We have updated our TARP Map to include the locations of the institutions that received TARP Capital infusions in round 7.
In light of the merger of Powell Goldstein LLP and Bryan Cave LLP, effective January 1, 2009, BankPogo.com has a new name, a new domain, and a new look. The site is now called, simply, Bank Bryan Cave, and can now be reached at www.bankbryancave.com. We think the new look will make it even easier for visitors to find the information they are looking for, while also increasing the speed of the site.
Despite these changes, the most important things are not changing. The site is still being written by the same attorneys; and we still plan to focus on providing up-to-date information, written in plain English, on the Troubled Asset Relief Program, the Temporary Liquidity Guarantee Programs, and other items affecting community bankers.
As we complete the transition to Bank Bryan Cave, there will potentially be technical hiccups, and you may encounter a broken link, or other problem. If you notice a problem, or simply have a request, please send us an email. If you’ve previously bookmarked the site or subscribed to receive updates by e-mail (see the “Subscribe” button on the right hand side of the page), then you don’t need to anything, as they will continue to work.
On December 29, 2008, the Treasury announced the completion of the seventh round of TARP Capital infusions. The Treasury purchased a total of approximately $1.9 billion in securities from 43 financial institutions on Tuesday, December 23, and has now invested in 208 institutions, totaling $172.5 billion. This leaves approximately $77 billion for the Treasury to invest under the TARP Capital program.
M&T Bank Corporation of Buffalo, New York, received the largest infusion of the round, $600 million, while Saigon National Bank of Westminster, California, received the smallest infusion of the round, $1.5 million.
On December 29, 2008, the Treasury announced an additional TARP investment in GMAC of $5 billion in senior preferred equity plus an additional loan to General Motors of up to $1 billion. In addition to the $348.4 billion already allocated under the TARP program, the Treasury has now committed $4.4 billion more than than the $350 billion that the Treasury is authorized to commit without congressional action under the Troubled Asset Relief Program. The Treasury Department noted that it could provide financing to GMAC because they have not actually used all of the money allocated for recapitalizing banks. The investment in GMAC is not under the TARP Capital Purchase program, but the terms of the investment are generally similar to the private company TARP Capital term sheet (but the preferred shares will pay an 8% dividend).
On December 23, 2008, American Express and CIT Group received approval to get $5.72 billion under the TARP Capital Purchase program, as a result of their new status as bank holding companies. In addition to the investments closed through December 23, 2008, the Treasury has now allocated $178.2 billion of the $250 billion allocated to recapitalize banks under the TARP Capital Purchase program.
Assuming the Treasury ultimately requests approval for the second $350 billion and Congress approves the request, there is $71.8 billion remaining to be allocated under the TARP Capital Purchase program. Without such congressional approval, there is $67.4 billion remaining.
On December 23, 2008, the Treasury issued a press release announcing that “Treasury Provides TARP Funds to Local Banks.” Through December 23, 2008, the Treasury had purchased preferred stock and warrants from 207 financial institutions, totaling $162.5 billion dollars (plus an additional $10 billion to Merrill Lynch pending its sale to Bank of America).
Out of the 207 completed TARP Capital transactions through December 23, 2008, the Treasury has completed 34 transactions for a total investment of $469.9 million under the private TARP Capital terms. While this still represents a minuscule number of the private financial institutions that should be eligible for TARP Capital investments, these private transactions were all completed in the last two rounds of capital infusions (December 19 and December 23).
The Treasury’s sixth round of TARP Capital infusions included five more public companies companies that are traded on the Over-The-Counter Bulletin Board. Three institutions received TARP Capital under the public company term sheet, while the other two institutions received TARP Capital under the non-public company term sheet.
As a result, it appears clear that the Treasury is willing to allow public reporting companies that are traded over the OTCBB participate in the TARP Capital program under either the public company terms or the non-public company terms. We still haven’t seen any public reporting companies that are traded over the Pink Sheets receive TARP Capital funds, but one would presume that they will receive the same deference shown to OTCBB companies.
The Treasury has provided us with more detailed calculations for the Warrant Preferred Shares to be issued by private companies participating in the TARP Capital program. (As a reminder, the “warrants” for private companies are essentially warrants only in name, as the Treasury intends to exercise them immediately, causing additional shares of preferred stock, the Warrant Preferred Shares, to be outstanding immediately following the capital infusion.)
In order to calculate the number of Warrant Preferred Shares that are subject to the warrant (before net settlement), the following calculations need to be made:
These calculations result in the Treasury receiving the full 5% of their TARP Capital investment as Warrant Preferred Shares, and avoids any reduction as a result of the net exercise (and further emphasizes that the warrants are only warrants in name.)
On December 19, 2008, the Treasury announced that it would be supporting General Motors and Chrysler using the authority provided by the Troubled Asset Relief Program. As a result, the Treasury has allocated effectively all of the first $350 billion, and will need to seek approval from Congress to allocate additional funds.
However, as noted by the Treasury, the actual disbursement of the first $350 billion remains subject to the approval of TARP Capital applications submitted by banks, many of which remain with the regulators and are not expected to reach the Treasury for review until the first quarter of 2009.
The first $350 billion under TARP has been allocated as follows:
In total, $348.4 billion has been allocated. (Note: while much of the commentary states that Treasury is “out of money” pending Congressional approval to release the remaining TARP funds, the Treasury still has $1,600,000,000 that it can disperse at its discretion.)