PHILADELPHIA-Of the $1.5 billion lent to area banks in 2008 and 2009 as part of the federal TARP initiative, $811 million is already paid back. Smaller banks are an exception in some cases, though, according to a Philadelphia Inquirer article.
"Stock prices are still depressed, so why go out and dilute your stock when you don't have to?" the paper quoted Vito Pantilione, chief executive officer of Parke Bancorp Inc. in Sewell, NJ, as saying. Many larger banks are selling preferred shares to pay back the money more quickly.
Most smaller banks that took the infusion were able to boost lending during the time significantly. And since they only have to pay a 5% annual dividend payment for the first five years after getting the funds, there is no incentive to increase those repayments.
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