New Castle's Americana Bancorp changes mind on TARP money

The IBJ

Ameriana Bancorp of New Castle this afternoon said it will not accept $9.8 million from the Troubled Asset Relief Program-or TARP-after all.

The move follows Congress' decision to retroactively attach new strings to acceptance of TARP funds. Language included in the stimulus package approved Feb. 13 imposes wide-ranging restrictions on executive compensation at companies receiving federal bailout money.

CEO Jerome Gassen told IBJ last week that he and the board were having second thoughts about accepting the money. He said the new language would have barred Ameriana executives from receiving severance if the bank were acquired, even though their employment contracts entitle them to it.

"You get a little concerned about government mandating what you can and can't do," Gassen said last week.

Ameriana was eligible to receive the money because the government deemed it healthy.

The new restrictions didn't cause First Merchants Corp. to turn down its TARP money. The Muncie bank today announced it received the $116 million under the program.