Banking Law

One small bank has taken a lesson from recent snarky marketing campaigns by other banks that didn't take TARP preferred stock investments through the US Treasury Department's Capital Purchase Program and have been playing on the public's anger over "bank bailouts." Millennium Bank of Edwards, Colorado, announced recently that it had received $7 million of capital through apreffered stock purchase by the US Treasury Department through the CPP, and that its receipt of such an additional proves that it's a healthy bank, not a sick one, like...oh...maybe...a bank that didn't get a CPP preferred stock investment.

"We are pleased to participate in the program, which is a reflection of our company's continuing strength," Donald Mengedoth, Millennium Banks' chairman and CEO, said in a statement. "The capital investment allows us to expand our ability to generate quality loans to families and businesses within our communities and support the economy. Further, this allows us to pursue growth and opportunities presented in today?s economic environment."

Millennium Bank has remained well-capitalized by federal banking standards, and the addition of new capital will increase its regulatory capital ratios by approximately 25 percent, officials said.

"It is important to note that the Treasury is providing this program to healthy banks that are well managed and well capitalized," Mengedoth said. "The CPP is not a 'bailout.' As the Treasury notes, only healthy banks that lend to their communities are eligible."

Given the recent public sniping by a few non-participating banks against their brethren who've grasped the brass ring of TARP capital, and the bashing of banks who take the government's money by certain members of Congress eager to play off public anger to their political advantage, I think Mr. Mengedoth's public posturing of the CPP investment is a smart move. If he's attacked, as Plains Capital in Texas was attacked, for participating in this program, he can turn the accusation around and publicly ask whether any bank that decided not to take TARP money did so because it thought it would be turned down. Only "healthy" banks qualify for CPP investments, after all.

In some ways, it's a sad state of affairs that such marketing tactics are necessary. On the other hand, folks like Mr. Mengedoth can honestly state that they didn't start these "spin wars," they're just defending themselves with a little "preemptive strike."