Local bank pays back portion of TARP

C&F Bank has repaid half the $20 million it took from Uncle Sam in 2009 as part of the bank’s participation in the TARP Capital Purchase Program.

The bank and its parent company said Wednesday that they redeemed $10 million worth of the preferred shares issued to the U.S. Department of Treasury in January 2009.

C&F, a $900 million institution, is only the second local bank to pay back any of its TARP capital. The former Union Bank, one of the predecessors of Union First Market Bank, paid back its $59 million to the Treasury in 2009.

In addition to the $10 million still left unredeemed by C&F, six local banks have yet to buy themselves out of the TARP program.

The TARP Capital Purchase Program, controversial in its day, provided capital to banks of all sizes in exchange for shares of preferred stock that the Treasury holds until the money is paid back. Banks pay a 5 percent quarterly dividend to the Treasury for the first five years. If the loan is not repaid after five years, the interest rate jumps to 9 percent.

Many banks today are having trouble coming up with the cash to buy back their preferred shares. C&F, headquartered in West Point, said it used existing financial resources from its parent corporation to make the payment.

Union First Market Bank, which is still on the hook for $33.9 million from its predecessor First Market Bank, recently filed a shelf registration with the SEC, leaving open the possibility for the company to raise up to $100 million. Union hinted in its prospectus that a portion of the capital could be used to buy back the remaining shares from Treasury.

Local banks that have yet to repay TARP money:

Central Virginia Bank: $11.3M

Community Bankers Trust/Essex Bank: $17.6M

EVB: $24 million

First Capital Bank: $10.9 million

Union First Market Bank: $33.9 million

Village Bank & Trust: $14.7 million

C&F Bank has repaid half the $20 million it took from Uncle Sam in 2009 as part of the bank’s participation in the TARP Capital Purchase Program.

The bank and its parent company said Wednesday that they redeemed $10 million worth of the preferred shares issued to the U.S. Department of Treasury in January 2009.

C&F, a $900 million institution, is only the second local bank to pay back any of its TARP capital. The former Union Bank, one of the predecessors of Union First Market Bank, paid back its $59 million to the Treasury in 2009.

In addition to the $10 million still left unredeemed by C&F, six local banks have yet to buy themselves out of the TARP program.

The TARP Capital Purchase Program, controversial in its day, provided capital to banks of all sizes in exchange for shares of preferred stock that the Treasury holds until the money is paid back. Banks pay a 5 percent quarterly dividend to the Treasury for the first five years. If the loan is not repaid after five years, the interest rate jumps to 9 percent.

Many banks today are having trouble coming up with the cash to buy back their preferred shares. C&F, headquartered in West Point, said it used existing financial resources from its parent corporation to make the payment.

Union First Market Bank, which is still on the hook for $33.9 million from its predecessor First Market Bank, recently filed a shelf registration with the SEC, leaving open the possibility for the company to raise up to $100 million. Union hinted in its prospectus that a portion of the capital could be used to buy back the remaining shares from Treasury.

Local banks that have yet to repay TARP money:

Central Virginia Bank: $11.3M

Community Bankers Trust/Essex Bank: $17.6M

EVB: $24 million

First Capital Bank: $10.9 million

Union First Market Bank: $33.9 million

Village Bank & Trust: $14.7 million

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