Bailouts, handouts, subsidies, and free money be damned.  In times when most large financial institutions are lining up for their share of TARP funds, there are many regional banks out there which have decided to refuse the government’s bailout TARP funds.  These banks say the are solid, and many of their share prices have held up much better than many of the troubled banks which are taking TARP monies.  Some of these regional banks are BancorpSouth, Inc. (NYSE: BXS), Cullen/Frost Bankers, Inc. (NYSE: CFR), First Commonwealth Financial Corporation (NYSE: FCF), Hudson City Bancorp, Inc. (Nasdaq: HCBK), Prosperity Bancshares, Inc. (Nasdaq: PRSP), and Westfield Financial, Inc. (NASDAQ: WFD).  These are the more actively traded stocks and what gets interesting is the explanation for refusing to accept TARP funds and the ratios of some of these banking institutions.

On November 14, BancorpSouth, Inc. (NYSE: BXS) announced that it wouldnot apply for TARP funds as it is a well-capitalized and strongperforming institution with high quality assets.  The company said itsbalance sheet was highlighted by total risk-based capital of 11.82% atSeptember 30, 2008, far above minimum regulatory standards.BancorpSouth, Inc., is a financial holding company headquartered inTupelo, Mississippi, with approximately $13.3 billion in assets whichoperates approximately 300 commercial banking, mortgage, insurance,trust and broker/dealer locations in Alabama, Arkansas, Florida,Louisiana, Mississippi, Missouri, Tennessee and Texas.

At the end of October, Cullen/Frost Bankers, Inc. (NYSE: CFR) in Texasannounced it will not apply for funds available through the TARP ansthat it will not seek federal CPP funds.  The bank said at the timethat it is well capitalized "now and for the foreseeable future withsufficient capital to grow our business and take advantage ofacquisition opportunities."

On November 14, First Commonwealth Financial Corporation (NYSE: FCF)announced that it would not apply for TARP funds since it recentlyraised over $100 million through a public offering of common stock.First Commonwealth Financial Corporation is a $6.2 billion bank holdingcompany headquartered in Indiana, Pennsylvania with 113 retail branchoffices.

On November 17, Hudson City Bancorp, Inc. (Nasdaq: HCBK) announced thatit did not participate in the TARP as it has not been seriouslyaffected by conditions in the marketplace. The company said that whileit is not immune from economic conditions, its average loan-to-valueratio of 61% at time of origination has protected the bank fromsignificant levels of loan losses.  It has also accepted more mortgageapplications during the first nine months of 2008 than it did in all of2007 and it originated $4.01 billion of mortgage loans.  It alsopurchased $2.55 billion of loans through September 30, 2008 as comparedto $3.06 billion for the same period in 2007. It grew deposits by $2.14billion during the first nine months of 2008 and it had an equity toassets ratio of 9.2% and a total risk based capital ratio of 21.9% atSeptember 30, 2008.

On November 17, Prosperity Bancshares, Inc. (Nasdaq: PRSP) announcedits decision not to apply for TARP funds.  Prosperity said it wasconsidered well capitalized under regulatory guidelines and should beable to continue building its business and take advantage ofopportunities.  Prosperity Bancshares is a $10.5 billion Houston, Texasbased regional financial holding company with approximately 170branches throughout Texas.

On November 17, Westfield Financial, Inc. (NASDAQ: WFD) announced thatit decided not to seek TARP funds as its ratio of Tier 1 capital torisk weighted assets was 44.04% and the ratio of Tier 1 capital tototal adjusted assets was 25.65%. Both of these ratios are above theminimums of 6.00% and 5.00%, respectively, to be considered wellcapitalized under prompt corrective action requirements.  WestfieldBank is headquartered in Westfield, Massachusetts and operates through11 banking offices.

Jon C. Ogg
November 28, 2008

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