State Bancorp of Jericho said Wednesday its soon-to-be new owner has paid back the $36.8 million that State borrowed under the federal government's controversial Troubled Asset Relief Program -- the bank bailout.
Technically, State used funding from New Jersey-based Valley National Bancorp to redeem $36,842,000 of its outstanding preferred stock issued to the U.S. Department of the Treasury on Dec. 5, 2008, under the troubled asset program, which was instituted as fears for the solvency of the financial system mounted.
In a State proxy statement in November urging shareholders to approve the takeover by Valley, State said it had financial and business constraints that left it with only limited ability to redeem the TARP preferred stock. Valley's ability to redeem that stock was offered as a reason to approve the takeover, which shareholders did.
State, the holding company for State Bank of Long Island, said the merger is expected to be effective Jan. 3.
The deal, a one-for-one stock exchange, was worth $222 million when it was first announced in April.
The combined bank will rank as the 37th largest U.S. publicly traded commercial bank, Valley said in April.
The $700-billion TARP, proposed and signed by President George W. Bush and supported by incoming President Barack Obama, helped shore up banks that had been pummeled by the widespread failures of mortgage-backed securities as the housing bubble burst. Obama would later call it "about as popular as a root canal" among the American public, although many economists contend it helped to prevent the recession from becoming a depression.