7:55 PM
Two U.S. banks reveal TARP repayment plans
Addison Ray
By Maria Aspan and Joe Rauch
NEW YORK/CHARLOTTE, North Carolina | Mon Dec 13, 2010 8:47pm EST
NEW YORK/CHARLOTTE, North Carolina (Reuters) - Two regional U.S. banks plan to repay their government bailout loans, a sign of health that could put pressure on other lenders to shed government aid.
Huntington Bancshares (HBAN.O) said it was issuing stock and bonds to help repay $1.4 billion it received under the U.S. Government's Troubled Asset Relief Program in November 2008.
First Horizon National Corp (FHN.N) said it is selling debt and equity to pay off $867 million of TARP aid.
Huntington's shares fell after the news because the bank will sell so much equity to repay the government, analysts said. First Horizon's shares rose as investors cheered its move to shed government support.
Analysts said these repayment plans could be the first of another wave of TARP repayments, and suggest that the U.S. banking system is continuing to heal after the 2008 crisis.
Banks that have yet to repay the government should think about doing it soon, said Jeff Davis, bank analyst at boutique bank Guggenheim Partners.
"If you're a bank that does wait now, the market might be left to assume there are deeper problems," Davis said.
The offerings from Huntington and First Horizon come one year after the largest U.S. banks -- including Citigroup Inc (C.N), Bank of America Corp (BAC.N) and Wells Fargo & Co (WFC.N) -- raised tens of billions of dollars to repay their government bailout aid. The first wave of banks to repay TARP came in the summer of 2009, and included Goldman Sachs Group Inc (GS.N) and JPMorgan Chase & Co (JPM.N).
BIG, BUT NOT TOO BIG
Despite the latest round of offerings from smaller lenders, the largest U.S. regional banks may still be months away from buying back the government's temporary investment.
Regional banks SunTrust Banks Inc (STI.N), Regions Financial Corp (RF.N), Fifth Third Bancorp (FITB.O) and KeyCorp are the four largest U.S. lenders that have yet to repay TARP.
The four banks were part of a larger group of the 19 biggest banks that underwent U.S. government stress testing in Spring 2009.
Huntington, with $53 billion in assets, and First Horizon, with $25 billion, fell well below that threshold.
Now, the Federal Reserve is retesting all of the "stress test" banks before allowing them to repay TARP, raise their dividends or repurchase shares.
Results are not expected until first quarter 2011, leaving a window for smaller banks to repay TARP.
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