Bank of Florida is withdrawing its application to receive about $40 million in TARP funds, joining critics of the federal government for changing terms of the bank bailout program.
Megabanks such as Citigroup, Bank of America and JPMorganChase have all signaled that they're eager to pay back funds garnered from the Troubled Asset Relief Program, getting out from government restrictions attached to the money involving bank management and executive compensation.
Several smaller banks have pulled TARP applications, but Bank of Florida chief executive Mike McMullen said he believes his institution is the first publicly traded bank in the state to withdraw.
"In the last couple of weeks, this has turned into a different scenario than we had originally thought," McMullen said.
For one, he said, TARP started out as seed money for healthy banks to be used in part to buy other banks, but it's morphed into a bailout of troubled banks. Bank of Florida had planned to use some of the money for acquisitions.
McMullen also was concerned the Treasury Department is imposing much stricter limits on the use of the funds and tracking whether money is spent on specific loans. "If the types of loans that meet that criteria are not in your market, it could be problematic."
And then there's the issue of executive compensation. Restricting pay for his executive management team, McMullen said, would make it hard for the bank to retain talented employees "especially if we're under those limitations and a competitor across the street isn't."
Based in Naples, Bank of Florida has about $1.5 billion in assets. Two of its 13 branches are in the bay area — one on Harbour Island and one in Clearwater.
The bank applied for TARP Nov. 14; so far, only eight of more than 80 Florida bank applications have been acted on.
"There was a huge backlog on the approval process," McMullen said. "We feel that has served us well."