Following a report in April that many small, community banks are unable to repay their Troubled Asset Relief Program loans, the Treasury Department said Thursday it would sell or restructure the majority of its remaining bank investments.

Timothy Massad, assistant secretary for financial stability at the Treasury, wrote in a blog post that TARP has produced a $19 billion positive return, collecting $264 billion in repayments and other income against the original $245 billion investment.

However, 343 banks, mostly small community banks, remain in the TARP program and owe approximately $12 billion.

“Treasury has three basic options: We can wait for the banks to repay Treasury, restructure the investments, or sell the investments. We plan to wind down the portfolio, as we have done to date, using a mix of all three,” Massad said.

Some banks can repay their TARP loans; however, Massad said the Treasury does not expect “a majority” of banks remaining in TARP to repay “in the foreseeable future.”

As a result, the Treasury will “move forward with other strategies to wind down the portfolio,” which includes plans to restructure or sell the investments, Massad said.

Some banks have proposed restructuring the investments through mergers or attempts to raise new capital. To date, the Treasury has participated in approximately 20 such deals, and will approve more, but “only if the terms represent the best deal for taxpayers under the circumstances.”

Other investments will be sold at auction, either individually, or grouped together into pools, he said. The sales will occur over time, in stages, and Massad said the Treasury will evaluate its strategies as it proceeds.

The sale prices may be less than the original par value, he said, but the Treasury has already estimated that the value is less than par in its budget projections. And, because TARP overall is in the black, “every additional dollar we recover from these investments is an additional return for taxpayers,” he said.