It's not just the nation's megabanks that are getting infusions of capital through the U.S. Department of the Treasury's massive Troubled Assets Relief Program (TARP). Three Inland Northwest banks have received a combined $454 million from the government, and the total could top $600 million if two other banks that have applied for the program also make final decisions to participate in it.

Meanwhile, several local banks say they won't participate in TARP, which is done through government purchases of preferred stock in the institutions.

As of Jan. 13, Treasury reported Spokane-based Sterling Financial Corp. had received $303 million; Walla Walla, Wash.-based Banner Corp. had received $124 million; and Sandpoint-based Intermountain Community Bancorp had received $27 million.

Spokane-based American West Bancorp, has applied for $57 million in TARP funds, but hasn't heard from Treasury whether it has been approved, says Patrick J. Rusnak, AmericanWest's president and CEO.

WTB Financial Corp., the Spokane-based bank-holding company that owns Washington Trust Bank, has received preliminary approval for up to $110 million, but hasn't made a final decision whether to participate in the program, says Peter Stanton, the company's chairman and CEO.

Banner Corp., the bank-holding company that owns Banner Bank, has ramped up loan promotions since receiving the TARP funds, says Douglas L. Bayne, the bank's vice president and director of marketing.

"We're talking about loans," he says. "We're actively telling people there is a funding source available."

Bayne notes that the purpose of the TARP program is to stimulate lending by banks to businesses and other customers to accelerate the country's climb out of recession. The capital infusion also will give financial institutions flexibility in considering whether to acquire other banks as the financial-services industry continues to consolidate, he adds.

Through TARP, the U.S. government buys stakes in participating hanks in the form of preferred stock. Banks agree to provide a 5 percent dividend on that stock for the first five years and 9 percent after that. Banks can buy back the preferred shares after three years.

In most cases, the U.S. government receives warrants through which it can buy common stock at a price that's fixed for 10 years. For instance, in Sterling's case the government has the option to buy 6.4 million shares of Sterling's common stock for $45.5 million.