When Treaty Oak Bank applied to the federal government for $3.3 million in financing in late 2008, the bank projected to post a $198,000 profit during 2009. Instead, it posted a $6.9 million loss.
The Austin-based bank, which was placed under a consent order by federal regulators in February and agreed last month to be bought by a Fort Worth company, received the capital by selling equity to the government through the Troubled Asset Relief Program, or TARP, according to its October 2008 application filed with the Treasury Department.
The federal government essentially became a shareholder in the community bank that reported a rapidly rising number of nonperforming loans during an 18-month period. Now, two years later, it’s unclear how much that equity investment is worth — if anything at all.