Shore Bancshares Inc. has notified the Treasury Department that it will return the $25 million in taxpayer capital it received in January.
Shore, based in Easton, Md., is the seventh bank to file for redemption of the preferred stock issued in return for aid through the $700 billion Troubled Asset Relief Program.
More than 500 banks have taken public money through the program.
W. Moorhead Vermilye, Shore's chairman and chief executive, said changes in TARP rules and public perceptions about the program have put his bank at a competitive disadvantage.
"The representation made by the Treasury concerning TARP was that the program was designed to attract broad participation by healthy institutions and that our participation in the program was important to restore confidence in our financial system and ensure that credit continue to be available to consumers and businesses," Vermilye said in a prepared statement. "Over the past few months, however, it has become clear to us that the public, including many members of Congress, view institutions that participated in TARP as having done so because they are weak and not because they wanted to do their part to foster economic recovery. We do not believe that TARP has been handled in such a way as to distinguish strong institutions from those that have capital adequacy or other problems."
Shore operates Talbot Bank, Centreville National Bank of Maryland and Felton Bank. It also owns several insurance units, an investment advisory firm and a mortage company.
published March 27, 2009, 1 Comments
Do you buy that excuse?
How hard is it to issue a press release stating we are a healthy bank, we were given these funds because our solid management and sound lending practices indicate we will manage these funds well? It seems a large number of banks are sending back the funds and giving the excuse that it just looks bad. If that is truly the case, Obama and Congress need to get the word out that although a few poorly managed large institutions received TARP, the majority of the mid sized and small institutions receiving taxpayer dollars are good banks. The reason these good banks are receiving funds is in an effort to assist them in making more good loans, more good investments and to buy up poorly capitalized banks and turn them around.
My thoughts are the banks giving back funds, just don't know what to do with them. They don't want to expand, they don't want to lend, they want to stay within their safety zone. It may well be the best thing for them, but the excuse they give is sketchy.