Local banks debate taking bailout funds

It is a conversation happening in the boardroom of every bank: whether to reach in to grab some of the bailout money from Uncle Sam's wallet.

So far, the Treasury Department, under the Troubled Asset Relief Program, has invested $158.5 billion in 23 banks in an effort to stabilize the financial system.

The larger banks that serve this area, Bank of America, SunTrust and Regions Financial Corp., have already received $23 billion total.

Others, including Fifth Third Bancorp and Synovus, which runs Augusta First, have gotten in line. Fifth Third, which took over R-G Crown branches last year, is asking for $3.45 billion. Columbus, Ga.-based Synovus is requesting $973 million.

T hen there are the ones riding the fence.

"Healthy banks are being encouraged to look at it. ... The Treasury is saying they want healthy banks to take the money," said Dan Blanton, the president of Georgia Bank & Trust, which applied Nov. 14.

Georgia Bank & Trust is eligible for $30 million but is not required to take the money if approved.

"We don't need the money," Mr. Blanton said. " It is good management that you look at all your options. We can back out of it at any time."

If approved, the government would buy the bank's preferred stock, meaning it would get a 5 percent dividend from the bank for five years. If the money isn't paid back by then, the government would start to get a 9 percent dividend, Mr. Blanton said.

The bank has the option of paying back the money after three years.

Mr. Blanton's concerns are the constant changes in rules or interpretations from the Treasury. That makes it difficult to make a decision about the program, he said.

First Citizens Bank, a privately held company, is also contemplating a capital infusion. The deadline for such banks is Dec. 8.

"We really don't feel compelled to use it. We're a strong financial institution and well capitalized. We are studying the merits of the program," said Craig Nix, the bank's chief financial officer.

There are local banks that have not succumbed to the lure.

"We don't need TARP money and won't be participating," said Jeff Spears, the president of Savannah River Banking Co. "We don't need the resource."

Executives from banks that have applied are contemplating their customers' perceptions of the move.

Mr. Blanton said he's had customers tell him that a strong bank should get some of that money. T hough the program has troubled assets in its name, none is needed to participate, Mr. Blanton said.

Reach Tim Rausch at (706) 823-3352 or timothy.rausch@augustachronicle.com.