How One Bank Spun Its TARP Money

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“We are pleased that we have been selected to participate in this voluntary program.”
— D. Michael Jones
President and CEO
Banner Corporation

Recently, Banner Bank in the Pacific Northwest got an infusion of capital through the Troubled Asset Relief Program (TARP). The U.S. Treasury bought $124 million of Banner’s stock through the government’s Capital Purchase Program.

“We are pleased that we have been selected to participate in this voluntary program,” said D. Michael Jones, President and CEO/Banner in a press release.

“The additional capital will enhance our capacity to support the communities we serve through expanded lending activities and economic development,” he continued. “This capital will also add flexibility in considering strategic opportunities that likely will be available to us as the financial services industry continues to consolidate.”

The preferred stock will pay a 5% dividend for the first five years, after which the rate will increase to 9%.

At the time of the deal, Banner was “well-capitalized” under regulatory guidelines. The TARP purchase lifts Banner’s Tier 1 Leverage Capital Ratio to approximately 11.25% (up from 8.86%), and its Total Risk Based Capital Ratio to approximately 13.90% (up from 11%).

Banner Bank has $4.7 billion in assets an operates two commercial banks in Washington, Oregon and Idaho.

Here’s how the bank spun the story in a recent ad. What do you think? More importantly, how do you think consumers will react?

This ad from Banner Bank ran in Kirkland Reporter, December 3, 2008.

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