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jyc3 (74.81)

Iberiabank To Return TARP Funds

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February 27, 2009 – Comments (5) | RELATED TICKERS: IBKC , MS , GS

Iberiabank (IBKC 43.88 ↑6.82%) of Louisiana has decided to return the TARP funds, saying that keeping the funds placed them at competitive disadvantage:

"On second thought, Iberiabank Corp. doesn’t want federal bailout money after all."

"Saying the “rules of the game had changed” since accepting federal funds in December, Iberiabank President Daryl Byrd announced Thursday the Lafayette bank will buy back the $90 million in preferred stock it sold through the Capital Purchase Program to the U.S. Treasury Department as soon as the shares mature on March 31."

Just more evidence that the banking “system” is not in trouble. The vast majority of banks in this country acted responsibly and are not having troubles. Iberia was able to raise private capital to replace the TARP funds and they will now be able to run their bank without political interference. I expect to see more of this in the coming weeks. Goldman Sachs (GS 93.34 ↑1.29%) and Morgan Stanley (MS 20.47 ↓4.03%) have already indicated their intention to return the funds, but that probably will take a while longer. In the meantime, expect to see more small banks, many of which didn’t really need the capital, follow Iberia’s lead.

5 Comments – Post Your Own

#1) On February 27, 2009 at 2:36 PM, blake303 (68.94) wrote:

The banking system is by no means clear of trouble. One bank with a market cap of under $1 billion returning TARP money does not reflect the general state of banking in the US. The important banks are extremely undercapitalized and will continue to be as long as unemployment and foreclosures are increasing.

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#2) On February 27, 2009 at 2:43 PM, Schmacko (96.90) wrote:

I've read a lot of opinions that the small regional banks will be the first to recover and I think it's because they can do things like this.

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#3) On February 27, 2009 at 3:28 PM, GNUBEE (68.08) wrote:

Schmacko,

In agreement on regionals. Smaller is nore nimble.

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#4) On February 27, 2009 at 4:05 PM, TMFSinchiruna (98.15) wrote:

Before you go jumping into those more numble regionals, though, I would caution Fools to look carefully at exposure levels to every tranche of the dominoes yet to fall... i.e. commercial real estate, small business loans, student loans, etc., etc. I do think the entire banking system has barely begun to feel the pain at this stage, and so I just toss out a cautionary word to my fellow Fools.

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#5) On February 27, 2009 at 4:55 PM, GNUBEE (68.08) wrote:

Duely noted Sinch, Anyone who is not really picky will get burned for your reasons above.

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