First Manitowoc To Withdraw From TARP; First Niagara Completes Redemption

Two more banks have redeemed the shares they sold the government in exchange for bailout funding.

First Niagara Financial Group Inc., of Lockport, N.Y., said it repaid the $184 million it received seven months ago. BailoutSleuth reported previously on its plan to exit the bailout the program.

First Manitowoc Bancorp Inc., a Wisconsin-based company, said it had paid the Treasury $12.6 million to redeem the shares it issued in January. It also paid $21,800 in accrued dividends.

First Niagara’s chief executive, John P. Koelmel, said the taxpayer capital that the bank received through the Treasury Department’s Troubled Asset Relief Program had served its purpose.

“Our first quarter loan production increased by 8 percent over the same period a year ago as we continued to leverage the federal capital to make commercial and consumer credit readily available in the communities where we do business,” he said in a prepared statement. “When market conditions improved, we replaced the government’s investment with private capital”

First Niagara raised $380.4 million through a stock offering last month.

Michael B. Molepske, First Manitowoc’s chief executive, said that the bank’s approval for, and withdrawal from, the Troubled Asset Relief Program were both signs of its financial health.

“The Treasury’s investment in our Company was an indication of our soundness and the Treasury’s acceptance of our repayment further highlights the financial soundness of Bank First National,” Molepske said in a prepared statement.

When the TARP program was announced, many banks applied under the belief that approval by the Treasury would calm anxious investors and partners.

Many other banks, however, calculated that involvement would send more negative than positive signals about the bank’s stability. First Manitowoc’s decision reflects a growing consensus that the latter interpretation was the correct one.

More than two dozen banks have either returned their TARP money or announced plans to do so. To gain approval, however, they must prove to the Treasury that they are strong enough to survive without government financing or loan guarantees.

Seventeen Wisconsin banks have received TARP funds. First Manitiwoc is the first of them to leave the program.

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