Glacier Bancorp of Kalispell is among 20 banks nationwide that have decided against accepting federal bailout money, after applying for the aid.
The banks are concerned about hidden strings and government interference.
After Congress approved the $700 billion bailout in October, the government gave banks only a few weeks to decide whether they wanted to take part in the government investment program.
Many applied to get a foot in the door, and then changed their minds as details emerged.
The banks that turned down the money said they were comfortable their own finances will allow them to weather the economic downturn. For some, taking the money seemed riskier than turning it down.
Glacier Bancorp is the parent company for Glacier Bank in Kalispell; First Security Bank in Missoula; Valley Bank of Helena; Big Sky Western Security Bank of Billings and First Bank of Montana in Lewistown. The company also has banks in Idaho, Utah, Washington, Wyoming and Colorado.
Second Long Island bank turns down bailout money
A second Long Island bank has turned down money from the U.S. Treasury Department's controversial program to take out equity stakes in healthy banks and help bail out troubled financial institutions.
Hauppauge-based Smithtown Bancorp, parent of the Bank of Smithtown, said Friday that it "will not be participating" in Treasury's Troubled Asset Relief Program, begun in late fall to help loosen tightened lending markets and aid institutions that suffered significant losses after investing in toxic assets.
The Bank of Smithtown's decision comes a week after Westbury-based New York Community Bancorp, parent of New York Community Bank, said it had decided against participating in the TARP program.
Both banks said that although they had been approved for funding - $37.8 million in Bank of Smithtown's case and $596 million in New York Community Bank's case - they had sufficient capital, and they also objected to some of the strings attached to the money.
Chief among the objections was limitations on dividend payments the banks accepting TARP money could make. Banks have also taken issue with other restrictions, such as on bonuses for employees and executive compensation.
"As long as they keep talking about imposing onerous restrictions on banks that take TARP money, it doesn't make sense for a healthy and profitable bank to take the money," Bank of Smithtown chief executive Brad Rock said in an interview yesterday.
Rock said the Bank of Smithtown has been paying dividends for its nearly 100-year history.
"We have had record earnings, the best year in the history of the bank," he said. "Why would we not pay dividends?"
In November, the bank declared a 4-cents-per-share cash dividend payment. In the third quarter, the bank said profits rose 21 percent, compared to the same period in 2007. The bank said loans increased to $1.5 billion, from $948 million in the third quarter in 2007. It is scheduled to release fourth-quarter results tomorrow.
Joseph R. Ficalora, chief executive of New York Community Bank, said Jan. 12 that the bank's capital is "sufficient to support the communities we serve ... "
In October, the bank declared a quarterly cash dividend of 25 cents per share.
David Wyss, an economist for Standard & Poor's Corp., said he expects government restrictions on TARP money to tighten even further as more funds are released. So far, Treasury has released $150 billion, and Congress recently approved the release of another $350 billion.
Nonetheless the American Bankers Association said that a relatively small percentage of financial institutions - about 300 of the 8,500 across the country - have been approved for TARP funding and have received it. Peter Garuccio, an ABA spokesman, said the TARP approval process is lengthy.
In testimony before the House Financial Services Committee this month, Edward L. Yingling, the ABA's chief executive, said bankers were "frustrated" about "the current confused situation" regarding TARP, which he said unfairly lumped together strong banks and failing institutions. "This is not fair and it is harmful to our economy," Yingling said.
Banks that have said 'no thanks' to US bailout
The following banks have announced they no longer planned to participate in the government-sponsored bank bailout program:
_ American River Bankshares, of Rancho Cordova, Calif., said it would not accept $6 million
_ Chemical Financial Corp., of Midland, Mich., said it will not accept $84 million
_ California United Bank, of Encino, Calif., said it will not accept $8.4 million
_ Dime Community Bancshares Inc., of Brooklyn, N.Y., said it will not accept $77.3 million
_ Dearborn Bancorp Inc., of Dearborn, Mich., withdrew its application for $29 million
_ Eagle Financial Services, Inc., of Berryville, Va., said it will not accept $10 million
_ First Capital Inc., of Corydon, Ind., said it would not accept bailout money
_ Friendly Hills Bank, of Whittier, Calif., said it would not accept $1.6 million
_ Glacier Bancorp Inc., of Kalispell, Mont., said it would not accept bailout money
_ Legacy Bancorp Inc., of Pittsfield, Mass., said it would not accept $20 million
_ Liberty Bancorp Inc., of Liberty, Mo., said it would not accept $8.5 million
_ Mechanics Bank, of Richmond, Calif., said it withdrew its application for $60 million
_ NBT Bancorp Inc., of Norwich, N.Y., said it would not accept bailout money
_ New York Community Bancorp Inc., of Westbury, N.Y., said it would not accept $596 million.
_ OptimumBank Holdings Inc., of Fort Lauderdale, Fla., said it would not accept $4.6 million
_ Pamrapo Bancorp Inc., of Bayonne, N.J., withdrew its application for $11 million
_ Pacific Continental Corp., of Eugene, Ore., said it would not accept $30 million
_ Smithtown Bancorp, of Hauppauge, N.Y., said it would not accept $37.8 million
_ S.Y. Bancorp Inc., of Louisville, Ky., said it would not accept $43 million
_ Tompkins Financial Corp., of Ithaca, N.Y., said it would not accept $15 million