Big banks quickest to repay TARP funds
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Across the nation, the biggest banks have generally been the quickest to repay the federal bailout money they received during the financial crisis. The Pittsburgh region is no exception.
Among the nine Western Pennsylvania-based financial institutions that received help, the two that have returned the funds are also the largest: Pittsburgh-based PNC Financial Services Group, with assets of $269.9 billion, and FNB Corp. in Hermitage, assets of $8.7 billion.
PNC paid back all $7.6 billion last month, while FNB, parent of First National Bank, returned its $100 million in bailout funds in September.
In general, big banks have been in more of a rush to repay the funds because of the caps on executive pay that come with the federal aid and because of the generally negative public view of financial institutions holding on to taxpayer money.
Top executives of the remaining seven area banks that took bailout money say they have no immediate plans for repaying their piece of the $700 billion rescue pie under the Troubled Asset Relief Program. On the list are Ameriserv Financial, Johnstown; Enterprise Financial, Allison Park; Emclaire Financial, Emlenton; Fidelity Bancorp, West View; Parkvale Financial, Monroeville; S&T Bancorp, Indiana, Pa. and TriState Capital, Pittsburgh.
"We don't have a definitive timetable at this point of when we are going to repay it," Fidelity CEO Richard Spencer said in a response echoed by top executives at the other local TARP banks.
Part of the decision to repay the money hinges on the economy continuing to recover, Mr. Spencer said.
"We just feel right now, [the bailout money] is a good capital cushion for us."
The banks point out that even though they still hold the funds, taxpayers are receiving a return on their investment in the form of quarterly dividends that are supposed to be paid until the government funds are returned. The dividend rate is 5 percent for the first five years, jumping to 9 percent thereafter.
Most of the region's TARP banks said they expect to return the money within the five-year time frame, before the dividend rate rises.
"The plan all along was to repay within five years, and that plan has not changed," said Gil Riazzi, interim principal financial officer at Parkvale, which, like most of the other area banks, received the federal funds in December 2008.
Officials at TriState Capital Bank and S&T Bank were less specific about their plans.
First Published March 25, 2010 12:00 am
