The federal government, which is trying to wind down the nearly 4-year-old bank rescue program known as TARP, plans to auction off its stake in seven U.S. banks next week, including one from Georgia.
The U.S. Treasury Department plans to sell its shares in the parent company of Moultrie-based Ameris Bank and the six other institutions as early as Monday.
Ameris, which received $52 million in TARP funds is among the state’s stronger community banks, and has been one of the more active purchasers of failed Georgia banks during the crisis.
TARP's eventual wrap-up would bring to a close one controversial chapter in a series of unprecedented steps started under former President Bush and expanded under the Obama administration to stave off financial Armageddon.
The Obama administration and others in Washington have been eager to end TARP and more quickly recoup taxpayer dollars by selling its remaining bank investments at a slight loss to the private sector.
More than 340 mostly small U.S. banks – including 21 operating banks in Georgia – still owe taxpayers under the Troubled Asset Relief Program. The total debt outstanding nationally is $11.6 billion, according to Keefe Bruyette & Woods.
KBW bank analyst Jefferson Harralson said the auction program "is designed to clean up these small fragments [of TARP] in the government’s eyes."
The portion of TARP that went directly to banks, though politically unpopular, has returned a profit of about $19 billion for the government.
But the $700 billion TARP as a whole, which stretched beyond banks and included aid to insurance giant AIG and automakers General Motors and Chrysler, remains in the red.
For some, TARP is an emblem of wasteful government spending that bailed out the excesses of Wall Street without doing enough to help Main Street.
But proponents say the program saved the economy from a more precipitous collapse.
Edwin Hortman Jr., president and CEO of Ameris, said TARP did exactly as it was intended. The program helped banks like his make loans through the crisis, as well as assist federal regulators by having banks acquire failed rivals.
No matter what organization owns the government’s preferred shares, Ameris will repay the full amount, Hortman said.
“We have a capital plan in place and it’s our intention to pay the entire amount of TARP before the step up in TARP [interest rates] in 2014,” he said.
Treasury has said some TARP banks will still repay the government directly. In other cases, Treasury will sell its stakes on the open market. The government could restructure investments in limited circumstances.
Sales of the government’s stakes generally will occur in banks it does not expect to repay within 18 months.
A report by FIG Partners in Atlanta this week said Ameris has on hand the resources to repay TARP. Approval to do so, though, is contingent on regulators.
Georgia's remaining TARP banks owe about $1.4 billion. Columbus-based Synovus Financial, parent of Bank of North Georgia, owes nearly $1 billion, more than any U.S. bank still in the program.
A spokesman for Synovus, which has paid $152.7 million in dividends on TARP, said: "We continue to model and plan for our TARP exit, and we will do so in a manner and timeframe that is prudent, efficient, and acceptable for all of our constituencies, including the Treasury and our primary regulators."
Synovus has said its repayment could come later this year or in 2013.
The majority of Georgia’s TARP recipients continue to make scheduled dividend or interest payments to the government.
Banks that have yet to repay haven't for numerous reasons. Some are so small it's difficult to sell stock or they don't want to hurt existing shareholders. Others have yet to overcome all their problems or don't feel confident enough to repay the funds given continued economic uncertainty.
For others still, TARP is a relatively affordable source of funding. Terms of TARP get much steeper for recipients on the fifth anniversary of disbursal, including an increase in dividend rates paid on the stock from 5 percent to 9 percent. That rate increase will start happening in many banks beginning next year.
“The step up in rate will probably be a catalyst for a lot of these banks to raise some capital and repay that TARP,” said KBW analyst Brady Gailey. It also could be a catalyst for banks to merge, he said, as some will continue to find it difficult to raise investor cash.
Treasury sold off its shares in six banks in its initial auction in March. In the prior auction, the government recouped about 88 cents on the dollar of its overall investment in those six banks, and analysts expect the figure to be higher next week.
Gailey said he expects the frequency of auctions and the number of banks included in the bidding to increase in the months ahead.
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Georgia's TARP banks
Banks that have paid it off
Name/aid received/amount paid off/ Interest or dividends paid to Treasury
SunTrust Banks /$4.85 billion/ $4.85 billion/ $568 million
Georgia Commerce Bank/ $8.7 million/ $8.7 million/ $961,471
Hamilton State Bank/ $7 million /$7 million/ $757,702
Gateway Bancshares/$6 million/ $6 million/$1 million
Banks that haven’t
Name/Amount received/ Interest or dividends paid to Treasury
Synovus Financial/ $967.8 million/ $152.7 million
United Community Banks/ $180 million /$28.8 million
Ameris Bancorp/ $52 million/ $8.4 million
Fidelity Southern/ $48.2 million /$7.6 million
Colony Bankcorp/ $28 million/ $4 million
Liberty Shares/ $17.3 million/ $1.4 million
United Bank Corp./ $14.4 million/ $3.2 million
Southcrest Financial Group/ $12.9 million/$933,494
PeoplesSouth Bancshares/ $12.3 million/$2 million
The Queensborough Co./ $12 million/ $882,900
Citizens Bancshares Corp./$11.8 million/$348,274
RCB Financial Corp./ $8.9 million/ $893,934
Metro City Bank/ $7.7 million/ $1.3 million
First Intercontinental Bank/ $6.4 million/ $757,454
Midtown Bank & Trust Co./ $5.2 million /$275,105
Georgia Primary Bank/ $4.5 million/ $0*
CBB Bancorp/ $4.4 million/ $616,739
Bainbridge Bancshares/ $3.4 million/ $93,854
Mountain Valley Bancshares/ $3.3 million/ $429,642
Alliance Bancshares/ $3 million/ $428,922
CSRA Bank Corp./ $2.4 million/$180,940
*A Georgia law prevents certain banks from paying dividends to any investor until it is cumulatively profitable for a certain period of time.
Failed Georgia TARP banks
Tifton Banking Co. received $3.8 million. It paid $223,208 in dividends or interest before it closed.
One Georgia Bank received $5.5 million. It did not pay back any of its TARP commitment before it closed.
Source: Special Inspector General for the Troubled Asset Relief Program
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