Ga. banks hold on to bailout funds

"The timing is not completely up to us," said Steve Shriner, director of investor relations.

Thus far, only a handful of the more than 600 financial institutions that received bailout money have been allowed to return the funds. But momentum is building. This week, 10 of the nation's biggest banks repaid $68 billion in bailout money. They included BB&T, a player in the Atlanta market, along with JPMorgan Chase and Morgan Stanley.

The federal government has invested $6.2 billion in 22 Georgia-based banks through the Troubled Asset Relief Program, or TARP. The vast majority has gone to SunTrust and Synovus, based in Columbus.

TARP's goal was to stabilize the banking industry by offering emergency cash to help banks write off losses, make new loans and shore up customer confidence.

Some bankers feel TARP, which started late last year, has worked well and are in no hurry to exit the program.

Atlanta-based Fidelity Bank, one of the state's larger community banks, says the $48 million it got has helped it boost lending. Fidelity has hired about 90 people to handle the increased business, mostly mortgage refinances, said Jim Miller, Fidelity's chairman.

There's little downside to holding onto the money, Miller said. Restrictions on executive pay don't really affect smaller banks like Fidelity. "We have more conservative salaries and bonuses than the Wall Street folks have," he said.

Synovus, which got $973 million last December, would have to issue stock to rebuild capital if it returned the money now, CEO Richard Anthony said. At today's depressed stock price, such a move would heavily dilute existing shares, he said.

"Once we get on an improving track and can begin to see our way to profitability, then we can issue stock and we can raise capital on our own, on more favorable terms," Anthony said.

SunTrust feels TARP money carries too great a cost. In addition to the strings attached, banks getting it must pay a 5 percent dividend each year —- $240 million a year for SunTrust. But executives declined to say if they've applied to pay back the money.

United Community, which got $180 million, says the money helped shore up a balance sheet battered by soured real estate loans. Compared to what it would cost to raise capital, the 5 percent interest on TARP funds is cheap, said Rex Schuette, chief financial officer.

"We all can't wait to get rid of it, but you must balance that on the best interests of your shareholders," Schuette said.

> SunTrust vice chairman to retire, consult for the company. A12