Two Buffalo area banks apply for government money
Two local banking companies have applied to the federal government to receive up to $37 million in capital through the Treasury Department's bank stock purchase program, despite having reservations about the program's rules and potential future changes.
Angola-based Evans Bancorp on Thursday submitted its application to sell between $3.98 million and $11.93 million of senior preferred stock to the Treasury. That would give a boost to the bank's already strong capital levels at prices that are attractive today, but would also leave the government owning as much as 3.75 percent of the bank.
Financial Institutions, the Warsaw-based parent of Five Star Bank, also applied, and is seeking to sell $25 million in preferred stock and warrants to the government. That's less than it could have asked for, said spokesman Matt Murtha.
Still, Evans executives remain hesitant about the program, citing the long-term cost of the investment, the accompanying restrictions on dividends, stock buybacks, and compensation that participating banks must accept, and the risk that the rules could change further. Already, the program has undergone significant shifts in recent days and weeks since its announcement.
"Economically, there's reason to look at it, but philosophically, I'm not sure we want the camel's nose under the tent," said David Nasca, Evans' president and CEO. "Does anybody want the govenrment as a business partner?"
Bank of America Corp., KeyCorp and First Niagara Financial Group have already accepted the government's investment, but M&T Bank Corp. and Lake Shore Bancorp have not yet decided whether to participate. M&T is the only one of the nation's top 25 banks that has not indicated to the government if it will take the TARP money.
