7 Arkansas Lenders Still Indebted to Treasury After TARP Relief

by George Waldon  on Monday, Nov. 4, 2013 12:00 am  

“At the end of the day, there may be some money, but it wouldn’t be much,” said Jack Williams, founding partner in the Little Rock law firm of Williams & Anderson, which represents Rogers Bancshares in the Chapter 11 case.

“Nobody can say for sure because we don’t know what the size of all the claims will be before we get to the unsecured creditors.”

In round numbers, Ford Financial Fund II of Dallas stands to recoup more than $2 million in fees, expenses and more associated with its role as the stalking horse bidder in the sale of Rogers Bancshares stock.

After other administrative fees and expenses associated with the bankruptcy are paid, three trust preferred creditors are next in line with claims that will leave little if anything for remaining unsecured creditors.

The trio is tied to debt of $41.2 million plus unpaid interest of $5.6 million associated with loans to Rogers Bancshares.

• Southern Bancorp Inc. of Arkadelphia initially participated in TARP’s capital purchase program to the tune of $11 million.

The holding company of $1.2 billion-asset Southern Bancorp Bank exchanged the CPP funding in 2010 for more favorable terms and expanded the government investment to $33.8 million under TARP’s Community Development Capital Initiative program.

CPP investments feature locked-in interest rates that escalate in five years. The annual interest rate under TARP’s CDCI program is set at 2 percent for the first eight years and jumps to 9 percent after that.

The funds helped Southern Bancorp expand its footprint for community development lending that included acquisitions of Timberland Bank of El Dorado and First Delta Bankshares Inc., the $309 million-asset holding company for First National Bank of Blytheville and the Bank of Trumann.

TARP’s CPP funds were disbursed to bank holding companies via equity (senior preferred shares of stock) or debt (subordinated debentures).

The senior preferred shares carry an annual interest rate of 5 percent for the first five years, which increases to 9 percent after that.

The subordinated debentures bear an annual interest rate of 7.7 percent for the first five years; that climbs to 13.8 percent after that. If the debt isn’t repaid by year five, the U.S. Treasury gains an additional subordinated debt claim equal to 5 percent of the investment.



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