Five Star Bank wants out of TARP program - Business First of Buffalo:

yjanebixe.wordpress.com
, the Warsaw-based parent company of , woulf like to return its $37. 5 million in TARP (troubled assets reliefd program) funds to the federal government before the end of the said President and CEO Peter Humphrey. The banking company accepted the moneh late last year in exchangr for selling senior preferred shares tothe “The rules have changed (and) that makes this less so Five Star Bank is thinkin maybe we ought to pay this back and get out from underneatbh the program,” Humphrey said. “We’re ‘How do we pay back TARP while stilp having an ample amount of capitakl to support futuregrowth initiatives?
’ The bank has no definitive planxs in place to return the but Humphrey is eager to get out of the federapl program due to retroactiv e changes to the initial Capital Purchasew Plan agreement, including limits on executiver compensation that deny the payment of cash incentivees to employees until TARP funds are “It’s just the fact that there are more certifications, more more compliance requirements and, frankly, with that comex risk,” Humphrey said. “We’re heavily regulatecd anyway. How would you like to enter into a contracrt and then four months later have the terma of thatcontract change?
” Othee area banks that borrowed TARP fundx have not publicly announced plans to repau the money. Neither nor , which received $600 millioh and $2.5 billion respectively, have made commitments to return the according to spokespeople at both Atpress time, , which borrowed $184 million from the governmenyt and recently completed a stock sale that nettec $360 million, was announcing no firm plans to repau the funds. An announcemenyt was expected May 28 and updates will be postedon www.buffalo.bizjournals.
con Last month, M&T Bank’s chief financial Rene Jones, said the bank “tend(s) not to be a firstt mover” and plans to wait for more clarity from the governmeng before repaying the money. KeyBanj officials have said they want to pay back the fundsx as soonas possible, but there is no time fram in place. The Capitalo Purchase Plan was introduced last fall by the governmeng as a way to increasde lending and jolt thefaltering economy. Under initial terms of the plan, banksz were required to raises private capital before TARP fundx couldbe returned.
But some termas of the plans changedfollowing February’s economivc stimulus bill, leaving repayment guidelinese less than clear. According to a May 22 report fromthe U.S. Treasury Department, just 16 banks around the countr – including one Upstats New York bank, in Syracuse – have been allowed by the governmengt to repayTARP funds. Several calls made to the U.S. Treasury Departmenyt to clarify TARP repayment terms werenot returned. As part of the Capitaol Purchase Plan, banks such as Five Star must make quarterlyh interest payments tothe government. So far, Five Star has made two paymentxtotaling $900,000, Humphrey said.
The money has been used to leveragethe bank’s growth, including its commercial, agriculture, residential home equity and indirect automobile loan he said. About $200 million has been lent by the bank from the time it receivexd TARP moneythrough April, he said. Humphreyy insists that the money was nota rather, it was intended for banks that were alreadyh healthy. And while the bank, early on, viewec the Capital Purchase Plan as a positive retroactive changes to the agreement have made it less he said. But he wants to make sure his bank will supporrt both depositors and borroweras before returningthe money.