Wisconsin Banking News

TCF Bank gets approval to pay back TARP funds; Securant Bank & Trust accepts TARP funds; Bank Mutual first quarter profit up 41 percent; First quarter earnings for Associated Bank up from fourth quarter

TCF Bank gets approval to pay back TARP funds

TCF Financial Corp., The Wayzata, Minn.-based parent company of TCF Bank, which has several Wisconsin locations, announced Monday that it has received approval from the U.S. Treasury Department to pay back $361.2 million to the federal government that the bank had received through the Troubled Asset Relief Program (TARP) program. TCF also said its board of directors reduced its regular quarterly cash dividend on common stock to 5 cents per share from 25 cents per share.

TCF said in March that it would request approval to return the TARP funds. TCF is repurchasing 361,172 shares of stock from the government.

In February, BizTimes Milwaukee was the first to report that TCF Bank, like some other banks that received TARP funds, sent some of its employees on an expensive junket to reward high performing employees. Public scrutiny of business practices by banks that received TARP has resulted in some banks deciding to return the money to the federal government. For example, Chicago-based Northern Trust Corp., which has an office in downtown Milwaukee said it would repay the $1.5 billion it received under the federal Capital Purchase Program as soon as possible, after several politicians decried its sponsorship of The Northern Trust Open, a PGA Tour event in California. Racine-based Johnson Bank and West Bend-based Commerce State Bank declined to participate in the TARP program.

Securant Bank & Trust accepts TARP funds

Menomonee Falls-based Securant Bank & Trust announced it will voluntarily sell $5.1 million in non-voting preferred stock to the U.S. Treasury Department as part of the voluntary federal Capital Purchase Program (CPP) to add capital. The CPP, part of the federal Troubled Assets Relief Program (TARP), was created to help the nation’s economy and encourage healthy banks to grow and increase lending.

The government will receive a 5-percent dividend as Securant Bank & Trust expects to buy back the certificates within three to five years.

"In order for banks to lend and grow, capitalization is necessary and raising the capital through private equity campaigns is difficult in this economic environment. The CPP was established to help banks raise capital precisely because of the difficulties for banks to raise funds in the midst of an economic recession," said David Davis, president and chief executive officer of Securant. "As the recession continues, the CPP becomes a practical source of capital that allows us to continue prudent growth opportunities and lend money to businesses and consumers in the communities we serve. When the economy starts to recover, businesses will want to borrow money, and we’ll be ready to lend them funds. Banks have to be ready and willing to lend money. It’s the catalyst for turning around this economy. That’s why this is a win-win for everyone."

Davis also said the bank is comfortable with the CPP’s requirements regarding executive compensation.

"None of the requirements has implications for Securant Bank & Trust," Davis said.

Securant has assets of $231 million, with operations in Menomonee Falls, Milwaukee, Elm Grove, Hartland and Slinger.


Bank Mutual first quarter profit up 41 percent

While other financial institutions in the United States are struggling to survive, Brown Deer-based Bank Mutual Corp. recently reported first quarter net income of $7.2 million, or 15 cents per diluted share, up 41 percent from first quarter 2008 net income of $5.1 million or 10 cents per diluted share.

“As we expected, a historically low interest rate environment enabled us to significantly increase profits from our mortgage lending operation and to maintain our net interest margin," said Michael T. Crowley, Jr., chairman, president, and chief executive officer of Bank Mutual Corp. "We were also able to take advantage of opportunities in the securities market to sell certain long-term, fixed-rate investments at significant gains. We felt these actions were prudent in order to prepare our balance sheet for what we believe will be higher interest rates in the future."

During the first quarter, Bank Mutual had a $3 million, or nearly 375 percent, increase in loan sales activities, a $2.2 million or 12.7 percent increase in net interest income, and a $592,000, or more than 40 percent, increase in investment gains.

However, in light of current economic conditions and recent loan origination activity, Bank Mutual management expects growth in all categories of the company’s loan portfolio to be slow or negative in the near term

"Although we continue to be pleased with the quality of our loan portfolio, we remain concerned about the overall direction of the economy," Crowley said. "For that reason, we took steps to increase our allowance for loan losses during the period.”

First quarter earnings for Associated Bank up from fourth quarter

Green Bay-based Associated Banc-Corp., which has substantial operations in the Milwaukee area, reported recently that its first quarter net income was $35.4 million, or 28 cents per share, down from $66.5 million, or 52 cents per share, during the first quarter of 2008, but still an improvement from fourth quarter of 2008 net income of $13.6 million, or 11 cents per share.

Net interest income for the first quarter of 2009 was $189.3 million compared to $191.8 million for the fourth quarter of 2008 and $165.1 million for the first quarter of 2008.

Associated Banc-Corp. also announced a 27-cent cut in quarterly dividend to 5 cents per share compared to the previous quarterly dividend of 32 cents per share.

“While the decision to reduce the quarterly dividend was difficult, we believe that it is in the best long-term interests of our shareholders to preserve capital during this time of unprecedented economic uncertainty and market volatility,” said chairman and CEO Paul S. Beideman. “We believe the dividend reduction will better enable us to support our customers and communities, grow and expand our businesses, and maintain and enhance our tangible common equity. We recognize and appreciate the loyalty of our shareholders. We also understand the impact the dividend reduction will have on our shareholders. The board of directors and management are committed to increasing the dividend as soon as possible.”


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