Three more banks get TARP approval

Three more banks have announced their selection for the Treasury Department's stock-purchase program.

A fourth said in its annual filing with the Securities and Exchange Commission that it also had been approved to receive taxpayer capital through the $700 billion Troubled Asset Relief Program but had strong reservations about the terms.

Integra Bank Corp., of Evansville, Ind., said it was approved to sell $83.5 million in preferred stock to the government. Integra lost $29.2 million in the first nine months of 2008, compared with a profit of $24.9 million in the same period a year earlier. Integra attributed the reversal largely to a $25.7 million increase in loan-loss provisions, $6.26 million in securities losses and a $48 million charge for goodwill impairment.

Pacific Mercantile Bancorp, of Costa Mesa, Calif., said it was approved for $25.5 million in TARP funds. The company was profitable through the first nine months of 2008, although its $525,000 in earnings represented an 88.6 percent decline from a year earlier. It cited higher loan-loss provisions and lower interest income.

Howard Bancorp Inc., based in Ellicott City, Md., said it was approved to sell $5.98 million in stock to the government through the TARP initiative. The company had profits of $337,000 in 2008, off 77 percent from a year earlier.

George W. Hamlin IV, president and chief executive of Canandaigua National Corp., said in a letter to shareholders that it was approved last month for $20 million in TARP funds.

Hamlin said Canandaigua National did not need the extra capital, but added that it could be useful in spurring growth and funding new loans. He noted that the bank participated in a similar program during the economic crisis of the 1930s, selling preferred stock to the government to raise an additional $300,000. It redeemed the shares after five years.

"Were today's program as simple and effective as that presented, now 75 years ago, we would likely be an enthusiastic participant,'' he wrote.

Canandaigua National thinks that the true cost of the capital from the TARP program is higher than the stated dividend rate on the shares because of the extra cost of filing related government paperwork and registration statements with the SEC.

Hamlin said the bank also objects to the restrictions on dividend payments and stock repurchases for banks receiving TARP funds, and on a provision that allows the government to alter the terms and conditions of the program.

"Because we cannot anticipate what these changes might entail, we cannot properly plan for the use of this capital,'' he wrote. "The interests of the government may be contrary to the interests of our community and shareholders. The right of one party to unilaterally amend a bilateral contract is wholly inappropriate as a matter of common business practice and it would be foolish for any prudent business organization to voluntarily and intelligently accept such a provision."