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SIGTARP SURVEY DEMONSTRATES THAT BANKS CAN PROVIDE MEANINGFUL INFORMATION ON THEIR USE OF TARP FUNDS SIGTARP-09-001 JULY 20, 2009 SIGTARP Office of the Special Inspector General for the Troubled Asset Relief Program July 20, 2009 Survey Demonstrates that Banks Can Provide Meaningful Information on Their Use of TARP Funds Summary of Report: SIGTARP-09-001 What SIGTARP Found Why SIGTARP Did This Study Although most banks reported that they did not segregate or track TARP fund usage on a dollar-for-dollar basis, most banks were able to provide insights into their actual or planned use of TARP funds. Over 98% of survey recipients reported their actual uses of TARP funds. The Troubled Asset Relief Program (“TARP”) was created by the Emergency Economic Stabilization Act (“EESA”) of 2008, which was enacted on October 3, 2008. TARP provided the Secretary of the Treasury with various authorities to restore the liquidity and stability of the United States financial system and stimulate lending. As of June 15, 2009, the Department of Treasury (“Treasury”) has provided about $330 billion of TARP funds to more than 600 financial institutions. The Congress and the public frequently ask questions about how TARP funds have been used. Accordingly, the objective of this report was to address how TARP recipients have used the funds received. In February 2009, SIGTARP sent survey letters to more than 360 financial and other institutions that had completed TARP funding agreements through January 2009. The survey instrument provided for open-ended responses. The goal was to elicit as much information as possible while allowing for different conditions at each bank. This report is limited to survey recipients that participated in the Capital Purchase Program. The review and analysis were confined to the survey responses which included supporting documentation as provided, reported, and certified by the TARP recipients. SIGTARP plans additional work to further assess the actual use of funds. SIGTARP’s work was performed in accordance with generally accepted government auditing standards. What SIGTARP Recommends SIGTARP is renewing and expanding on a recommendation previously made that Treasury require TARP recipients to submit periodic reports to Treasury on the uses of TARP funds, including what actions they were able to take that they would not have taken otherwise. The full text of the recommendation is included in the body of the report. In commenting on a draft of this report, Treasury did not agree with the recommendation. SIGTARP’s response to Treasury’s position is included in the management comments section of this report. Many banks reported that TARP funds allowed them to increase lending for residential and commercial loans, small business loans, credit card loans, and other types of lending. Most firms reported multiple and sometimes interrelated uses; a majority of respondents’ reported that they used the funds primarily for lending, building capital reserves and investing, as highlighted below. • More than 80 percent of the respondents cited the use of funds for lending or how it helped them avoid reduced lending. Many banks reported that lending would have been lower without TARP funds or would have come to a standstill. • More than 40 percent of the respondents reported that they used some TARP funds to help maintain the capital cushions and reserves required by their banking regulators to be able to absorb unanticipated losses. • Nearly a third of the respondents reported that they used some TARP funds to invest in agency-mortgage backed securities. These actions provided immediate support of the lending and borrowing activities of other banks and positioned the banks for increased lending later. • A smaller number reported using some TARP funds to repay outstanding loans–some because the TARP funds were a more cost-effective source of funds than their outstanding debt, and some because of pressure from a creditor to use the funds for that purpose. • Several banks reported using some TARP funds to buy other banks. One reported that this was a cost-effective way to acquire additional deposits that, in turn, would facilitate an even greater amount of lending. • Some banks reported that they had not yet allocated funds for lending and other activities due to the short time elapsed since the receipt of funds, the weak demand for credit, and the uncertain economic environment. Although the respondents reported that lending was an important use of funds, their responses generally did not quantify the amount of new lending or the incremental difference in lending based on use of TARP funds. Moreover, their responses represented their use or planned use at a single point in time and could be subject to change depending on economic conditions. Special Inspector General for the Troubled Asset Relief Program Table of Contents Introduction 1 Banks Were Able To Provide Information on Their Use of TARP Funds 5 Conclusions and Recommendations 14 Management Comments and Audit Response 14 Appendices A. Scope and Methodology 17 B. How Banks Use Capital 19 C. Survey Letter 22 D. CPP Survey Recipients 24 E. Reported Actual Use of Funds by Month of Disbursement, Asset Size, and Amount of Funding 34 F. Broad Impact of Receiving TARP Funds 36 G. Audit Team Members 37 H. Management Comments 38 i Introduction The Emergency Economic Stabilization Act of 2008 (“EESA”) 1 was enacted on October 3, 2008, authorizing the Secretary of the Treasury to establish the Troubled Asset Relief Program (“TARP”) to purchase non-performing or troubled assets from financial institutions. However, given the rapid deterioration of the financial markets in the fall of 2008, Treasury believed it needed to move more swiftly. The result was the decision to inject equity capital into financial institutions under its Capital Purchase Program (“CPP”) as it sought to stabilize financial institutions and markets and to stimulate lending. Subsequently, a number of other initiatives were undertaken. As of June 15, 2009, the Department of Treasury has provided about $330 billion to more than 600 financial institutions using funds authorized under EESA. Nearly $200 billion has been devoted to the CPP. The Congress and the public frequently ask two questions regarding the investments made by the Department of Treasury: • What have program recipients done with the money they received from Treasury? • Have the recipients complied with the executive compensation requirements as a condition of receiving the funds? To address these questions, beginning on February 5, 2009, SIGTARP sent survey letters to 364 financial institutions that had completed TARP funding agreements through January 31, 2009. This report addresses the responses of CPP recipients on the use of funds portion of the survey. SIGTARP will issue a separate report on executive compensation compliance. Background The dramatic correction in the U.S. housing market in recent years precipitated a decline in the price of financial assets that were associated with housing, in particular mortgage-backed securities based on subprime loans. 2 As 2008 progressed, this led to an escalating crisis in the financial markets. Some institutions found themselves so exposed that they were threatened with failure—and some failed—because they were unable to raise needed capital as the value of their portfolios declined. Other financial institutions– ranging from government-sponsored enterprises to the largest of the Wall Street firms–were left holding “toxic” mortgages and/or securities that became increasingly difficult to value, were illiquid, and potentially had little worth. Moreover, investors stopped buying securities backed by mortgages and became reluctant to buy securities backed by many other types of assets. Because of the uncertainty about the financial condition 1 P.L. 110-343, October 3, 2008. Subprime loans are designed for borrowers who do not qualify for prime interest rates, such as borrowers who have one or more of the following characteristics: weakened credit histories typically characterized by payment delinquencies, previous charge-offs, judgments, or bankruptcies; low credit scores; high debt-burden ratios; or high loan-to-value ratios. These loans were often not supported by documentation and carried less favorable terms to the borrower such as higher interest rates. Many of these loans were often bundled into residential mortgage-backed securities (“RMBS”) that were sold to investors including banks, hedge funds, insurance companies and retirement fund systems. 2 1 and the solvency of financial entities, the fees banks charge each other to borrow money rose dramatically, and inter-bank lending effectively came to a halt. 3 By late Summer 2008, the potential ramifications of the financial crisis included failure of systemically significant financial institutions; increased losses of individual savings; diminished corporate investments; and further tightening of credit that would exacerbate the emerging global economic slowdown. In response to the financial crisis, ESSA was enacted on October 3, 2008. EESA authorizes Treasury to purchase and insure certain types of troubled assets to provide stability and prevent disruptions in the economy and financial system, and to protect taxpayers. The purpose of EESA was to give Treasury authority and facilities to restore liquidity and stability to the U.S. financial system and to ensure that these activities were consistent with protecting home values, college funds, retirement accounts, and life savings; preserving homeownership and promoting jobs and economic growth; maximizing overall returns to U.S. taxpayers; and providing public accountability for the exercise of authority under the act. EESA gave the Secretary of the Treasury considerable discretion in determining both the type of financial instrument purchased and the institution from which it would be bought. Accordingly, within two weeks of EESA’s enactment, as the financial markets and credit markets continued to deteriorate rapidly, Treasury’s initial strategy quickly evolved from purchasing troubled assets to injecting capital into financial institutions to encourage them to build capital, increasing the flow of financing to businesses and consumers and supporting the economy. Accordingly, Treasury created the Capital Purchase Program (“CPP”) and subsequently expanded the scope of its efforts under EESA to include a number of other program initiatives, such as support to Systemically Significant Failing Institutions, the Targeted Investment Program, and the Automotive Industry Financing Program. This audit report focuses on participants in Treasury’s CPP. The CPP funds were a primary source of new Tier 1 capital available to financial institutions when credit losses were rapidly eating away at the existing capital of many firms and the ability to raise private capital was severely constrained. Given the nationwide decline in real estate values, many banks faced losing the stream of income they had enjoyed from homeowner payments on mortgages. Moreover, they also faced being forced to recognize losses as they foreclosed on properties and found that the resale value of the properties was often dramatically lower than the amount of the loan. Similarly, the market for the mortgage-related securities had also declined, and many of the securities the banks held could no longer be sold in the open market for more than a fraction of what the banks had paid for them. 4 Banks use their capital funds for multiple purposes. With respect to lending and investing, capital can also have a multiplier effect; one dollar in capital may generate multiple dollars in loans and investments. It can seed lending and investments by combining with and leveraging other sources of funds, such as relatively inexpensive bank deposits. One added dollar of Tier 1 capital can generate the potential for the bank to then issue an additional $10 in loans, because, based on regulatory rules, a healthy bank that receives $1 million in TARP funds can then 3 Without the ability to readily borrow funds, banks were more concerned about retaining cash and somewhat reluctant to lend out funds. 4 SIGTARP, “Quarterly Report to Congress,” April 21, 2009. 2 borrow up to $10 million to make new loans to consumers or businesses and still be deemed to be adequately capitalized, as long as the regulator finds that overall capital is sufficient and that the bank is able to absorb losses such as loan defaults. The bank could also leverage capital by using the new capital to buy deposits from other banks, further increasing their ability to issue new loans. For a more complete discussion regarding how banks use capital, see Appendix B. Objectives The audit and survey of TARP recipients was intended to obtain information from the recipients regarding their use of TARP funds. Thus, our specific objective was to determine how TARP recipients have used the funds received. Scope SIGTARP sent the survey to 364 financial institutions that had completed TARP funding agreements through January 31, 2009. The recipients had been approved for funding through the CPP, the Targeted Investment Program (“TIP”), the Systemically Significant Failing Institutions (“SSFI”) program, and the Auto Industry Financing Program (“AIFP”). Over 73 percent of the funding went to eight institutions, as is reflected below in Table 1. Table 1: Recipients of SIGTARP Survey by Funding Received Amount of TARP Funds Received Number of Firms Funding Amount (billions) Percentage of funding Greater than $10 billion 8 $219.3 73 $1 billion to $9.9 billion 19 $58.3 20 $100 million to $999 million 54 $14.6 5 283 $6.6 2 $298.8 100 Less than $100 million Total 364 Source: SIGTARP “Quarterly Report to Congress,” April 21, 2009. Of the 364 firms surveyed, 360 (99 percent) were under the CPP program and directly concentrated on banking; the other four included AIFP or SSFI recipients. 5 Accordingly, for ease of presentation, this report focuses on the 360 CPP recipients. For a list of the 360 banks that SIGTARP surveyed, see Appendix D. We confined our review and analysis to the survey responses and supporting documentation as provided, reported, and certified by the TARP recipients. Because of the goal to provide insights into the use of funds as quickly as possible, SIGTARP generally did not review information or 5 The other four firms were AIG, GM, GMAC, and Chrysler. These firms used TARP funds in various ways, such as repaying loans, funding ongoing operations, improving capital ratios to acceptable regulatory levels and continued lending. These firms will be the subject of a future SIGTARP report on the use of funds. 3 documentation beyond that provided by the respondents. 6 We did not attempt to verify independently the accuracy of the statements made by the banks. Information on lending was provided, but most of the responses did not quantify, on a dollar basis, the amount of lending or the incremental difference in lending resulting from the TARP investment. This report does not encompass or inquire about funds received from other government or non-government sources or the extent to which such funding may have influenced the use of TARP funding. The survey instrument primarily provided for open-ended responses to elicit in-depth data. This was necessary because the institutions are widely diverse in terms of asset size, geography, institution type, and institution-specific economic factors. As such, this approach permitted a wide range of responses and flexibility with regard to the specific information and supporting documentation provided. This data is not sufficient for statistical inferences; it should be interpreted as more reflective of directional insights rather than statistically valid characterizations of the TARP recipient’s use of funds. Because the objective of this report is broad, the open-ended survey elicited differing levels of detail. Many banks were concerned about business-sensitive information and requested confidentiality of individual survey responses. Accordingly, pursuant to our legal obligations, SIGTARP is unable in this report to attribute any results or comments to a specific institution. However, SIGTARP is in the process of evaluating recipients’ claims of confidentiality and will provide copies of the individual responses that will include information provided by the banks to the maximum permitted by law. SIGTARP plans to post the responses, redacted as necessary, on its website within 30 days. For a more complete discussion of the audit scope and methodology, see Appendix A. For a discussion of how banks use capital, see Appendix B. For a copy of the letter sent to recipients of TARP funds through January 31, 2009, see Appendix C. For a list of TARP CPP recipients, see Appendix D. For tables on reported use of funds by month of disbursement, asset sizes, and amount of funding, see Appendix E. For reported broad benefits of receiving CPP funds, see Appendix F. For the audit team members, see Appendix G. For a copy of comments from the Department of Treasury, see Appendix H. 6 SIGTARP plans additional work in this area. 4 Banks Were Able To Provide Meaningful Information on Their Use of TARP Funds Although most banks reported that they did not segregate or track TARP fund usage on a dollarfor-dollar basis, most banks were able to provide insights into their actual or planned use of TARP funds. Over 98 percent of survey recipients reported their actual uses of TARP funds. 7 The banks reported that TARP funds were primarily used for lending, capital reserves, and investments, often citing multiple benefits. However, some banks reported that they had not yet allocated funds for lending or other activities due to the short time that elapsed since the receipt of funds, weakened demand for credit, and the uncertain economic environment. Other firms reported more broadly on the overall benefits of the TARP funding, including actions they were able to undertake or avoid, such as freezing or reducing lending. Nearly 30 percent of respondents reported that their lending levels would have been lower without TARP funds. Table 2 highlights the major uses of funds as reported by the recipients. Table 2: Reported Use of CPP Funds Category of Use Number of Institutions Percentage of Institutions Lending 300 83 Capital Cushion, other reserves 156 43 Investments 110 31 Debt Repayments 52 14 Acquisitions 15 4 Source: SIGTARP analysis of 360 survey responses. Note: Numbers and percentages do not total because respondents reported multiple uses of funds. The responses reflect the multiple uses of funds cited by individual TARP recipients. It is important to note, however, that the numbers shown in Table 2 represent only the uses specifically reported by banks; others may have made similar uses without specifically reporting it. Respondents reported investment activities across all bank asset sizes and amounts of funding received, as outlined in more detail in Appendix E. Most Recipients Did Not Segregate TARP Funds from Other Bank Capital Under the terms of CPP, banks receiving TARP funds were not required to segregate TARP funds or report on their use of such funds. Forty-four respondents, nonetheless, reported that they segregated TARP funds from other bank funds. Approximately half of those respondents recorded the TARP investment on the balance sheet as a discrete component of each bank’s 7 Only six institutions did not report actual uses of TARP funds. Five of those six received TARP funds in January 2009 and reported expected future uses of TARP funds. One intends to return the funds but has not yet done so as of June 15, 2009. 5 capital. Others cited efforts to segregate physically the funds in a separate account and to manage them separately. One bank stated: • “[A] separate checking account was established at [the Bank] in to which the TARP funds were deposited. This account is tracked individually on the parent's books via a specific general ledger account. Thus, all activity is isolated and tracked for dispersals. On a monthly basis, the general ledger balance is reconciled to the account statement.” More than half of the banks that reported physical segregation of funds, however, stated that segregation was only a temporary measure pending future deployment of the funds. The majority of recipients reported that they did not segregate TARP funds. They noted that, in accordance with typical banking industry practices, they commingled the TARP funds with their other capital and leveraged the funds to increase lending and/or make investments. Several banks focused on what they perceived to be the impracticality of segregation. However, this did not preclude respondents from providing information on the use of TARP funds. With regard to segregation, one bank stated that it deposited the TARP funds into its Federal Reserve Bank account, which it used to meet general funding needs. The bank noted that from a capital perspective, the TARP preferred shares and related common warrants were clearly visible as discrete components of their overall capital. At the same time, it also noted that, once received, the cash associated with the TARP funding became indistinguishable from any other cash sources. The following quotes provide context on the reasons that some banks did not segregate TARP funds from other bank capital. • “The capital we received from the U.S. Treasury was not segregated from other funds. We manage from a total balance sheet perspective, and capital investments are typically not segregated. We do not believe that such segregation is common practice in the industry, nor was it required pursuant to the agreements governing the Treasury's capital purchase.” • “Upon receipt of the TARP proceeds, [the Bank] did not segregate those funds from other capital funds. We did not and do not believe that earmarking the specific funds is in the best interest of our shareholders and/or borrowing customer. Instead, by adding the TARP funds to our existing, already strong capital base, [the Bank] could effectively deliver on its mission of growing its balance sheet by providing retail and commercial depositors and borrowers in our market competitive financial products and services that foster appropriate, rational growth.” The majority of recipients did not report any specific actions taken to track use of TARP funds. They reported bank activities that were supported by TARP funds, but did not specify the portion that represented TARP fund investment. Nearly 90 percent of banks reported some activities in this manner. Some banks that reported in this regard were quite general in their responses, such as the following bank comment: “…our actual use of TARP funds to date has been…to make loans to credit worthy customers, and to facilitate resolution of problem assets on our books.” Others provided more details about company activities, but did not give a dollar amount of TARP funds spent or specify the portion of the activity that represented TARP fund investment. 6 A few respondents, however, tracked actual lending figures as such. However, one bank, in a far more typical response, described the difficulty in tracking lending as follows: • “Although banks do use capital to lend, it is more precise to say that banks use capital to support their lending…it is a cushion against losses, and it is there to support and enable other borrowing in the form of deposit gathering and capital markets borrowing. In this regard,…banks actually lend more than just the amount of their total capital and their TARP capital investment amounts…it is also important to understand that because TARP CPP funds are commingled with other capital, deposits and funds from other sources, it is difficult to state categorically what specific funds are actually being used for, except to say…that they are being used for and in support of lending.” Generally speaking, although there were exceptions, the information provided by the survey respondents regarding the use of funds did not vary significantly among those who reported that they segregated TARP funds from other funding sources and those who reported that they did not segregate TARP funds. Lending Most recipients reported leveraging the TARP funds to support lending activities by continuing lending or renewing and/or modifying existing loans. Some institutions reported that, without TARP funds, lending activities would have come to a standstill or would have been curtailed. For example, one respondent stated that “had we not received the TARP funds, we may not have been able to fund as many residential loans or our liquidity would have been strained which would have hampered our ability to make future loans.” Although some firms reported general lending efforts and the preservation of lending levels, many institutions further subcategorized their lending initiatives by residential lending, small business loans, credit cards, and other categories, as shown in Table 3. However, the survey and responses did not result in sufficient information to develop an overall aggregate amount of actual lending. Table 3: Reported Lending Activities Supported by TARP Funds Number of Institutions Percentage of Institutions Residential Mortgage Activities 103 29 Commercial Mortgages 66 18 Other Consumer Lending 61 17 Lending Activity Small Business Loans 45 13 Other Business Loans 48 13 Loan Modification 34 9 Credit Cards 8 2 Student Loans 6 2 Source: SIGTARP analysis of 360 survey responses. Note: Numbers and percentages do not total because respondents reported multiple uses of funds. 7 The respondents most frequently cited using TARP funds to support origination of residential mortgages, commercial mortgages, and small business loans. About 29 percent of the respondents reported a focus on using TARP funds to support residential mortgages. Additionally, another 9 percent stated that they have used TARP funds for mortgage loan modification initiatives. Various responses cited using TARP funds for commercial mortgage lending (18 percent) and small business lending (13 percent). These are some of SIGTARP’s observations related to the categories of lending activities listed in Table 3: • Residential lending: The incidence of residential mortgage lending was even greater when combined with reported loan modifications. Some institutions reported direct use of TARP funds for residential mortgage activities and for bolstering mortgage modification programs. For example, one bank commented that “since receiving TARP in December 2008, the bank has modified about $3 million of its existing loans to a structure that is sustainable and affordable for troubled borrowers.” Another bank reported that it was going to implement a home equity loan program designed to help customers remain in their homes and avoid foreclosure. • Commercial lending: Nearly 20 percent of respondents reported that they used TARP funding for commercial lending activities. Commercial lending, the second most frequently cited category of lending, was broadly distributed across institutions of various sizes. Most often, firms provided general information related to commercial real estate. A few however, provided exact figures; for example, one firm reported funding two loans from TARP proceeds, including a commercial real estate loan for $820,000. • Other consumer lending: Almost 17 percent of respondents reported deploying TARP funds for other consumer lending activities. When these consumer lending activities were reported more descriptively, the loans were often reported as auto loans, personal loans, or other lines of credit. One recipient reported a renewed focus on consumer lending, stating that they have “reentered the [state] market to expand our consumer automobile lending...and have increased our budgeted 2009 automobile loan production [by $90 million]. We expect to use the remaining TARP funds to continue to increase our automobile loan production...”. • Small business lending: About 13 percent of the institutions–of various sizes and types–reported using some TARP funds to support small business lending. One smaller firm reported that it had used all the CPP funds for various lending activities, including $500,000 related to small business loans. A larger institution reported lending over $20 billion in new credit extensions, including commitments and renewals to 8,000 small and mid-sized businesses, governments, and non-profits. Another institution responded more generally, that it is using the TARP capital funds to renew and originate quality SBA loans, in addition to other lending. 8 Capital Cushion or Other Reserves Regulators require banks to maintain certain capital cushion levels to be able to absorb unanticipated losses and to protect against the risk of insolvency. Beyond that, banks may leverage excess capital to engage in lending and investing to serve their customers and generate more income. Many survey responses highlighted the importance of the TARP funds to the bank’s capital base, and, by extension, the impact of the funds on lending. As noted earlier in Table 2, more than 40 percent of banks reported using some TARP funds to generate capital reserves to help the institution remain well-capitalized from a regulatory capital perspective. In citing the use for capital purposes, various recipients emphasized the need to retain capital as a buffer or cushion against loan losses or other unforeseen events in light of the economic instability facing U.S. and international markets. For example, one institution reported that “while some policymakers are encouraging banks to lend more, regulators have announced that they expect banks to maintain significantly higher capital ratios as a buffer against a potentially severe and prolonged recession.” In addition, the respondents also disclosed a variety of other reasons for focusing on strengthening capital. These reasons included concerns about the recessionary economic environment, the anticipation of potential increases in regulatory capital requirements, the need to better position themselves to absorb future credit losses, and preparing for the possibility of continued capital availability constraints in the future. The following responses provide some insights into the importance of having TARP funds to bolster capital reserves: • Retain strong capital ratios: “During the second half of 2008, management became concerned about being able to retain its well capitalized risk based ratios because of the dramatic reduction in expected repayments.” • Cushion against future losses: “[I]t was in the best interest of [the Bank’s] shareholders for the company to gain additional liquidity and a further capital cushion against the economic uncertainties that lay ahead.” • Raise new capital otherwise not available in the market: “Absent an infusion of capital [the Bank] was unable to continue to meet the needs of its retail and commercial customer base. Opportunities to raise capital through private sources are virtually non-existent. Consequently, participating in the TARP enabled [the Bank] to continue to meet its customer needs.” Another bank noted that “none of this new lending would have been possible without the additional TARP capital, which helped us maintain our well capitalized rating while continuing our important lending programs.” Some institutions listed measurable impacts of TARP funds on their capital ratios, while others reported in general terms on how the direct infusion of TARP funds bolstered their reserve positions. 9 Investments Some recipients chose to support lending by investing in relatively safe and liquid securities or debt, primarily Government Sponsored Enterprises (GSE), mortgage-backed securities (MBS), agency debt, and municipal securities, as seen in Table 4. According to the banks, these investments provided immediate support of the lending and borrowing activities of other institutions, as described below. Table 4: Reported Investment Activities Supported by TARP Funds Investment Activity Number of Institutions Percentage of Institutions Mortgage-backed Securities (Agency) 8 88 24 Municipal Securities 19 5 Agency Debt 10 3 Mortgage-backed Securities (Non-agency) 8 2 Corporate Debt 6 2 Source: SIGTARP analysis of 360 survey responses. Note: Numbers and percentages do not total because respondents reported multiple uses of funds. Those that invested TARP funds in MBS tended to invest in the so-called “agency” securities– those backed by Ginnie Mae, Fannie Mae, and Freddie Mac; only a few invested in private-label MBS or corporate debt. Many characterized these investments in “agency” MBS and debt as short-term. The recipient rationale for investing in these instruments included: • the consideration of safety and liquidity • the reasonableness of the return on the investment • the favorable regulatory capital treatment of those assets • the flexibility to use the securities as collateral to secure future loans • the opportunity to redeploy the cash flows generated from these investments over time to support direct lending and other investment opportunities One large entity reported that its multi-billion dollar investment in Fannie Mae MBS “helped to provide liquidity to the secondary [mortgage] market 9 when Fannie Mae’s funding costs had 8 In some cases, the respondent did not report which types of mortgage-backed securities were purchased. In these cases, we captured the response as an agency MBS because those were the most common, and the market for nonagency MBS was virtually frozen during the time period covered by the survey. 10 increased significantly.” Another recipient that purchased more than $2 billion of MBS expressed the belief that these purchases assisted in the recovery and stabilization of the MBS market. Many other recipients who expressed similar sentiments stated that investments in MBS help to replenish funds to other lenders so that those lenders, in theory, could continue to originate additional mortgage loans. Others sought to use the cash flows from these investments to support lending. For example, one regional bank that used TARP funds to purchase more than $80 million in MBS stated that “the intention of this initial use of funds was to invest in high quality, low risk securities issued by [GSEs] to assure a reasonable return on these funds and to establish a series of cash flows that could quickly and easily be redeployed into customer-based commercial, mortgage and consumer loans as local economic conditions warrant.” Although most recipients that reported investments deployed the TARP funds into mortgage– related investments, a few reported investments in municipal securities with the intent of helping local communities. One recipient strongly emphasized municipal bonds by investing around 14 percent of the TARP funds received in this manner, explaining that investing in municipal bonds will provide much-needed funding for municipalities currently strained by the recession. Debt Repayment About 14 percent of TARP recipients reported using some of the funds to repay outstanding debt obligations. More specifically, the respondents used the funds to reduce short-term borrowing, repay loans to other financial institutions, retire or reduce letters of credit, and/or as replacement financing for higher cost loans. Banks noted these reasons for repaying outstanding debt: • improving the balance sheet while mitigating their liquidity risk • external pressure to retire their outstanding debt obligations • instructed by their creditors to use the TARP funds to pay off their loans • lack of demand for lending • to replace their outstanding debt with new, cheaper debt Many banks were able to provide specific dollar amounts of TARP funds used for this purpose. One bank reported using $75 million of TARP funds to reduce its short-term borrowings; another used $55 million to pay down a revolving credit facility. Acquisitions Only 4 percent of institutions reported that they used TARP funds to complete acquisitions. The most common theme emerging from responses related to acquisitions was that they were often completed at FDIC’s encouragement or that the assets were acquired from FDIC. The majority of the responding institutions shared perspectives similar to these: 9 A secondary market is created when a bank sells a portion of their loans to a dealer, who pools the loans together and sells portions of the loan pools as securities to investors. The secondary market serves as a source of cash for banks, providing them money to make new loans. 11 • “We have also cooperated with the FDIC who asked us to commit resources to take on another failed bank…and continue to provide uninterrupted service to 6,400 customers.” • “Included in the deposit growth is our…purchase of approximately $180 million of deposits from the FDIC.” • “Without TARP funds, it is unlikely that the Bank could have assisted the FDIC with the transaction while still meeting credit needs of existing customers.” Only two institutions reported that their capital levels would have been sufficient to support acquisitions without the TARP injection. One of them planned to acquire a number of bank branches and was specific as to the investment costs and the benefit. Although noting that the acquisitions would have occurred without the TARP funds, this institution expressed the view that the acquisitions were an excellent use of the TARP funds because the additional deposits acquired with the branches would (through leveraging) allow the bank to increase future lending many times over the expected acquisition cost. Reported Future Uses of TARP Funds Nearly 78 percent of recipients reported future plans for deployment of TARP funds. They most frequently cited lending and capital accumulation activities. Recipients that reported plans for future deployment of TARP funds typically expected that lending activity would increase; almost all of those institutions stated that they deployed or intend to deploy a portion of TARP funds to support lending. Banks also indicated that they were less likely to use TARP funds for investment in securities, debt repayments, and capital reserves in the future. Furthermore, more respondents reported that they were actually considering using TARP funds to acquire another bank than those who reported they already have done so. Other banks reported that they had not yet allocated funds for lending and other activities because of the short time elapsed since the receipt of funds, the demand for credit, and the uncertain economic environment. In January 2009, 147 survey recipients received TARP funds, sometimes only weeks before receiving the survey request. Accordingly, many of these recipients had only a limited amount of time to deploy TARP funds fully. Some recipients provided responses with perspectives on the timing of the survey and the time passed since the receipt of funds, including a firm that made this request: • “Because this transaction closed only three weeks ago, we would respectfully ask that in reviewing our response, you do so in light of the very limited period of time that has passed between January 30, 2009 and the date of this letter.” Other institutions provided insight into their initial limited ability to deploy TARP funds due to the weakened demand for credit and the broader economy. One such bank stated that “our liquid assets created by the capital injection are being invested nightly with the Federal Reserve until such time as the economy and demand for loans within our markets returns and the capital can be effectively employed.” 12 Overall Benefits Beyond specific details on their use of funds, banks also provided insights into the overall benefit of the TARP funding, some of which were previously noted. Importantly, many recipients addressed these questions: • What actions were they were able to take that they could not have taken without receiving the TARP funds? • Conversely, what actions were they able to avoid because of the infusion of TARP funds? For example, approximately two-thirds of those who addressed this question reported that, without TARP funds, their lending levels would have been lower than levels they were able to achieve with TARP funds. 10 A more complete summary of the broad impact of receiving TARP funds—the actions that were possible to be taken, as well as the actions avoided––is provided in Appendix F. The importance of each of the benefits in terms of actions that could be taken or avoided in return for receiving TARP funds is well summarized by the comments of one respondent: “At the outset TARP capital was viewed as providing three core elements. First, it would enhance the liquidity position as a source of long-term committed funding. Second, it would strengthen the balance sheet by bolstering the capital position, thus giving all key stakeholders (regulators, investors, debt investors, customers, employees) confidence in [the bank’s] ability to weather the current ‘economic storm.’ The final element is achieved only through satisfying the first two, and that is the ability to continue executing our strategic business model through serving customers and growing our core lending business.” 10 106 respondents indicated at least one of the following categories reflected in Appendix F: Grow Lending, Enhance Lending Activity, Reduce Loan Terms, Reduce Lending, Freezing Lending, or Exiting the Banking Business. 13 Conclusions and Recommendations Although most banks reported that they did not segregate or track TARP fund usage on a dollarfor-dollar basis, they were able to report on actual or planned activities that were supported by TARP funds as well as macro benefits associated with having the funds. These responses demonstrate that banks can provide useful information to improve transparency over how they use the TARP funds. The uses of funds identified in this report are as of a particular point in time and that use could vary somewhat over time depending on changing economic circumstances. Because of time constraints, many of the survey respondents had not yet allocated all of their TARP funds as of the March 2009 response date. Furthermore, more than 250 institutions have received TARP funds since the survey was issued, including a $3.4 billion dollar investment in insurance company through the Capital Purchase Program. Treasury has engaged in ongoing efforts to obtain lending data from each TARP recipient, but this tells only a small part of the story. It fails to recognize that TARP recipients do far more with their TARP funds than simply originating loans: they have also used these funds in a broader array of interrelated activities, as demonstrated in this audit, such as making investments, acquiring other financial institutions, and simply maintaining the capital as a cushion against future losses. SIGTARP has previously recommended that Treasury require all TARP recipients to report on their use of TARP funds, but, with limited exceptions, Treasury has not done so. Based on the survey responses, SIGTARP believes that this recommendation continues to be essential to meet Treasury’s stated goal of bringing transparency to the TARP program and informing the American people and their representatives in Congress on what is being done with their investment. To improve transparency over the use of funds, SIGTARP recommends that the Secretary of the Treasury require TARP recipients to submit periodic reports to the Department of Treasury on their uses of TARP funds, such as lending, investments, acquisitions and other activities, including a description of what actions they were able to take that they would not have taken without TARP funding. SIGTARP also recommends that the Secretary of the Treasury require TARP recipients to retain all supporting documentation in conjunction with any reporting requirement that Treasury may impose. Management Comments and Audit Response In written comments on a draft of this report, Treasury’s Assistant Secretary for Financial Stability did not express concurrence with the report’s recommendation but raised questions regarding the information provided; this response was consistent with the Department’s previous opposition to this recommendation as noted in SIGTARP’s Quarterly reports to the Congress. For a copy of Treasury comments on a draft of this report, see Appendix H. 14 In commenting on this report, the Assistant Secretary recognized that the report illustrated the broad range of uses to which capital may be put, including building capital reserves and supporting lending and making investments. Yet, at the same time, the Secretary suggested caution in drawing conclusions from this data noting that “although it might be tempting to do so, it is not possible to say that investment of TARP dollars resulted in particular loans, investments or other activities by the recipient. “ He went on to use selectively a quote in the report that most TARP recipients did not segregate TARP funds and that, once received, the cash associated with the TARP funding became indistinguishable from any other case sources. He further stated that “even if TARP investments could be traced to particular uses, those uses cannot be said to be attributable to the TARP investment if the same expenditures would have been made from other sources even in the absence of TARP funding.” SIGTARP’s report clearly points out the diverse views of respondents regarding the fungibility of TARP funds received and the difficulty of saying precisely which dollar was used for which purpose. Nonetheless, SIGTARP’s report provides significant information on the use of funds and notes that, with limited exceptions, the information provided by the survey respondents on their use of funds did not vary significantly between those banks that reported they segregated TARP funds from other funding sources and those that did not segregate TARP funds. Both groups provided meaningful responses indicating their actual and planned use of funds. SIGTARP finds it compelling that it received a 100 percent response rate to its survey and 98 percent of the respondents were able to describe wide ranging uses of their funds, typical of the range of actions that banks would be expected to take in having received the funds at a time of financial crisis in the country where the need to stabilize financial institutions and foster lending was paramount. Moreover, they were able to speak broadly about the benefits of having received the funds—both actions they were able to take as a result of receiving the funds as well as actions avoided. For Treasury to discount wholly SIGTARP’s results because a particular bank may not be able to say which dollar was used for a specific purpose substantially underestimates a bank’s capacity — on a practical level — to know how its resources are being utilized. Take the example of an American family with a checking account. Because all of the family income goes into the same account, the family cannot say with any precision which paycheck paid for which particular bill. That does not mean, however, that the family cannot give meaningful information about what it did with the sizeable bonus that the wife received at the end of the year. Such infusions of money can be budgeted; such infusions can be used to do things that would not have been possible without such infusion. Banks are no different, and indeed should be in a better position to plan, and to track, how it will use a sizeable capital infusion. Stated another way, if a bank is receiving an infusion of tens of millions, if not billions, of TARP dollars, that bank is very likely to budget how it will be put to work and can likely give at least a general indication of what the bank was able to do that it would not have but for that sizeable infusion. Treasury’s decision to reject this information just because the bank may not be able to trace the exact dollars ignores this common sense view. It also ignores the data that was collected in this audit. Many of the banks’ responses revealed uses to which the banks put the TARP funds that can be readily tested. If a bank reports that it was able to repay a specific loan with TARP funds that it would not have been able to repay but 15 for TARP funds, that is a use that can be tested. If a bank reports that it took the TARP funds and purchased agency MBS, that, too can be verified. If a bank states that it put the TARP funds into its account at the Federal Reserve to save for future potential losses that too can be checked. In sum, the fact that there may be some limitations on the precision of the data that could be collected by requiring use of funds reporting does not mean that such reporting could not generate meaningful information, including meaningful information that will not be captured by Treasury’s lending snapshots. 16 Appendix A—Scope and Methodology SIGTARP performed this audit under the authority of Public Law 110-343, as amended, which also incorporates the duties and responsibilities of inspectors general under the Inspector General Act of 1978, as amended. This audit reports on the use of TARP funds by 360 institutions that participated in TARP’s Capital Purchase Program. Our specific objective was to determine how TARP recipients have used the funds received. We conducted this audit from February to June 2009 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient and appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. Within the limitations noted below, we believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. We contracted with Concentrance Consulting Group, Inc. (Concentrance) to help us review and analyze the responses we received. We interacted and worked with the Concentrance team at least weekly from April through June 2009 to help develop the analysis and produce the report. We developed a narrative survey letter that provided for open-ended responses to elicit in-depth information. We chose this approach because the institutions are so wide in diversity in terms of asset size, institution type, and institution-specific economic factors. Regarding the use of funds, we asked each recipient to provide a narrative response that outlined: • whether they segregated TARP funds from other institutional funds • their actual use of TARP funds to date • their expected future use of unspent TARP funds We also asked recipients to consider their anticipated use of TARP funds when they applied for such funds, as well as any actions they have taken that they could not have taken without the infusion of TARP funds. Furthermore, we encouraged recipients to make reference to any statements to the media, shareholders, or others concerning their intended or actual use of TARP funds, as well as any internal email, budgets, or memoranda describing anticipated use of funds. Additionally, we asked recipients to segregate and preserve all documents referencing the use or anticipated use of TARP funds–such as any internal email, budgets, or memoranda regarding anticipated or actual use of TARP funds–and to provide copies of pertinent supporting documentation (financial or otherwise) to support their response. We also asked each institution to sign a statement attesting to the accuracy of the data. To determine the extent to which firms segregated and tracked TARP funds, we analyzed the survey responses to determine the extent to which the respondents reported that they segregated the TARP funds from other bank capital and established a process for tracking specific uses of funds. To determine how recipients reported their use or plans to use TARP funds, we identified a number of common response categories and analyzed the various actions associated with the use 17 of TARP funds, including general activities (such as general lending) and associated subcategories (such as residential lending and small business lending). Similarly, we identified investment categories, such as agency MBS, agency debt, and corporate debt. We took a number of steps to ensure the consistency of our analysis. We developed a checklist for analysts to review each survey response. If an analyst had questions related to a survey response, another analyst reviewed the response; then they discussed these cases collectively until they reached consensus agreement in interpreting the response relative to other responses. In addition, a quality control team that was not involved in the analytical process reviewed all of the data entries. Limitations on Data SIGTARP’s review and analysis was confined to the survey responses and supporting documentation, as provided, reported, and certified by the TARP recipients. These data are not sufficient for statistical inferences. They should be interpreted only as directional insights, not as definitive characterizations of the TARP recipients’ use of funds. The survey did not encompass or inquire about funds received from other government or non-government sources and the extent to which such funding influenced the use of TARP funding. 18 Appendix B—How Banks Use Capital Capital is an essential component of a bank’s financial capacity to sustain itself, grow, and serve its customers. 11 Regulators and market participants recognize the critical role that capital plays in supporting confidence in the health of banks and of the financial system. 12 Capital generally provides at least three broad benefits: • enabling the banks to absorb current and future losses while further protecting the interests of the bank’s creditors • strengthening the bank’s capacity and willingness to lend • providing added liquidity by injecting cash into the firm, thereby making funds available to address a variety of corporate funding needs, such as repayment of maturing debt Federal banking regulators 13 have established minimum capital adequacy ratios to ensure that banks can absorb a reasonable level of losses before becoming insolvent. 14 Therefore, maintaining acceptable capital ratios protects depositors and other senior creditors while enhancing the stability and efficiency of the U.S. financial system, especially during recessionary times. Federal banking regulators have traditionally focused upon “Tier 1” capital. Tier 1 capital includes common stock, disclosed retained earnings, and qualifying perpetual preferred stock. Additionally, Treasury and the banking regulators determined that qualifying U.S.-controlled banks, savings associations, and certain savings and loan holding companies that issued senior preferred stock to the Treasury under the CPP could include such capital instruments in meeting their Tier 1 capital requirements. 15 Banks must consider a number of key factors in prudently allocating Tier 1 capital. When considering deploying excess capital above the minimum regulatory capital adequacy levels, a bank must balance two critical factors: 1. Prior to issuing any dividend distributions or stock repurchases, the bank needs to maintain a capital cushion that can absorb unanticipated losses and protect against the risk of insolvency. 2. The bank needs to leverage the excess capital to provide more lending and investing, potentially generating more income. With respect to lending and investing, capital can have a multiplier effect; one dollar in capital can generate multiple dollars in loans and investments. It can seed lending and investments by combining with and leveraging other sources of funds, such as relatively inexpensive bank 11 A bank's capital is also referred to as equity. Treasury, White Paper, “The Capital Assistance Program and Its Role in the Financial Stability Plan” 13 The federal banking regulators are the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the Federal Reserve Board, and the Federal Deposit Insurance Corporation. 14 Capital adequacy ratios are a quantification of the amount of a bank's capital presented as a percentage of its riskweighted credit exposures and are key measures of a bank's financial strength. 15 Treasury Announces TARP Capital Purchase Program Description, October 14, 2008- HP-1207. 12 19 deposits. One added dollar of Tier 1 capital might generate the potential for the bank to then issue an additional $10 in loans. That is because based on regulatory rules, a healthy bank that receives $1 million in TARP funds can then borrow up to $10 million to make new loans to consumers or businesses and still be deemed to be adequately capitalized, as long as the regulator finds that overall capital is sufficient and that the bank is able to absorb losses such as loan defaults. The bank could also leverage capital by using new capital to buy deposits from other banks further increasing their ability to issue new loans. The CPP funds were a primary source of new Tier 1 capital available to financial institutions when credit losses were rapidly eroding the existing capital of many firms and the ability to raise private capital was severely constrained. Given the nationwide decline in real estate values, many banks faced losing the stream of income they had enjoyed from homeowner payments on mortgages. Moreover, as they foreclosed on properties, they found that resale value of the properties was often dramatically lower than the amount of the loan. Similarly, the market for the mortgage-related securities had also declined, and many of the securities the banks held could no longer be sold in the open market for more than a fraction of what the bank had paid for them. 16 The injection of new funding can strengthen the capital base of the recipient banks and provide for added liquidity. Generally, a bank has sufficient liquidity if it can easily meet its needs for funds by having readily available cash, loans, and securities that can be easily sold, or if it has the ability to otherwise raise or borrow funds. Prior to the current recession, banks generally were able to raise cash easily by borrowing and selling a wide array of assets without government support. Banks used short-term and long-term secured (collateralized) loans and unsecured debt funding, as well as securitization, 17 to generate and maintain liquidity, and thus had more funds available for lending. Securitization entails packaging loans into asset-backed securities, and the sale of these securities provided a source of funds to banks. In the past, the ability to sell these loans as securities freed up capital and funds for more lending. The failure of securitized assets, which include consumer and business loans, has played a prominent role in the current credit crisis. The weakness in the securitized asset market substantially can be traced back to the individual subprime borrowers whose loans had been securitized. As the subprime borrowers began to miss their monthly loan payments, the value of the securities backed by the borrowers’ loans began to lose value. Throughout 2008, investors were losing confidence in these securities and therefore stopped buying them. Many banks were dependent on the cash they received from selling their loans to securities issuers or investors; when this market essentially disappeared, they were unable to generate enough money to continue making new loans. 18 Consequently, the onset of the current credit contraction was also accompanied by a general weakening of balance sheets of U.S. banks. A balance sheet provides a summary of a firm’s financial position reflecting its assets, liabilities, and equity at a specific date. A number of key factors contributed to balance sheet weaknesses, including 16 SIGTARP, “Quarterly Report to Congress,” 4/21/2009. The process by which new securities are created by combining or bundling other financial assets together, including loans, and selling the resulting financial instrument, usually in pieces, to investors. 18 SIGTARP, “Quarterly Report to Congress,” 4/21/2009. 17 20 • the erosion of capital levels because of losses • the inability of banks to sell many of the securities they held in the open market for more than a fraction of what they had paid 19 Accordingly, these securities remained on the balance sheets as investments, thereby tying up precious capital and liquidity. Under normal market conditions, bank capital fuels lending, and strong earnings give the firm the opportunity to distribute dividends and repurchase shares. Dividend distribution and share repurchases return capital to shareholders. However, the current recessionary environment, future macroeconomic uncertainties, and continued credit losses made the distribution of capital to shareholders and allocation to lending activities more challenging. To conserve capital, banks may curtail dividends distribution to their common shareholders and stop repurchasing their common shares. Additionally, firms were likely to reduce lending and investments. 19 SIGTARP, “Quarterly Report to Congress,” 4/21/2009. 21 Appendix C––Survey Letter 22 23 Appendix D—CPP Survey Recipients Table 5 provides information on the 360 CPP recipients that responded to the survey. Table 5: CPP Recipient Respondents, Funds Received and Date Institution Name Funding (millions) Alliance Financial Corporation American Express Company 21 11/14/2008 $27.00 20 12/23/2008 $16.00 1st FS Corporation/ Mountain 1st Bank & Trust TARP Agreement Date $12.00 1st Constitution Bancorp 12/19/2008 $3,389.00 AmeriServ Financial, Inc 1/9/2009 $52.00 Ameris Bancorp/ Ameris Bank 1/9/2009 $6.00 American State Bancshares 11/21/2008 $21.00 12/19/2008 $525.00 11/21/2008 Bancorp Rhode Island, Inc./Bank Rhode Island $30.00 12/19/2008 BancTrust Financial Group, Inc./Bank Trust $50.00 12/19/2008 $25,000.00 10/28/2008 Associated Banc-Corp Bank of America 22 Bank of Commerce $3.00 Bank of Marin Bancorp 23 1/16/2009 $17.00 Bank of Commerce Holdings 11/14/2008 $28.00 Bank of New York Mellon Corp 12/5/2008 $3,000.00 24 10/28/2008 BNC Bancorp/Bank of North Carolina $31.00 12/5/2008 Bank of the Ozarks, Inc. $75.00 12/12/2008 $124.00 11/21/2008 Banner Corporation/Banner Bank Bar Harbor Bankshares/Bar Harbor Bank & Trust $19.00 1/16/2009 $3,134.00 11/14/2008 $11.00 12/23/2008 $40.00 12/19/2008 Blue Valley Ban Corp $22.00 12/5/2008 BNCCORP, Inc. $20.00 1/16/2009 BB&T Corp. 25 BCSB Bancorp, Inc. Berkshire Hills Bancorp, Inc. 26 Boston Private Financial Holdings Inc. $154.00 11/21/2008 Bridge Capital Holdings $24.00 12/23/2008 Bridgeview Bancorp, Inc./ Bridgeview Bank Group $38.00 12/19/2008 Broadway Financial Corporation/ Broadway Federal Bank $9.00 20 1/9/2009 $5.00 Cache Valley Banking Company 11/14/2008 $20.00 C&F Financial Corporation 12/23/2008 Repaid Treasury on May13, 2009. Repaid Treasury on June 17, 2009. 22 Bank of America received $15 billion on October 28, 2008, and $10 billion on January 9, 2009. 23 Repaid Treasury on March 31, 2009. 24 Repaid Treasury on June 17, 2009. 25 Repaid Treasury on June 17, 2009. 26 Repaid Treasury on May 27, 2009. Note: Funding numbers provided reflect some rounding. 21 24 Institution Name Funding (millions) Cadence Financial Corporation $44.00 27 12/23/2008 $41.00 Capital Bank 1/9/2009 $5.00 Capital Bancorp, Inc. Capital One Financial Corporation TARP Agreement Date 12/12/2008 $3,555.00 11/14/2008 $4.00 Capital Pacific Bancorp 12/23/2008 Carolina Bank Holdings, Inc. $16.00 1/9/2009 Carver Bancorp, Inc. $19.00 1/16/2009 Cascade Financial Corporation $39.00 11/21/2008 $258.00 12/5/2008 Cecil Bancorp, Inc. $12.00 12/23/2008 Center Bancorp, Inc. $10.00 1/9/2009 Center Financial Corporation/Center Bank $55.00 12/12/2008 $28.00 11/21/2008 $15.00 1/16/2009 $10.00 12/5/2008 $7.00 12/5/2008 $11.00 12/23/2008 Cathay General Bancorp/ Cathay Bank Centerstate Banks of Florida Inc. Centra Financial Holdings, Inc./Centra Bank, Inc. 28 Central Bancorp, Inc./Central Co-operative Bank Central Federal Corporation Central Jersey Bancorp Central Pacific Financial Corp. $135.00 1/9/2009 Centrue Financial Corporation $33.00 1/9/2009 CIT Group Inc. $2,330.00 12/31/2008 $25,000.00 Citigroup Inc./Citibank National Association 10/28/2008 Citizens & Northern Corporation $26.00 1/16/2009 Citizens Bancorp $10.00 12/23/2008 Citizens Community Bank $3.00 12/23/2008 Citizens First Corporation $9.00 12/19/2008 $300.00 12/12/2008 $21.00 12/12/2008 $400.00 11/21/2008 Citizens Republic Bancorp, Inc. Citizens South Bank City National Corporation Coastal Banking Company, Inc. $10.00 12/5/2008 CoBiz Financial Inc. $64.00 12/19/2008 Codorus Valley Bancorp, Inc. $17.00 1/9/2009 Colony Bankcorp, Inc./Colony Bank $28.00 1/9/2009 Columbia Banking System Inc. $77.00 11/21/2008 Comerica Inc. $2,250.00 11/14/2008 Commerce National Bank $5.00 1/9/2009 Community 1st Bank $3.00 1/16/2009 Community Bank of the Bay $2.00 1/16/2009 Community Bankers Trust Corporation $18.00 12/19/2008 Community Financial Corporation/Community Bank $12.64 12/19/2008 $3.00 12/23/2008 Community Investors Bancorp, Inc. Community Trust Financial Corporation $24.00 1/9/2009 Community West Bancshares $16.00 12/19/2008 $3.00 1/9/2009 Congaree Bancshares, Inc. 27 28 Repaid Treasury on June 17, 2009. Repaid Treasury on March 31, 2009. 25 Institution Name Funding (millions) Crescent Financial Corporation TARP Agreement Date $25.00 1/9/2009 $7.29 Crossroads Bank (FFW Corporation) 12/19/2008 CVB Financial Corp $130.00 12/5/2008 Dickinson Financial Corporation II $146.00 1/16/2009 Eagle Bancorp, Inc. $38.00 12/5/2008 East West Bancorp $307.00 12/5/2008 Eastern Virginia Bankshares, Inc. $24.00 1/9/2009 ECB Bancorp, Inc./East Carolina Bank $18.00 1/16/2009 $8.00 12/23/2008 Emclaire Financial Corp./The Farmers National Bank of Emlenton Encore Bancshares Inc. $34.00 12/5/2008 Enterprise Financial Services Corp./ Enterprise Bank & Trust $35.00 12/19/2008 $43.00 12/19/2008 Exchange Bank F.N.B. Corporation $100.00 1/9/2009 $30.00 Farmers Capital Bank Corporation 1/9/2009 FCB Bancorp, Inc. $9.00 12/19/2008 Fidelity Bancorp, Inc. $7.00 12/12/2008 Fidelity Financial Corporation $36.00 12/19/2008 Fidelity Southern Corporation $48.00 12/19/2008 $3,408.00 12/31/2008 Financial Institutions, Inc. $38.00 12/23/2008 First Bancorp, North Carolina $65.00 1/9/2009 $400.00 1/16/2009 $10.00 1/16/2009 $295.00 12/31/2008 Fifth Third Bancorp First BanCorp, Puerto Rico First Bankers Trustshares, Inc. First Banks, Inc. First California Financial Group, Inc $25.00 12/19/2008 First Community Bancshares Inc. $42.00 11/21/2008 First Community Bank Corporation $11.00 12/23/2008 First Community Corporation $11.00 11/21/2008 First Defiance Financial Corp. $37.00 12/5/2008 First Financial Bancorp $80.00 12/23/2008 First Financial Holdings Inc. $65.00 12/5/2008 First Financial Service Corporation $20.00 1/9/2009 First Horizon National Corporation $867.00 11/14/2008 $10.00 12/12/2008 $12.00 1/16/2009 First Litchfield Financial Corporation First Manitowoc Bancorp, Inc. 29 First Midwest Bancorp, Inc. $193.00 12/5/2008 $184.00 11/21/2008 First PacTrust Bancorp, Inc. $19.00 11/21/2008 First Security Group, Inc. $33.00 1/9/2009 $7.00 12/23/2008 $125.00 1/9/2009 First Niagara Financial Group 30 First Sound Bank Firstmerit Corporation 31 29 Repaid Treasury on May 27, 2009. Repaid Treasury on May 27, 2009. 31 Repaid Treasury on April 22, 2009. 30 26 Institution Name Funding (millions) $70.00 FPB Bancorp, Inc. Fulton Financial Corporation Goldman Sachs & Co. 12/19/2008 $6.00 Flushing Financial Corporation TARP Agreement Date 12/5/2008 $377.00 10/28/2008 $9.00 GrandSouth Bancorporation 12/23/2008 $10,000.00 32 1/9/2009 Great Southern Bancorp/ Great Southern Bank $58.00 12/5/2008 Green Bankshares, Inc. $72.00 12/23/2008 Hampton Roads Bankshares, Inc. $80.00 12/31/2008 Hawthorn Bancshares, Inc. $30.00 12/19/2008 Heartland Financial USA, Inc. $82.00 12/19/2008 Heritage Commerce Corp. $40.00 11/21/2008 Heritage Financial Corporation $24.00 11/21/2008 33 $25.00 11/21/2008 HMN Financial, Inc. $26.00 12/23/2008 Home Bancshares, Inc. $50.00 1/16/2009 HopFed Bancorp $18.00 12/12/2008 HF Financial Corp Horizon Bancorp $25.00 12/19/2008 $1,398.00 11/14/2008 $90.00 12/5/2008 Idaho Bancorp $7.00 1/16/2009 Independence Bank $1.00 1/9/2009 Huntington Bancshares Iberiabank Corporation 34 Independent Bank Corp. 35 $78.00 1/9/2009 $72.00 Independent Bank Corporation 12/12/2008 Indiana Community Bancorp $22.00 12/12/2008 Intermountain Community Bancorp/Panhandle State Bank $27.00 12/19/2008 $216.00 12/23/2008 International Bancshares Corporation/ International Bank of Commerce Intervest Bancshares Corporation JP Morgan Chase & Co. $25.00 1/9/2009 $6.00 Leader Bancorp, Inc./Leader Bank, National Association 11/14/2008 $13.00 LCNB Corp. 10/28/2008 $2,500.00 KeyCorp/Keybank National Association 12/23/2008 $25,000.00 36 12/23/2008 LNB Bancorp Inc. $25.00 12/12/2008 LSB Corporation $15.00 12/12/2008 M&T Bank Corporation $600.00 12/23/2008 Magna Bank $14.00 12/23/2008 MainSource Financial Group, Inc. $57.00 1/16/2009 $2.00 12/5/2008 $36.00 12/19/2008 $1,715.00 11/14/2008 Manhattan Bancorp Marquette National Corporation Marshall & Ilsley Corporation 32 Repaid Treasury on June 17, 2009. Repaid Treasury on June 3, 2009. 34 Repaid Treasury on March 31, 2009. 35 Repaid Treasury on April 22, 2009. 36 Repaid Treasury on June 17, 2009. 33 27 Institution Name Funding (millions) MB Financial Inc. TARP Agreement Date $196.00 12/5/2008 MetroCorp Bancshares, Inc. $45.00 1/16/2009 Mid Penn Bancorp, Inc. $10.00 12/19/2008 MidSouth Bancorp, Inc. $20.00 1/9/2009 Midwest Banc Holdings, Inc. $85.00 12/5/2008 Mission Community Bancorp/Mission Community Bank $5.00 1/9/2009 Mission Valley Bancorp/ Mission Valley Bank $6.00 12/23/2008 Monadnock Bancorp, Inc. $2.00 Morgan Stanley 12/19/2008 $10,000.00 37 12/19/2008 $15.00 Monarch Financial Holdings, Inc. 10/28/2008 Morrill Bancshares, Inc. $13.00 1/16/2009 MutualFirst Financial, Inc. $32.00 12/23/2008 Nara Bancorp, Inc. $67.00 11/21/2008 $150.00 12/12/2008 NCAL Bancorp $10.00 12/19/2008 New Hampshire Thrift Bancshares, Inc. $10.00 1/16/2009 National Penn Bancshares, Inc. New York Private Bank & Trust Corp. / Emigrant Bank $267.00 1/9/2009 NewBridge Bancorp/New Bridge Bank $52.00 12/12/2008 Nicolet Bankshares, Inc./Nicolet National Bank $15.00 12/23/2008 North Central Bancshares, Inc. $10.00 1/9/2009 $4.00 12/12/2008 Northeast Bancorp Northern Trust Corporation 38 $1,576.00 11/14/2008 Oak Valley Bancorp $14.00 12/5/2008 OceanFirst Financial Corporation $38.00 1/16/2009 $7.00 12/5/2008 $100.00 12/12/2008 Old Line Bancshares, Inc. Old National Bancorp 39 Old Second Bancorp, Inc. $73.00 1/16/2009 One United Bank $12.00 12/19/2008 Pacific Capital Bancorp $181.00 11/21/2008 Pacific City Financial Corporation/ Pacific City Bank $16.00 12/19/2008 Pacific Coast Bankers' Bancshares $12.00 12/23/2008 Pacific Coast National Bancorp $4.00 1/16/2009 Pacific Commerce Bank $4.00 12/23/2008 Pacific International Bancorp $7.00 Patapsco Bancorp, Inc. 12/23/2008 $32.00 Parkvale Financial Corporation 12/12/2008 $100.00 Park National Corporation 12/23/2008 $6.00 12/19/2008 Patriot Bancshares, Inc./ Patriot Bank $26.00 12/19/2008 Peapack-Gladstone Financial Corporation $29.00 1/9/2009 Peoples Bancorp of North Carolina, Inc. $25.00 12/23/2008 Pinnacle Financial Partners, Inc. $95.00 12/12/2008 Plains Capital Corporation $88.00 12/19/2008 37 Repaid Treasury on June 17, 2009. Repaid Treasury on June 17, 2009. 39 Repaid Treasury on March 31, 2009. 38 28 Institution Name Funding (millions) $7,579.00 Popular, Inc. Porter Bancorp, Inc.(PBI) Louisville, KY 12/31/2008 $935.00 PNC Financial Services Group Inc. TARP Agreement Date 12/5/2008 $35.00 11/21/2008 $152.00 11/14/2008 $5.00 1/16/2009 Pulaski Financial Corp $33.00 1/16/2009 Queensborough Company, The $12.00 1/9/2009 Redwood Capital Bancorp $4.00 1/16/2009 Redwood Financial, Inc. $3.00 1/9/2009 $3,500.00 11/14/2008 Provident Banshares Corp. Puget Sound Bank Regions Financial Corp./ Regions Bank Rising Sun Bancorp $6.00 Saigon National Bank 1/9/2009 $109.00 S&T Bancorp 1/16/2009 $2.00 $4.00 SCBT Financial Corporation 40 Seacoast Banking Corporation of Florida/Seacoast National Bank 12/5/2008 12/19/2008 $65.00 Santa Lucia Bancorp 12/23/2008 $83.00 Sandy Spring Bancorp, Inc. 1/16/2009 $50.00 12/19/2008 $2.00 Seacoast Commerce Bank 12/23/2008 Security Business Bancorp/Security Business Bank of San Diego $6.00 1/9/2009 Security California Bancorp/ Security Bank of California $7.00 1/9/2009 Security Federal Corporation $18.00 12/19/2008 Severn Bancorp, Inc. $23.00 11/21/2008 $25.00 1/9/2009 $120.00 12/12/2008 $7.00 1/16/2009 Shore Bancshares, Inc. Signature Bank 41 42 Somerset Hills Bancorp 43 Sound Banking Company $3.00 1/9/2009 $347.00 12/5/2008 Southern Bancorp, Inc. $11.00 1/16/2009 Southern Community Financial Corp./ Southern Community Bank & Trust $43.00 12/5/2008 Southern Missouri Bancorp, Inc./ Southern Missouri Bank & Trust Co. $10.00 12/5/2008 South Financial Group, Inc./ Carolina First Bank Southwest Bancorp, Inc. $70.00 12/5/2008 State Bancorp, Inc./State Bank of Long Island $37.00 12/5/2008 State Bank & Trust/State Bankshares, Inc. State Street $50.00 1/16/2009 $2,000.00 44 10/28/2008 StellarOne Corporation $30.00 12/19/2008 Sterling Bancorp $42.00 12/23/2008 $125.00 12/12/2008 Sterling Bancshares, Inc./Sterling Bank 45 40 Repaid Treasury on May 20, 2009. Repaid Treasury on April 15, 2009. 42 Repaid Treasury on March 31, 2009. 43 Repaid Treasury on May 20, 2009. 44 Repaid Treasury on June 17, 2009. 41 29 Institution Name Funding (millions) Sterling Financial Corporation/Sterling Savings Bank $303.00 46 12/5/2008 $9.00 Summit State Bank Sun Bancorp, Inc TARP Agreement Date 12/19/2008 $89.00 Surrey Bancorp/Surrey Bank & Trust 12/31/2008 $69.00 Superior Bancorp Inc. 1/9/2009 $4,850.00 SunTrust Banks, Inc. 12/5/2008 $2.00 1/9/2009 Susquehanna Bancshares, Inc $300.00 12/12/2008 SVB Financial Group $235.00 12/12/2008 Synovus Financial Corp./ Columbus Bank & Trust Co. $968.00 12/19/2008 Syringa Bancorp $8.00 TCF Financial Corporation Tennessee Commerce Bancorp, Inc./ Tennessee Commerce Bank 11/14/2008 $2.00 TCNB Financial Corp/The Citizens National Bank of Southwestern Ohio 1/16/2009 $361.00 47 11/21/2008 $12.00 TCB Holding Company, Texas Community Bank 1/16/2009 $105.00 Taylor Capital Group 12/23/2008 $30.00 12/19/2008 $3.00 12/23/2008 $75.00 1/16/2009 $4.00 1/9/2009 The Bancorp, Inc./The Bancorp Bank $45.00 12/12/2008 The Baraboo Bancorporation $21.00 1/16/2009 $5.00 12/19/2008 Tennessee Valley Financial Holdings, Inc. Texas Capital Bancshares, Inc. 48 Texas National Bancorporation The Connecticut Bank and Trust Company The Elmira Savings Bank, FSB $9.00 12/19/2008 $25.00 1/9/2009 The Little Bank, Incorporated $8.00 12/23/2008 TIB Financial Corp/TIB Bank $37.00 12/5/2008 Tidelands Bancshares, Inc $14.00 12/19/2008 Timberland Bancorp, Inc. $17.00 12/23/2008 TowneBank $76.00 12/12/2008 The First Bancorp, Inc. Treaty Oak Bankcorp, Inc $3.27 Trustmark Corporation 1/16/2009 $16.00 Tri-County Financial Corporation 12/19/2008 $215.00 11/21/2008 $6,599.00 11/14/2008 UCBH Holdings, Inc. $299.00 11/14/2008 Umpqua Holdings Corp. $214.00 11/14/2008 $59.00 12/19/2008 U.S. Bancorp 49 Union Bankshares Corporation United Bancorp, Inc. $21.00 1/16/2009 United Bancorporation of Alabama, Inc. $10.00 12/23/2008 $180.00 12/5/2008 United Community Banks, Inc. 45 Repaid Treasury on May 5, 2009. Repaid Treasury on April 8, 2009. 47 Repaid Treasury on April 22, 2009. 48 Repaid Treasury on May 13, 2009. 49 Repaid Treasury on June 17, 2009. 46 30 Institution Name Funding (millions) United Financial Banking Companies, Inc. TARP Agreement Date $6.00 1/16/2009 Unity Bancorp, Inc./Unity Bank $21.00 12/5/2008 Uwharrie Capital Corp/Bank of Stanly $10.00 12/23/2008 Valley Community Bank $6.00 Valley National Bancorp 50 1/9/2009 $16.00 Valley Financial Corporation 12/12/2008 $300.00 11/14/2008 $71.00 Virginia Commerce Bancorp 12/12/2008 VIST Financial Corp./VIST Bank $25.00 12/19/2008 Wainwright Bank & Trust Company $22.00 12/19/2008 Washington Banking Company/ Whidbey Island Bank $26.00 1/16/2009 $200.00 11/14/2008 Washington Federal Inc./ Washington Federal Savings & 51 Loan Association Webster Financial Corporation $400.00 $36.00 Western Alliance Bancorporation/Bank of Nevada 12/5/2008 12/31/2008 $140.00 West Bancorporation, Inc. 10/28/2008 $75.00 Wesbanco Bank Inc. 11/21/2008 $25,000.00 Wells Fargo Bank 11/21/2008 Western Community Bancshares, Inc. $7.00 12/23/2008 Western Illinois Bancshares Inc. $7.00 12/23/2008 Whitney Holding Corporation $300.00 12/19/2008 Wilmington Trust Corporation $330.00 12/12/2008 $62.00 12/12/2008 $250.00 12/19/2008 $36.00 1/16/2009 $1,400.00 11/14/2008 $111.00 1/23/2009 Wilshire Bancorp, Inc. Wintrust Financial Corporation Yadkin Valley Financial Corporation Zions Bancorporation 1st Source Corporation AB&T Financial Corporation/Alliance Bank & Trust Company $4.00 1/23/2009 $12.70 1/29/2009 Alarion Financial Services, Inc. $7.00 1/23/2009 AMB Financial Corporation $3.67 1/30/2009 $110.00 1/30/2009 Adbanc, Inc Anchor BanCorp Wisconsin, Inc. Annapolis Bancorp, Inc. $81.50 1/30/2009 Bankers' Bank of the West Bancorp, Inc. $12.64 1/30/2009 BankFirst Capital Corporation $16.00 1/23/2009 $6.00 1/30/2009 Beach Business Bank California Oaks State Bank $3.30 1/23/2009 Calvert Financial Corporation $1.00 1/23/2009 Calwest Bancorp/South County Bank $5.00 1/23/2009 Central Bancshares, Inc $5.80 1/30/2009 Central Valley Community Bancorp $7.00 1/30/2009 Central Virginia Bankshares, Inc. $11.39 1/30/2009 Commonwealth Business Bank $8.00 1/23/2009 Community Partners Bancorp $9.00 1/30/2009 50 51 Repaid Treasury on June 3, 2009. Repaid Treasury on May 27, 2009. 31 Institution Name Funding (millions) Country Bank Shares, Inc./Farmers&Merchants Bank TARP Agreement Date $7.53 1/30/2009 Crosstown Holding Company/21st Century Bank $11.00 1/23/2009 DNB Financial Corporation $11.75 1/30/2009 Equity Bancshares $8.75 1/30/2009 Farmer's and Merchants/F & M Bancshares, Inc. $4.61 1/30/2009 Farmers Bank $9.00 $2.60 First Southern Bancorp, Inc. First ULB Corp. 52 1/23/2009 1/30/2009 $10.90 First Resource Bank 1/23/2009 $23.00 First Citizens Banc Corp 1/30/2009 $5.00 1/23/2009 First United Corporation $30.00 1/30/2009 Firstbank Corporation $33.00 1/30/2009 Flagstar Bancorp, Inc. $266.66 1/30/2009 $3.00 1/23/2009 FPB Financial Corp Fresno First Bank $2.00 1/23/2009 Goldwater Bank, NA $2.57 1/30/2009 Greer Bancshares Incorporated $9.99 1/30/2009 $17.00 1/30/2009 $4.00 1/30/2009 $10.45 1/30/2009 $5.50 1/30/2009 $58.00 1/23/2009 $7.70 1/30/2009 Middleburg Financial Corporation $22.00 1/30/2009 Midland States Bancorp, Inc. $10.00 1/23/2009 $4.73 1/30/2009 Guaranty Federal Bancshares, Inc. HillTop Community Bancorp,Inc. Katahdin Bankshares Corp. Legacy Bancorp, Inc. Liberty Bancshares, Inc. Metro City Bank Monument Bank Moscow Bancshares, Inc. $6.00 1/23/2009 $10.00 1/30/2009 Oak Ridge Financial Services, Inc. $7.70 1/30/2009 Ojai Community Bank $2.08 1/30/2009 $16.29 1/30/2009 $6.00 1/30/2009 Peoples Bancorp, Inc. $39.00 1/30/2009 Pierce County Bancorp $7.00 1/23/2009 Plumas Bancorp $11.95 1/30/2009 Princeton National Bancorp, Inc. $25.00 1/23/2009 $243.82 1/30/2009 $25.00 1/30/2009 $6.00 1/23/2009 Northway Financial,Inc. Parke Bancorp, Inc. The Private Bank of The Peninsula/Peninsula Bank Holding Co. Private Bancorp, Inc. Metropolitan National Bank/Rogers Bancshares Seaside National Bank & Trust Southern Illinois Bancorp, Inc. $5.00 1/23/2009 Stewardship Financial Corporation $10.00 1/30/2009 Stone Bridge Financial Corp $11.00 1/23/2009 $0.30 2/6/2009 The Freeport State Bank 52 53 Repaid Treasury on April 22, 2009. 32 Institution Name Funding (millions) TARP Agreement Date UBT Bancshares, Inc. $8.95 1/30/2009 Valley Business Bank (Valley Commerce Bancorp) $7.70 1/30/2009 W. T. B. Financial Corp/Washington Trust Bank $110.00 53 1/30/2009 $53.00 WSFS Financial Corporation 1/30/2009 $6.63 Washington First Bank 1/23/2009 The Freeport State Bank was included in our survey, however, their closing date on the TARP funds was delayed until February 6, 2009. 33 Appendix E––Reported Actual Uses by Month of Disbursement, Asset Size, and Amount of Funding Table 6 shows the number of banks that reported actual uses of CPP funds for each major category of use, segmented by the month when funds were disbursed. Table 6: Actual Uses of CPP Funds by Disbursement Month OCT NOV DEC JAN 54 TOTAL 8 43 162 147 360 Lending 8 38 145 109 300 Investment 5 20 54 31 110 Debt Repayment 0 8 21 23 52 Acquisition 0 5 7 3 15 Capital Cushion or Other Reserves 1 17 69 69 156 Month Funds Disbursed Number of Banks Banks Reporting Uses for: Source: SIGTARP analysis of survey responses. Note: Some percentages may have been rounded beyond 0.5 percentage points in order to add up to 100 percent. Table 7 shows the number of banks that reported actual uses of CPP funds for each major category of use, segmented by the asset size of the recipient. Table 7: Actual Uses of CPP Funds by Asset Size >$100B $100B - 10B $10B $1B $1B 100M <$100M 14 37 131 110 68 TOTAL 360 14 32 113 87 54 300 Investment 10 17 40 31 12 110 Debt Payoff 0 5 26 10 11 52 Acquisition 3 2 8 1 1 15 Capital Cushion or Other Reserves 2 19 55 48 32 156 Asset Size Number of Banks Banks Reporting Uses for: Lending Source: SIGTARP analysis of survey responses. Note: Some percentages may have been rounded more than 0.5 percentage points in order to add up to 100 percent. 54 One bank that was included in our survey was delayed in closing on its TARP funds until February 6, 2009. 34 Table 8 shows the number of banks that reported actual uses of CPP funds for each major category of use, segmented by the amount of funds received. Table 8: Actual Uses of CPP Funds by Amount of Funds Received Amount of TARP Funds Received Number of Banks Banks Reporting Uses for: Lending Investment Debt Repayment Acquisition Capital Cushion or Other Reserves >$10B $1B - 10B $100M - 1B <$100M TOTAL 6 17 54 283 360 6 16 46 232 300 3 0 0 10 2 5 24 7 1 73 43 9 110 52 15 1 5 25 125 156 Source: SIGTARP analysis of survey responses. Note: Some percentages may have been rounded beyond 0.5 percentage points in order to add up to 100 percent. 35 Appendix F––Broad Impact of Receiving TARP Funds To illustrate the broad impact of receiving TARP funds, Table 9 shows the reported actions that recipients would not have been able to achieve without TARP funding, and actions that recipients were able to avoid due to TARP funding. The distribution of firms that addressed these actions (in regards to the date of funding, the amount of funding received, and asset size) was comparable to the distribution of all recipients. Table 9: Broad Impact of Receiving TARP Funds Summary Number of Institutions Percentage of Institutions 55 Grow Lending 34 21 Enhance Lending Activity 21 13 Improve Capital Position 16 10 Conduct Loan Modifications 8 5 Grow Deposits 6 4 Purchase Investments 6 4 Reduce Loan Terms 4 2 Pay Debt 3 2 Complete an Acquisition 3 2 Reducing Lending 46 28 Reducing their Loan Portfolio 17 10 Shrinking their Balance Sheet 14 9 Freezing Lending 11 7 Falling Below Well Capitalized Level 5 3 Job Reductions 2 1 Activity Without TARP funds institutions would not have been able to: Because of TARP funds institutions were able to avoid: Exiting the Banking Business 1 Source: SIGTARP analysis of survey responses. Note: Numbers and percentages do not total since respondents reported multiple uses of funds. 55 Percentages are based on 163 recipients that responded to this question. 36 1 Appendix G—Audit Team Members This report was prepared and the review was conducted under the direction of Barry W. Holman, Audit Director, Office of the Special Inspector General for the Troubled Asset Relief Program. Other key SIGTARP staff included Michael Kennedy, James Shafer, Anne Blank, Trevor Rudolph, and Kamruz Zaman. The Concentrance staff members who supported SIGTARP in the audit and report development included Karmen Carr, Alex Kangelaris, Darius Grayson, Patricia Taylor, Christopher Laughlin, Matthew Herman, Yusuf Makhkamov, and Mandy Ho. 37 Appendix H––Management Comments 38 39 SIGTARP Hotline If you are aware of fraud, waste, abuse, mismanagement or misrepresentations affiliated with the Troubled Asset Relief Program, please contact the SIGTARP Hotline. By Online Form: www.SIGTARP.gov By Phone: Call toll free: (877) SIG-2009 By Fax: (202) 622-4559 By Mail: Hotline: Office of the Special Inspector General For The Troubled Asset Relief Program 1801 L Street Washington, D.C. 20220 Press Inquiries Please contact our Press Office if you have any inquires: Kristine Belisle Director of Communications Kris.Belisle@do.treas.gov 202-927-8940 Legislative Affairs Please contact our Legislative Affairs Office for Hill inquires: Lori Hayman Legislative Affairs Lori.Hayman@do.treas.gov 202-927-8941 Obtaining Copies of Testimony and Reports To obtain copies of testimony and reports please log on to our website at www.sigtarp.gov 40