Several Baltimore area banks may take the federal government up on its offer to invest in their institutions, part of the U.S. Treasury’s $700 billion plan to stabilize the nation’s financial institutions.
Provident Bank became the first major local bank to accept the funds, announcing Monday it had received $151 million under the program, the 13th bank nationwide to do so.
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The banks are quick to point out that the equity infusions are not a bailout but an investment made in “healthy” banks in hopes that they’ll continue lending to consumers.
But they underscored the desire to add additional capital to their balance sheets amid a still shaky economy.
“It provides us additional flexibility with our customers and it’s really attractive terms and conditions that we think are good for our shareholders,” said Gary Gesiel, Provident chairman and chief executive officer.
As part of its Troubled Assets Relief Program, or TARP, the government will invest equity into banks they judge to be “healthy.” The deadline for publicly held banks to apply for the funding was Friday, and a deadline for privately held institutions has not be set, a Treasury spokeswoman said Monday.
Fulton Financial, parent company of the Columbia Bank, applied for the TARP investment on Nov. 6, said spokeswoman Laura Wakeley. Fulton is a holding company for nine other banks in five states, and unlike Provident said at least part of its investment would go to acquisitions of smaller banks to expand its business.
Baltimore County Savings Bank CEO Joseph Bouffard would not confirm whether the bank had applied for the program but said it had considered doing so.
“It’s an excellent source of capital at a very reasonable cost,” he said. “In uncertain times, you can’t have enough capital.”
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