Lafayette-based IberiaBank Corp. is now saying thanks but no thanks to the U.S. Treasury’s Capital Purchase Program, which was designed for healthy banks. Last year, IberiaBank was one of three Louisiana-based banks, along with MidSouth and Whitney, to participate in the CPP, a component of the Treasury’s $750 billion Troubled Asset Relief Program originally designed to bail out of the financial industry. However, all three have been reconsidering accepting the capital since the government’s recent $787 billion economic stimulus program imposed new restrictions on participating banks. Primarily, the government is now imposing strict limits on executive bonuses. IberiaBank sold $90 million in preferred stock to the Treasury through the program, Whitney sold $300 million and MidSouth sold $20 million.

IberiaBank is the first Louisiana bank to file to return the CPP funds, but MidSouth and Whitney have indicated they may follow suit. Whitney CEO John Hope III recently told The Times-Picayune that the rules are “at the point where the cost now far exceeds the benefits.” MidSouth CEO Rusty Cloutier has frequently been quoted saying that solvent community banks are now being punished for the crimes of the too-big-to-fail banks that brought on the financial crisis. “[CPP] was sold to us by the feds as a partnership,” he told the Associated Press, “but it’s turning out to be something very different. It’s looking more and more like the federal government wants to treat this as a needs-based issue, and we didn’t need the money.” IberiaBank President and CEO Daryl Byrd released the following statement regarding his company’s decision to send back the bailout funds:

“The Capital Purchase Program under TARP has assisted in the effort to provide stability to the financial services industry during this period of unprecedented uncertainty. When we decided to accept funds under this program, we believe we were the type of healthy bank that could employ the funds in the manner consistent with the goals initially set out by Congress and the Treasury in supporting the expansion of credit to the markets we serve. We believe recent actions, interpretations, and commentary regarding various aspects of the program places our Company at an unacceptable competitive disadvantage. Our Board of Directors has determined that continued participation in this program is no longer in the best interest of our Company and its shareholders. Our Company occupies a unique position of strength, growth, and opportunity relative to other participants in the financial services industry. We are pleased to be able to redeem the Treasury’s investment in our Company.”

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