Independent Bank Corp. near Lansing announced Tuesday it has exited the Troubled Asset Relief Program Capital Purchase Program, known as TARP. In 2008, the U.S. Department of the Treasury invested $72 million in the bank through the program, and last Friday the company repurchased those shares for $81 million.
As a result, the U.S. Treasury department no longer has an equity interest in the company.
“Our exit from TARP represents the culmination of a very challenging and eventually rewarding period in the history of our organization,” says Brad Kessel, president and CEO of Independent Bank. “This is the epitome of a total team effort.”
The redemption of the preferred stock and warrant will result in annualized savings of approximately $4.6 million due to the elimination of associated preferred dividends and related discount accretion. Not surprisingly, the company, founded as First National Bank of Ionia in 1864, is positive about its future, according to Robert Shuster, Independent Bank’s CFO.
“We went through a three- or four-year timeframe where we had to focus on building our capital base and exiting TARP,” Shuster says. “Now we’re turning our attention to our customers, improving our operations and earnings, and continuing to grow the business.”
While Shuster says that the company doesn’t have any immediate plans for a brick-and-mortar expansion, he believes it “has a good amount of opportunity within (its) existing footprint.” The institution operates 71 branches across Michigan’s Lower Peninsula through one state-chartered bank subsidiary.
“In some ways, (Independent Bank) kind of mirrored the state in terms of going through a difficult time,” Schuster says. “We feel very positive about the future for both our company and Michigan.”
The completion of the redemption was preceded by Independent Bank’s public offering of 11.5 million shares of common stock in exchange for gross proceeds to the company, before expenses, of $89.1 million on Aug. 28, and the company’s payment of all deferred interest with respect to each of the company’s subordinated debentures and related trust preferred securities on Aug. 29.
In total, approximately $245 billion was committed in TARP programs to stabilize U.S. banking institutions. As of June 30, the treasury department had recovered more than $271 billion through repayments and other income — some $26 billion more than the $245 billion originally invested.