City National repays remainder of TARP funds
City National Corp. announced Thursday that it had repaid the remaining $200 million of the $400-million infusion it received from the U.S. Treasury in late 2008 under emergency efforts to stabilize the nation’s financial system.
The largest bank based in Southern California, City National wanted to repay the entire amount last year but regulators initially let the firm pay only $200 million in late December.
The bank’s repurchase Wednesday of the rest of the preferred stock it sold to the Treasury’s Troubled Asset Relief Program will result in an after-tax charge of $3.8 million, or 7 cents a share, City National said.
All told, 627 U.S. banks received TARP funds, and about 70 have repaid at least some of the money. Reflecting paybacks from the biggest banks, $170 billion of the $240 billion invested in the banking system under TARP had been repaid as of Feb. 15, according to the Treasury.
For banks such as City National, receiving TARP funds initially was regarded as a “badge of honor,” because community and regional banks were supposed to be strong already to qualify for the federal infusions, Chief Executive Russell Goldsmith said.
However, the public soon turned resentful of what became known as the bank bailout program. With that in mind, City National, which remained well capitalized during the crisis and its aftermath, is “very pleased” to get the repayment behind it, Goldsmith said.
The Treasury still owns warrants it received as part of its investment, which give it the right to buy 1.1 million City National shares for $53.16 apiece.
The stock rose 30 cents Thursday to $50.17.
The bank said it planned to negotiate an agreement to buy back the warrants from the Treasury.
