Louisiana bank is first to return TARP funds
Iberiabank Corp., which received $90 million in December, says recent changes to the program would leave it disadvantaged if it kept the money.
NEW YORK (CNNMoney.com) -- Iberiabank Corp. became the first bank to pull out of the government's bailout program Friday, saying it would be returning the $90 million it received from the government in early December under the Troubled Asset Relief Program.
The Lafayette, La., bank said it will buy back the 90,000 class A shares held by the Treasury, plus a pro-rated dividend accrual of $575,000. That will make Iberiabank the first institution to return TARP funds, according to a Treasury spokesman.
TARP has helped provide stability to the banking system overall but recent changes would put IBERIA (IBKC) at a disadvantage, said Daryl Byrd, the bank's chief executive.
"We believe recent actions, interpretations, and commentary regarding various aspects of the program places our company at an unacceptable competitive disadvantage," said Byrd in a statement.
Due to highly publicized losses at larger institutions such as Citigroup (C, Fortune 500) and Bank of America (BAC, Fortune 500), Congress has tightened restrictions on recipients of TARP funding, noted Andy Stapp, senior analyst with investment research firm B. Riley & Co.
"A lot of these small-cap banks remain profitable, and it just doesn't make much sense for the government to try to dictate the way they should operate their business," said Stapp, adding "I think you'll see more banks returning TARP money."
Earlier this week several congressmen, including Sen. John Kerry, D-Mass., expressed outrage at Chicago-based Northern Trust (NTRS, Fortune 500), a relatively unscathed bank which received $1.6 billion through the TARP program in November, for throwing a lavish party for clients at a golf tournament.
"Absolutely, some banks regret taking TARP. The enormous amount of mistrust the government has created in banks is something we've never seen," Chris Kelly, head of capital markets at law firm Jones Day, told CNNMoney.com when discussing Northern Trust earlier this week.