This paper examines to what extent banks with outstanding Troubled Asset Relief Program (TARP) debt are perceived as potential takeover targets. Each bank\u27s price-to-tangible-book value is related to a series of fundamental bank ratios and market index as well as a series of TARP variables that capture if a bank took TARP and for how long. The results show that middle tiered banks (with assets between 500 million and 5 billion) are positively associated with retaining TARP, which may suggest they are perceived as takeover targets. In addition, banks with higher valuations have lower non-performing assets, net charge offs, loan loss reserves, tier 1 capital ratios, real estate and development loans. A higher price-to-tangible-book value is also associated with higher returns on average tangible common equity and interest income
