Here's your $10M bailout, now what?

First Community Bank’s president and CEO, Ken Cherven, says it has loans pending and that it will also buy assets from failed institutions or continue to expand.

CHRIS ZUPPA | Times

First Community Bank’s president and CEO, Ken Cherven, says it has loans pending and that it will also buy assets from failed institutions or continue to expand.

First Community Bank Corp. of America badly needed a pick-me-up after a rugged 2008. It just arrived in the form of a check for $10,685,000 from the federal government. The Pinellas Park-based institution is one of the first community banks in Florida to qualify for funds from the government's Troubled Asset Relief Program (TARP), the $700-billion bailout program intended to restore the financial industry to solid footing. Under TARP, the Treasury Department is buying stock in U.S. banks under the premise the influx of cash will spur lending. Ken Cherven, president and CEO of the 24-year-old First Community, interprets his bank's approval as an encouraging sign since the federal government is only doling out money to those banks it believes will survive. Like others in the financial industry, First Community was certainly hammered by the real estate meltdown and related credit crunch. Adding to the misery, its stock fell 56.8 percent last year, making it one of the biggest losers among publicly-traded companies based in the bay area. Cherven talked last week about the injection of federal funds and plans for '09.

How will you spend the TARP money?

We'll continue to lend it out to the community. We've got more than $9-million in new loan approvals in the pipeline. Secondly, we'll use it to buy assets from failed institutions or continue to expand. We have a branch (in St. Petersburg) opening in March.

Without this we would have had to slow our growth down; that's why it helps. We had just under $40-million in capital before this (about $37.8-million). This gives us another 20 percent and helps you weather the storm, because it's tough out there.

Megabanks have been criticized for being secretive about how they're spending billions of taxpayer dollars in the bailout. Can you give a direct accounting of how your funds will be spent?

That's very difficult to do because it's all capital. It goes into one pool, and it's a cushion for you to grow your institution. I don't know how you would break it down. ... You don't segregate it out in any way.

(As far as citing) specific projects, we can't yet because we're just getting the money. We are looking at (spending funds) on a marketing campaign and doing market research.

We haven't seen many community banks, certainly not in our region, getting bailout money yet.

We're probably ahead of the curve because we're publicly traded. (The Treasury Department) is still trying to get a handle on how to value the stock for privately traded banks.

What's your forecast for the region and your bank?

Florida is toxic right now. There is no investor willing to invest in Florida. The real problem is the underlying value of all of our collateral. What is the value of all this real estate? Until we can stabilize that, it's very difficult to invest in any institutions

We're still working on our profit plan for next year. We still expect to grow, probably in the 5 to 10 percent range. As a company, we have a lot of loan issues. ... (Real estate) values have deteriorated and incomes have deteriorated. Everyone doesn't qualify for as much as they used to. It's becoming more and more difficult for customers in all our segments. We don't see anyone who hasn't been affected.

Jeff Harrington can be reached at jharrington @sptimes.com or (727) 893-8242.

Here's your $10M bailout, now what? 01/12/09 [Last modified: Monday, January 12, 2009 7:07am]

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