Loading ...by Dan Meisler | Ann Arbor Business Review
Thursday March 05, 2009, 4:18 PM
Bank of Ann Arbor, the largest community bank in Washtenaw County, is withdrawing its application for up to $11.5 million from the federal Department of Treasury’s Troubled Asset Relief Program.
In a statement today, the bank’s board cited “ever-changing rules and the growing negative publicity for participating banks” as reasons that the program had become “unappealing.”
The bank had applied in December for the funding, which President and CEO Timothy Marshall said at the time could be used for potential acquisition, internal growth, strengthening of its balance sheet, or greater lending. But today, Marshall said the strings attached and the negative perception of the program outweighed the potential benefits.
“The potential acquisition targets in our immediate area are limited,” he said. “The board decided to remain focused on the greater Ann Arbor and Washtenaw County area.”
Six banks based in Michigan have received TARP funds, including United Bancorp in Tecumseh, parent company of United Bank & Trust, which got $20.6 million. The others are Citizens Republic in Flint, Independent Bank in Ionia, Flagstar in Troy, Firstbank in Alma, and, most recently, Monarch Community Bancorp in Coldwater.
Marshall said the perception that a bank must be in trouble if it receives federal money was a factor in the decision to withdraw the TARP application.
“We’re profitable, we’re liquid, and we’re well-capitalized,” he said.
Year-end earnings figures were not available, but Bank of Ann Arbor reported a net income of $2.2 million for the nine months ending Sept. 30, 2008, compared to $3.1 million for the same period in 2007.
Another factor was the recent amendments to the program pushed by U.S. Sen. Christopher Dodd, D-Conn., that were approved in the federal stimulus package, Marshall said. Limits on executive pay in Dodd’s amendment have received the most attention, but Marshall said the changes also showed a troubling potential for changing the rules as the program is operating.
