(Crain's) - The parent of First American Bank has won approval from regulators to repay a portion of its federal bailout funds, making it the first privately held lender in the Chicago area to redeem preferred shares sold to the Treasury Department under the Troubled Asset Relief Program.
Elk Grove Village-based First American Bank Corp. on Wednesday will redeem $15 million of the $50 million in TARP shares held by the Treasury, CEO Thomas Wells said Friday.
The repayment was made possible after First American raised $26 million in fresh equity from existing shareholders over the summer, Mr. Wells said.
With $2.8 billion in assets, First American is the ninth-largest bank holding company in the Chicago area and the second-largest privately held one, behind Metropolitan Bank Group Inc. First American has 48 branches spread mainly throughout the suburbs, with eight in the city.
While a few of the biggest banks here like Northern Trust Corp., Lake Forest-based Wintrust Financial Corp. and Itasca-based First Midwest Bancorp Inc. have repaid their bailout funds, the Treasury still holds nearly $1 billion collectively in TARP shares of 17 area banks. The banks' painfully slow recovery from the recession has made it difficult for many of them to exit the program, created during the height of the financial crisis in 2008.
In an interview, Mr. Wells said he had no firm timetable for repaying the remainder, saying there still was uncertainty about the pace of economic recovery and future loan losses.
"We're doing it in steps, and carefully," he said.
For the first nine months of 2011, First American posted a $5.3-million loss as it wrote off a net $28 million in bad loans. Last year, the bank eked out a $1.3-million profit after writing off a net $39 million in soured loans.
But the bank's capital ratios are well above what's needed to be deemed "well-capitalized" by regulators. And unlike several of its large, privately held competitors, First American has stayed current on its quarterly TARP dividend payments due to the Treasury Department.
