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The Capital Journal

Recent TARP activity

December 10, 2008

By MortgageDaily.com staff


MortgageDaily.com has tracked almost 50 of the nearly 90 institutions that have accessed or been approved to access the $700 billion Troubled Asset Relief Program. Two non-banks recently announced their intentions to become bank holding companies -- though a failed attempt by another firm to become a bank holding company could spell disaster for one of the country's biggest mortgage lenders.

Acting Comptroller General Gene L. Dodaro was expected to testify before the House committee on Financial Services today, according to a transcript of his prepared testimony. He reported that as of Dec. 5, 87 institutions have been provided with $155 billion from the capital purchase program, while a total of $195 billion in TARP funds have been disbursed under various programs.

Dodaro noted that a total of $335 billion has been allocated.

GMAC Financial Services has so far been unable to rally enough interest in its private-exchange and cash-tender offers to boost capital to at least $30 billion -- which would have been enough to qualify it to become a bank holding company, a filing with the Securities and Exchange Commission today said. The Federal Reserve has advised GMAC that if it can't meet these capital requirements, it will not be approved to become a bank holding company.

The move would have provided the struggling firm with badly needed access to TARP funds.

"If GMAC is unable to successfully convert to a bank holding company and complete the GMAC and ResCap offers by Dec. 31, 2008, it would have a near-term material adverse effect on GMAC's business, results of operations, and financial position," the filing stated.

Last month, GMAC warned that its Residential Capital LLC subsidiary -- which was the fifth biggest U.S. residential originator during the third quarter -- would not be able to survive without continued economic support from GMAC.

Capmark Financial Group Inc. announced Monday that it has applied with the Federal Reserve Board of Governors to become a bank holding company. The Horsham, Pa.-based company simultaneously submitted an application to participate in TARP.

Genworth Financial announced yesterday that it has agreed to acquire InterBank, fsb of Maple Grove, Minn. The deal is still subject to approval by the Office of Thrift Supervision and subject to Genworth's ability to obtain approval to obtain TARP funds.

Treasury investments in fixed-rate cumulative perpetual preferred stock under the capital purchase program earn 5 percent during the first five years and 9 percent in subsequent years. The Treasury also receives ten-year warrants.

In addition to the 28 banks listed in the table below, MortgageDaily.com has already tracked 18 institutions that have reported TARP activity.

CPP Journal
Company
Date
Announced
Action
Amount
United Community Banks Inc.
Dec. 5
sale completed
$180 million
1st Source Corp.
Dec. 8
preliminary approval
$111 million
Park National Corp.
Dec. 2
preliminary approval
$100 million
Sandy Spring Bancorp Inc.
Dec. 5
sale completed
$83 million
Rockland Trust Co.
Dec. 9
preliminary approval
$78 million
Dime Community Bancshares Inc.
Dec. 5
preliminary approval
$77 million
Bank of the Ozarks Inc.
Dec. 2
preliminary approval
$75 million
Superior Bancorp
Dec. 8
sale completed
$69 million
Great Southern Bancorp Inc.
Dec. 8
sale completed
$58 million
Seacoast Banking Corporation of Florida
Dec. 10
preliminary approval
$50 million
Southern Community Financial Corp.
Dec. 5
sale completed
$43 million
Sterling Bancorp
Dec. 9
preliminary approval
$42 million
Financial Institutions Inc.
Dec. 5
preliminary approval
$38 million
Eagle Bancorp Inc.
Dec. 5
sale completed
$38 million
West Bancorporation Inc.
Dec. 8
preliminary approval
$36 million
StellarOne Corp.
Dec. 3
preliminary approval
$30 million
Bank of Marin Bancorp
Dec. 2
approval
$28 million
Crescent Financial Corp.
Dec. 8
preliminary approval
$25 million
First California Financial Group Inc.
Dec. 2
preliminary approval
$25 million
Peoples Bancorp of North Carolina Inc.
Dec. 9
preliminary approval
$25 million
Unity Bancorp Inc.
Dec. 8
sale completed
$21 million
Central Bancorp Inc.
Dec. 5
sale completed
$10 million
Coastal Banking Company Inc.
Dec. 5
sale completed
$10 million
Security California Bancorp
Dec. 2
preliminary approval
$7 million
FPB Bancorp Inc.
Dec. 5
sale completed
$6 million
Commerce National Bank
Dec. 3
preliminary approval
$5 million
Seacoast Commerce Bank
Dec. 1
preliminary approval
$2 million
MutualFirst Financial Inc.
Dec. 5
preliminary approval
not specified


Related
CPP Journal
A new watchdog has been confirmed to oversee the $700 billion Troubled Asset Relief Program -- which has seen plenty of action recently.

Firms Restructure to Tap TARP Funds
The U.S. Department of the Treasury has already disbursed $150 billion in funds from the Troubled Asset Relief Program to financial institutions and still has another $100 billion to go. The lure of cheap capital has prompted another five firms -- including a commercial financial company, a mortgage servicer and a mortgage insurer -- to initiate the process of converting to bank-holding companies. Three firms are making bank acquisitions as part of the conversion process.

Banks Jump On CPP Bandwagon
A stream of banks have recently reported being approved to sell nearly $1.5 billion in securities to the U.S. Department of the Treasury under the Troubled Asset Relief Program. Most of the participants indicated that they were already well capitalized.

Banks Continue to Tap CPP
Utilization of the Treasury's capital purchase program continues to be brisk -- with most institutions promising to use the funds to strengthen community activity. The program taps into available funds from the $750 billion Troubled Asset Relief Program.

Banks Grab TARP Capital
More than 1,000 financial institutions have applied for or received capital investments from the Troubled Asset Relief Program, according to Congressional testimony. Funds from the program will be used to support lending and acquire other banks.

Troubled Mortgage Asset Purchases Curtailed
The U.S. Treasury secretary said today that the Troubled Asset Relief Program will not be used to purchase troubled mortgage assets. He said the $700 billion fund would be better utilized for capital investment.

TARP purchases of distressed assets put on hold

Some Firms Saved by Mergers
Mergers have picked up steam as several mortgage companies teeter on the brink of insolvency. Some of the mergers are forcing changes at the top of the executive ranks. Meanwhile, losses continue to pound financial firms -- forcing regulator actions at some.

Volatile Banking Sector Reshapes
As capital continued to be wiped out and dozens of small banks were hit with regulatory orders, some financial institutions have been approved to participate in the government's capital purchase plan. One mortgage company is shedding its real estate investment trust status, another is shutting down its commercial operations and a third will be acquired by a bank.

Government to Invest in Banks
Some of the $700 billion Troubled Asset Relief Program will be used for the U.S. government to invest directly in U.S. banks. The rescue package also includes bank loan guarantees and provisions to stabilize the commercial paper market.

$250 billion of TARP funds targeted


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