Wednesday, November 14, 2012
U.S. bailout helped HomeTown Bank lend $30 million
The government said it recouped most of the $10.3 million it gave the Roanoke-based bank.
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A 2009 capital infusion made possible by the federal government's Troubled Asset Relief Program has enabled Roanoke-based HomeTown Bank to lend businesses and individuals an estimated $30million, a bank official said.
HomeTown Bankshares Corp. released the figure Tuesday as it acknowledged the end of the government's investment in its well-being, saying the money was well spent.
The federal government sold the bank shares it acquired in September 2009 to private investors at an October auction, the bank said in a filing Tuesday with the U.S. Securities and Exchange Commission.
Beginning in 2008 after the onset of a severe recession, the U.S. Treasury Department bought billions of dollars of stock in scores of private banks in a move designed to stem panic and stabilize financial institutions. In 2012, the program is being wound down. Banks are buying back their stock. And, the government is selling some stock at auction to private investors at a small loss. Of $417 billion disbursed, $371 billion has been recovered, the treasury department said in its latest monthly report.
"By any objective standards, the Troubled Asset Relief Program has worked: it helped stop widespread financial panic, it helped prevent what could have been a devastating collapse of our financial system, and it did so at a cost that is far less than what most people expected at the time the law was passed," the report said.
HomeTown officials found the money their bank received, which totaled $10.3 million, produced "a significant level of comfort in us being able to continue to lend into our community," said Charles Maness, executive vice president and chief financial officer at the bank. "It was a success from our perspective. It did what it needed to do, which is stabilize the financial system and give everybody a solid footing entering a very unknown period."
The loans included vehicle loans, equity lines of credit, residential mortgages and business loans, Maness said.
The money placed in HomeTown achieved its stated purpose to stimulate lending. The federal government reported that it suffered a loss at the auction level, receiving $9.4 million. However, the government received $1.2 million in dividend payments previously from the bank.
Meanwhile, the bank recently announced that it made money during the July-through-September quarter, though less than during the same period a year ago.
The bank earned $584,000, or 19 cents a share, during the three months that ended Sept.30. That was 8 percent less than a year ago when the company earned $637,000, or 18 cents a share, during the third quarter of 2011.