tarp:Your money

Good read.  SIGtarp investigations and assessments, along with showing  the significant disagreement by OMB and Treasury as to the cost of tarp to taxpayers. Depending on whose number one uses, the cost of just the oversight of tarp money has cost us about 2B so far. That is without the actual tarp losses incurred.  Click here.

52 comments on “tarp:Your money

  1. If and when an offer is made on the real estate, I presume that the directors will have to approve any acceptance or rejection, with a recommendation by the listing real estate agent. How can Mark Janko not have a conflict of interest? Of course he does.

    • I would have to respectfully point out that your presumption is wrong. Being a bank director is not a full-time job, it’s not even a part-time job. It’s a few days a month job. Jim McMahon was a bank director. Why would you ever want a radio station GM, a jewelry store owner, farmer, farmer, lawyer, lawyer, or ag view GM making day to day decisions that is out of their realm of expertise? Are you picturing a special meeting each time they sell a problem asset to discuss the offer? They’d all resign because $30k for 50 hrs a week wouldn’t be worth it. They fly at high altitude; strategic direction and oversight is what they do. They are not without fault, they made the same mistake as several banks to try to grow in the outskirts of Chicago, and they dropped the ball by not tar and feathering TJS, but they aren’t running the bank on a day-to-day basis. That is the employees.

  2. In the July 25, 2012 Special Inspector General Report on TARP on page 100 Princeton Nation Bancorp is listed as having missed 6 payments valued at $1,881,225. Having missed more than 5 payments entitles the government the opportunity to appoint up to 2 directors. In practice those missing 5 or more are asked for the consent for the program to send an observer to the board meetings. This report indicates they have such an observer sitting in on PNBC meetings. None of the $25,083,000 has been repaid on the 1/23/2009 transaction. There are also 155,025 warrants owned by the fund. A phase in the report “delay and pray” looks like the best hope!

    • I have to believe that the observer holds the fate of PNBC in his/hers hand. We all know that the numbers are terrible, but I believe the final decision will hinge on how the observer thinks the board is able to perform their duties. When I conjure up visions of what is going through the observers mind as the meeting is taking place, I do not get a warm and comfortable feeling. I hope I am wrong.

      • The board is largely composed of certified doofuses who have shirked their duties. I fear that an observer will reach that conclusion rather quickly.

        • Most were hand-picked by Tony Sorcic and became his lap dogs. Some are legacies that came from other banks that Sorcic acquired at top dollar.

          • And those that weren’t, were so spineless they not only let him lie his way through, they even helped him cover it all up. How many careers they trashed in the process.

        • Certified doofuses? This is not the case. It’s a group of people who trusted the CEO to a fault. They assumed he was as honest and trustworthy as they were. Most places they would’ve been fine to operate under that assumption. TJS is a special character. He duped many, many board members over the years, it just so happens that the real estate bubble went bust with this group in the chairs and all his mismanagement came to light.

          The one criticism of the board is that they didn’t have someone who could be CEO other than Tony. The Chief Lending Officer had been kicked off the board for some Lake Thunderbird-like actions, and after that there wasn’t anyone capable. Their choice was Tony or nobody, and that isn’t much of an option. All he did was keep the seat warm until Tom O. came to town.

  3. The sooner the better when the feds put two members on the PNBC board. Do two of the existing board members have to leave?

    An observer is better than nothing, I guess.

    • I surely don’t know anything regarding the activities of the FDIC or the OCC, but I do know that the bank board can have up to 25 members at the discretion of the board, itself. So members can certainly be added without anyone leaving. Which begs the original question; Why didn’t they just put Steve Bonucci on the board? No one would have had to vacate a seat.

        • Excellent observation. As it appeared prior to the annual meeting, the mindset of the board was such that they were going to allow no one into their inner circle to see what was really going on. And as the actual worsening financial situation became known, it was evident that no one, without a huge amount of cash, could help these guys and gals out of the mess they had created for all of us.

          • At that point, who would want to be on the board? What could have been done differently since the annual meeting until now to not have them below the 2% tier 1? Maybe a new board member from Princeton who was friends with the FDIC regulator (who also lives and works in Princeton) that put the screws to Citizens in the last go-round would’ve helped? How someone who lives and works in Princeton for the FDIC can claim to not be biased in this town, with this bank, is hard to believe.

            • I agree with you mostly. What could have been done? Financially I think, nothing. Even had they seated Steve in Dec. of 2011, when first proposed.
              Otherwise I think we would have been represented by a member who was capable of more than the following which was submitted in another comment in this post: “From the board members’ point of view, if your CEO, Chief Lending Officer, auditing firm, and the OCC all tell you that things are fine (pre-2006) with the loans, you’d probably believe them right?”
              It was that thinking that got us where we are. If that’s acceptable, then why have a board? Let the regulators make all the decisions. We have to disagree if you are implying that the board had no responsibility because the bank was audited, examined and regulated. None of those entities decided to loan out more than the bank could cover if the housing boom bubble burst.
              In addition, after meeting with Frank Bettasso and seeing the proof, a prudent board would have had reason to revisit most everything they had been told by Tony rather than conspire to cover it all up. It would have been time and money better spent, I think.

  4. Here is the press release for two other banks that had directors appointed…”WASHINGTON (MarketWatch) — The U.S. Treasury Department has elected directors to two banks that participated in a key program used to help out Wall Street during the financial crisis.

    Treasury on Tuesday said it exercised its right to elect John S. Poelker and Guy Rounsaville Jr. to the First Banks Inc. board of directors and Gerard M. Thomchick to the Royal Bancshares of Pennsylvania Inc. board.

    Those banks participated in the Capital Purchase Program, which was part of the Troubled Asset Relief Program created to bail out Wall Street.

    The agreements under the CPP give Treasury the right to nominate up to two members to the board of a program recipient under certain conditions.”


      • If the entire board were replaced with representatives of the feds, would that change things in the reasonably foreseeable future? Such a board would demand more thorough and precise accounting for loan losses, etc. That might actually hasten the bank’s failure?

        But, putting a couple of feds on the board might put the fear of bejesus in the existing board – not a bad idea, in my opinion.

        Even with just the current fed observer, he/she will undoubtedly take notes on everything the board members do or say, and make sure the board meeting notes are accurate. That may be good evidence for any future legal action.

        • You’re advocating bringing precision to a murky practice. You never know what the losses/profits on a loan are until it’s paid off or written off. They had $1.7 million of recoveries last quarter, and other loans got reassessed upward. The problem is that when things are going well, the regulators give banks the benefit of the doubt and agree with most of their assessments on loan loss provisions. When a bank gets into trouble, they get no benefit of the doubt because the regulators don’t want egg of their face. That is one group that deserves more blame in all of this. They’ve been through the books at Citizens every year, good times and bad, and only now are they cracking down. If they had any real skill or talent that could be applied in the banking sector, they probably would be working for a bank somewhere instead of for the FDIC or OCC. Where were they when these loans were being made? From the board members’ point of view, if your CEO, Chief Lending Officer, auditing firm, and the OCC all tell you that things are fine (pre-2006) with the loans, you’d probably believe them right? The Lake Thunderbird stuff is pretty black and white, no excuses there. The most important skill that any new board member could have would be deep pockets, and the ability and willingness to reach into them and provide capital.

          • Blaming this on the examiners and regulators is like blaming a bad grade on the teacher. Whining will not relieve the status quo of the responsibility they bear for the poor decisions they made.

  5. The feds would put people on PNBC’s board, not the bank’s, since the holding company received the TARP? Would that make a difference?

    • Since the Tarp funds were invested in PNBC and PNBC made an investment in the bank in the form of a capital injection the real interest of the Observer or for that matter Fed appointed board members would be the bank. It is the bank that has the problems and the bank that will either solve them our fail. There is little more to the holding company.

      The phase sited earlier “delay and pray” seams fitting.


    • It used to. Two board members up until early in 2011 were only on the PNBC board, not on the Bank board. Now they’re all the same.

  6. New 8-K submitted by Citizens: http://www.secinfo.com/


    On August 22, 2012, Citizens First National Bank (the “Bank”) , the wholly-owned subsidiary of Princeton National Bancorp, Inc. (the “Company”), received a notification from the Office of the Comptroller of the Currency (“OCC”) confirming that the Bank became “critically undercapitalized” within the meaning of the Prompt Corrective Action (“PCA”) provisions of the Federal Deposit Insurance Act and the regulations of the OCC as of August 20, 2012, the date the Bank filed its amended Report of Condition and Income Report for the quarter ended June 30, 2012 (“Call Report”). In the Call Report, the Bank reported that its tangible equity to total assets ratio as of the end of the quarter was 1.92%. The Bank’s capital category is determined solely for the purposes of applying PCA and the capital category may not constitute an accurate representation of the Bank’s overall financial condition or prospects.

    As a result of it being “critically undercapitalized” for PCA purposes, the Bank remains obligated to submit a capital restoration plan acceptable to the OCC, which plan must be guaranteed by the Company. In addition to other restrictions and prohibitions applicable to depository institutions that are “critically undercapitalized,” the Bank is prohibited, without the prior written approval of the Federal Deposit Insurance Corporation (the “FDIC”), from (1) entering into any material transaction other than in the usual course of business, including any investment, expansion, acquisition, sale of assets, or other similar action with respect to which the Bank is required to provide notice to the OCC; (2) extending any credit for any highly leveraged transactions as defined in 12 C.F.R. § 325.2(i); (3) amending the Bank’s charter or bylaws, except to the extent necessary to carry out any other requirement of law, regulation, or order; (4) making any material change in accounting methods; (5) engaging in any covered transaction as defined in Section 23A(b) of the Federal Reserve Act (12 U.S.C. § 371c(b)); (6) paying excessive compensation or bonuses; and (7) paying interest on new or renewed liabilities at a rate that would increase the Bank’s weighted average cost of funds to a level significantly exceeding the prevailing rates of interest on insured deposits in the Bank’s normal market areas. The Bank also remains subject to regulatory restrictions prohibiting the acceptance, renewal or rolling over of brokered deposits.

    The PCA framework generally requires that depository institutions that are “critically undercapitalized” be placed into conservatorship or receivership within 90 days of the date on which it was determined that the institution was “critically undercapitalized,” unless the depository institution can raise sufficient capital, merge with another financial institution or the OCC and the FDIC determine and document that “other action” would better achieve the purposes of the PCA capital requirements. The Company and the Bank are diligently working to evaluate and pursue strategic alternatives. There can be no assurance that the Company or the Bank will be successful in obtaining outside additional capital or merging with or being acquired by another company within any regulatory imposed time frame.

    As a member of the FDIC, the deposits at the Bank continue to be insured by the FDIC up to the legal maximum insurance limit – currently $250,000 per depositor, per deposit category. The Bank’s staff can help depositors with any questions abut the mechanics of FDIC deposit insurance.

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