TARP provided capital at an attractive price, he said. Created four years ago as the country's financial system teetered on the verge of collapse, TARP provided more than 700 banks with a combined $205 billion of capital by buying dividend-paying preferred shares. The goal was to support viable banks, but it became seen by the public as a government handout for troubled lenders.

Large institutions able to raise capital elsewhere abandoned the program to avoid the stigma, and others followed. As of last week, just 258 banks nationwide remain in TARP. Of the 20 Maryland banks that took TARP money, 10 are still in the program with a combined $108 million in TARP funds, according to the Treasury Department's latest figures.

Here and elsewhere, the remaining banks tend to be small institutions.

As of August, participants had an average of $936 million in assets , compared with $35.7 billion for those that previously exited TARP, including such giants as Citigroup and Bank of America, according to SNL Financial.

Also, compared to banks that have pulled out of the program, "current TARP participants look worse in terms of capital, profitability and asset quality," said Andrew Wolcott, an SNL analyst.

Meanwhile, the Treasury Department is making its own exit by winding down TARP. It has begun auctioning off some preferred shares to private investors. Banks, of course , can avoid this by repaying the government, buying back the preferred shares.

But some worry that Treasury is beating too hasty a retreat, dumping shares without considering whether the banks are strong enough yet.

"Community banks are still feeling the effects of the crisis and have only just begun their recovery," the office of the special inspector general for the Troubled Asset Relief Program reported last month. "Any TARP exit plan should ensure that the industry does not lose ground on that recovery."

All but one of the 10 Maryland banks that still have TARP funds have missed quarterly dividend payments to the federal government, the Treasury reported. The dividends are 5 percent a year for the first five years, and jump to 9 percent thereafter.

According to October figures from the Treasury, Maryland's largest remaining recipients of TARP funds are:

•First United Corp. of Oakland, which received $30 million in TARP money and is behind on eight dividend payments totaling $3 million.

•Severn Bancorp of Annapolis, which received $23.4 million and behind on two payments worth $584,825.

•Cecil Bancorp Inc. of Elkton, which has $11.5 million from TARP and is in arrears on 11 payments amounting to nearly $1.59 million.

The three banks did not return phone calls seeking comment.

Delmar has missed four dividend payments amounting to $490,500, according to the Treasury. Bank regulators required a suspension of dividend payments after the bank posted a loss last year, said Thomas, the president.

With 10 bank branches in Maryland and Delaware, Delmar lost $2.9 million after charging off some bad loans, the first loss in Thomas' 22 years there, he said. The company has the money to pay the dividends, he said, and will do so once it gets regulatory approval.

The bank would still be well-capitalized without TARP, but wants to maintain its capital cushion for now, Thomas said. Delmar plans to repay the TARP funds before the dividend bumps up to 9 percent in a couple of years, he said.

For big banks, it's easy to go into the market and raise capital, but that's not always an option for small banks, Thomas said.

"We don't have the luxury. We don't have an investment banker that can raise $10 million for us tomorrow," he said. "That's why smaller banks are still in the program."

Harbor Bankshares Corp. of Baltimore received $6.8 million in TARP investment, and has missed 9 payments totaling $765,000. The Treasury can nominate up to two members to a bank's board once it misses six payments, but that hasn't happened in Harbor's case, said Joseph Haskins Jr., its chairman, president and CEO.

A 2010 consent order with bank regulators has precluded Harbor from making dividend payments so the banking company can use that money instead to raise its capital levels, Haskins said. Harbor exceeds capital requirements, he said, adding that he expects dividend payments will be reinstated early next year after a bank examination.