Two TARP banks repay aid

Sandy Spring Bancorp Inc. and First PacTrust Bancorp have repaid the government money they received through the Troubled Asset Relief Program and exited the program.  Meanwhile, First Horizon National Corp. has announced plans to raise cash to retire its $866.5 million TARP debt.

Sandy Spring Bancorp, the Olney, Md.-based parent company of Sandy Spring Bank, got $83 milion in TARP money from the Treasury Department in December 2008.

As Bailoutsleuth previously reported, Sandy Spring repaid roughly half of that money in July, as part of a two-pronged strategy for exiting the program.  It made the second installment last week, repurchasing the last of the preferred stock that it had issued the government in return for taxpayer aid.

Sandy Spring made significant fiscal strides during the first six months of the year--conducting a successful common offering in the first quarter and turning a $5.1 million profit for the second quarter--and thus received regulators' approval to repay the first $41.5 million in aid.

The company announced Wednesday that it had repaid the final $41.7 million that it owed the government.  The sum reflects the $41.5 million of original principal and $173,112 of accrued dividends.  In a press release, Sandy Spring's chief executive, Daniel J. Schrider, said the decision to exit TARP reflected the company's strong capital position.

Sandy Spring made all the dividend payments on its TARP shares in a timely manner.  The company hopes to repurchase the accompanying warrant from Treasury at fair market value, but said there was no guarantee that it would be able to do so.

First PacTrust, which is based in Chula Vista, Calif., and is the holding company for Pacific Trust Bank, also announced Wednesday that it had redeemed the $19.3 million in preferred stock it had sold to the Treasury in November of 2008.  The move was made possible by a $60 million private placement completed on November 1, 2010.

First PacTrust paid nearly $2 million in dividends over the life of its participation in TARP.  The Treasury still holds a warrant to buy 280,795 shares of First PacTrust's common stock at an exercise price of $10.31 per share, but the release made no mention of the company's  intentions in that regard. First PacTrust's stock is trading for around $12.80 a share.

In what has come to be a rare note of gratitude from a TARP institution, Greg Mitchell, the company's chief executive and president, applauded those who helped the company through tough economic times.   "We thank the U.S. government, our regulators and fellow taxpayers for their support and vote of confidence in our Company, and more broadly for their support of the U.S. financial system."

First Horizon National, parent company of the Memphis, Tenn.-based First Tennessee Bank, announced Monday that it planned to sell more than $250 million in common stock to help settle its tab with the Treasury.  Two days later, the company unveiled the second leg of its exit strategy, announcing a public offering of senior notes.

First Horizon National said it intends to sell $500 million in notes. It plans to use the proceeds of the stock and note offerings to help repay its TARP obligations and retire roughly $100 million in other debt.

According to ProPublica, First Horizon has paid nearly $76 million in dividends to the government over the past two years.  The company's communications have made no mention of its plans for the warrant it issued to Treasury along with its preferred stock in 2008.

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