also gets warrants to buy common stock, which could provide a return to taxpayers if the value of the banks' shares rises as their financial condition improves.

The Treasury Department said Monday it had provided SunTrust Banks Inc. with an additional $1.35 billion in capital, completing the Atlanta-based company's double dip into the $700 billion Troubled Asset Relief Program.

SunTrust got $3.5 billion on November 14, when it sold preferred stock to the government as part of Treasury Secretary Henry M. Paulson's plan to inject capital directly into banks to strengthen their balance sheets and spur lending.

SunTrust decided to take the additional money - pushing its total to the Treasury Department investment cap of 3 percent of total risk-weighted assets - after concluding that the outlook for the economy had grown bleaker.

"Given the increasingly uncertain economic outlook, we have concluded that further augmenting our capital at this point is a prudent step, especially if the current recession proves to be longer and more severe than previously expected," Chairman James M. Wells III said in a statement last month.

SunTrust is the only bank to have received two disbursements from the $250 billion of TARP money set aside for capital purchases. More than 280 banks, thrifts and finance companies have received taxpayer capital or been approved for it.

The preferred stock that SunTrust and the other participants are selling to the government pays an annual dividend of 5 percent for the first five years and 9 percent thereafter. The Treasury Department also receives warrants to buy common stock in the companies, which could provide a return to taxpayers if their share prices rise.

The Treasury Department has approved nearly $1.2 billion in capital investments in five banks.

New York Community Bancorp Inc. said it was approved to sell $596 million in preferred stock to the government through the Troubled Asset Recovery Program (TARP). The Westbury, N.Y.-based company owns New York Community Bank and New York Commercial Bank It has more than $32 billion in assets.

New York Community Bancorp had a loss of $24.3 million for the first nine months of 2008, compared with a profit of $211.7 million in the same period of 2007. It took nearly $370 million in pre-tax charges in the second and third quarters, partly reflecting losses on investments in bankrupt Lehman Brothers Holdings Inc. and Freddie Mac, the government backed mortgage funder that was placed into conservatorship.

First Banks Inc., which has headquarters in Clayton, Mo., said it got $295.4 million in taxpayer capital. First Banks has branches in Missouri, Illinois, California, Texas and Florida. It has roughly $10.8 billion in assets. First Banks also raised capital in 2008 from its shareholders, bringing its total for the year to more than $400 million.

Flagstar Bancorp Inc., of Troy, Mich., said Friday it was approved for $266 million in public money. Flagstar announced another financing deal last month with an affiliate of MatlinPatterson Global Opportunities Fund III, L.P, a New York private equity firm that specializes in distressed companies.

Flagstar agreed to sell the fund $250 million in convertible preferred stock equal to a 70 percent fully diluted stake in the company. The financing deal was contingent on Flagstar being approved for at least $250 million in TARP money.

Flagstar has operations in Michigan, Indiana and Georgia. It posted a loss of $62.1 million for the third quarter, reflecting $86.9 million in loan loss provisions and a $17 million loss linked to the collapse of Lehman Brothers.

Legacy Bancorp Inc., of Pittsfield, Mass., said it was approved to sell $20 million in preferred stock to the Treasury Department. Community Partners Bancorp., of  Middletown, N.J., said it was approved for $10.35 million.

The stock the banks are selling to the government pays an annual dividend of 5 percent for the first five years and 9 percent thereafter. The Treasury Department also gets warrants to buy common stock in the banks, which could provide a return to taxpayers if the shares increase in value.

The Treasury Department's inspector general is reportedly looking into the government's investment in City National Corp., a Beverly Hills, Calif., bank holding company that got $400 million through the Troubled Asset Relief Program.

According to a story in the Los Angeles Times, the inspector general views City National as a test case for understanding how the Treasury Department and banking regulators determine which institutions get capital injections and which do not.

The company owns City National Bank, which has $10.5 billion in deposits and is known as the "bank to the stars'' because of the services it provides to many people and companies in the entertainment industry.

The Los Angeles Times report said the inspector general's office did not identify City National as the bank that is the subject of the inquiry, only that it was looking at the application and selection of one institution in Southern California.

The paper said the inquiry was not based on any possible wrongdoing by the bank.

The Treasury Department announced in October that it would use $250 billion of the $700 billion TARP package to make direct capital investments in banks, in the hope of strengthening their balance sheets and stimulating lending.

However, many of the banks that have been selected to receive taxpayer capital were already relatively strong financially. Critics of the government bailout program have questioned how those investments can help the economy.

Even the Treasury Department acknowledged in a report this week that it is difficult to track how the banks use the money and how the investments have contributed toward the original goals of the TARP legislation.