New Mexico based First States Bank is selling is Colorado banks, known as First Community, to South Dakota-based Great Western Bank, which itself is owned by National Australia Bank. Papers in all three states reported on the sale, but in very different ways. And each tells an important story larger than this sale.
The Las Cruces paper leads with the fact that First States is changing its mind about that TARP money, after all:
Albuquerque-based First State Bancorporation says the sale of its Colorado bank branches will improve its balance sheet enough to eliminate any need to accept federal bailout money.First State, which does business as First Community Bank, will focus its attention on the New Mexico market, the Albuquerque Journal reported in a copyright story Thursday.
...
Stanford said availability and terms of the federal Troubled Asset Relief Program funding is too uncertain and that First State has withdrawn the application it submitted last October.
The bankers don't like the fact that, increasingly when doing business with the Federal government, a deal really isn't a deal, after all. So rather than get caught in that particular tarp, er, trap, they decided to raise their capitalizatino to 12% from 10% by selling off some of the bad loans.
Both of the Colorado reports, from the DenPo and the Denver Business Journal, mention that it was Bob Beauprez who sold the under-performing banks to First State in the first place. Bad news for an election run this cycle, I'd think.
But neither mentions why Great Western would want to take on this burden. Leave that to the Argus-Leader:
The acquisition involves the purchase of 20 branches and will allow Great Western to expand its small business and agriculture lending, said Jeff Erickson, president and chief executive at Great Western."The addition of these Colorado branches is consistent with our strategic growth plans and gives us the opportunity to expand particularly in the areas of small business and agricultural banking," Erickson said.
So it would appear that rather than beg for federal money with Lilliputian-quantity strings attached, a bad sold off an underperforming ball and chain to another bank who saw opportunity there instead.
I can't believe either presidential administration meant for it to work this way, but the raging uncertainly surrounding TARP may be forcing smaller banks to actually let the market operate.
