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Tag Archives: TARP Redemption

December TARP Capital Infusions – TARP Map and List of Recipients Updated

During the month of December, the Treasury completed rounds fifty-two, fifty-three, fifty-four, fifty-five, and fifty-six of TARP Capital infusions.  In these five rounds, which closed on December 4,  December 11, December 18, December 22, and December 29, respectively, the Treasury purchased a total of approximately $159 million in securities from 37 financial institutions (24 of which previously received a TARP capital infusion).  Through December 2009, the Treasury had invested in 709 institutions, totaling approximately $204.9 billion.

In these five rounds, First Community Financial Partners received the largest infusion, $22 million, and Valley Financial Group Ltd. received the smallest infusion, $1.3 million.

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Email This Content Email This Content Posted in TARP Capital. Tagged with , , , , . By Dustin Hall - Friday, January 22, 2010

November TARP Capital Infusions – TARP Map and List of Recipients Updated

During the month of November, the Treasury completed rounds forty-nine, fifty, and fifty-one of TARP Capital infusions.  In these three rounds, which closed on November 6,  November 13, and November 20, respectively, the Treasury purchased a total of approximately $38 million in securities from 7 financial institutions (3 of which previously received a TARP capital infusion).  Through November 2009, the Treasury had invested in 696 institutions, totaling approximately $204.7 billion.

In these three rounds, Presidio Bank, San Francisco, California, received the largest infusion, $10 million, and Community Pride Bank Corporation, received the smallest infusion, $4.4 million.

Of note during the month of November, F&M Bancshares, HPK Financial Corporation, and Metropolitan Capital Corp., joined WashingtonFirst Bankshares, Inc. as institutions to receive a second investment from Treasury in connection with the TARP expansion for community banks.  F&M Bancshares received an additional $3.5 million and had already received $4.6 million; HPK Financial Corporation received an additional $5 million and had already received $4 million; and Metropolitan Capital Corp. received an additional $2.4 million and had already received $2 million.

During November, nine financial institutions (one of which had already re-paid a portion of its funds) re-paid their TARP capital investments: Bank of Ozarks, Inc. ($75 million), LSB Corporation ($15 million), Wainwright Bank & Trust ($22 million), Union Bankshares Corp. ($59 million), Midwest Regional Bancorp, Inc. ($700,000), 1st United Bancorp, Inc. ($10 million), Magna Bank ($3.5 million, approximately 25% of the outstanding amount), Frontier Bancshares, Inc. ($1.6 million), and Westamerica Bancorporation ($41.9 million, completing its repayment).  As of the end of November, 2009, 53 financial institutions had re-paid all, or some portion, of their TARP Capital investment, bringing the total amount re-paid to approximately $71 billion.  At the end of November 2009,  Treasury’s outstanding investment equaled approximately $133.7 billion.

As discussed in another post,  TARP has been extended until October 3, 2010. 

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Email This Content Email This Content Posted in TARP Capital. Tagged with , , , , . By Dustin Hall - Wednesday, December 16, 2009

September TARP Capital Infusions – TARP Map and List of Recipients Updated

During the month of September, the Treasury completed rounds forty-two, forty-three, forty-four, and forty-five of TARP Capital infusions.  In these four rounds, which closed on September 4, September 11, September 18, and September 25, respectively, the Treasury purchased a total of approximately $141 million in securities from 14 financial institutions.  Through September 2009, the Treasury had invested in 687 institutions, totaling approximately $204.6 billion.

In these four rounds, Community Bancshares of Mississippi, Inc., Brandon, Mississippi, received the largest infusion, $52 million, and State Bank of Bartley, Bartley, Nebraska, received the smallest infusion, $1.7 million. 

During September, seven financial institutions re-paid their TARP capital investments: Valley National Bancorp ($125 million (approximately 42% of the initial investment)), Centerstate Banks of Florida ($27.9 million), Wesbanco Bank, Inc. ($75 million), Manhattan Bank ($1.7 million), CVB Financial Corp. ($32.5 million (25% of the initial investment)), F.N.B. Corporation ($100 million), and Westamerica Bancorporation (approximately $42 million (50% of initial investment)).  Valley National and CVB Corp. had already re-paid a portion of their TARP investments, and Valley National still has $100 million remaining.  As of the end of September, 2009, 42 financial institutions had re-paid all, or some portion, of their TARP Capital investment, bringing the total amount re-paid to approximately $70.7 billion.  At the end of September 2009,  Treasury’s outstanding investment equaled approximately $133.9 billion.

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Email This Content Email This Content Posted in TARP Capital. Tagged with , , , , . By Dustin Hall - Monday, October 5, 2009

August TARP Capital Infusions – TARP Map and List of Recipients Updated

During the month of August, the Treasury completed rounds thirty-eight, thirty-nine, forty, and forty-one of TARP Capital infusions.  In these four rounds, which closed on August 7, August 14, August 21, and August 28, respectively, the Treasury purchased a total of approximately $130 million in securities from 9 financial institutions.  Through August 2009, the Treasury had invested in 673 institutions, totaling approximately $204.5 billion.

In these four rounds, U.S. Century Bank, Miami, Florida, received the largest infusion, $50 million, and Bank Financial Services, Inc., received the smallest infusion, $1 million. 

During August, three financial institutions re-paid their TARP capital investments: CVB Financial Corporation ($97.5 million (75% of the initial investment)), Bancorp Rhode Island, Inc. ($30 million), and State Bankshares, Inc. ($12.5 million (25% of the initial investment)).  As of the end of August, 2009, 37 financial institutions had re-paid all, or some portion, of their TARP Capital investment, bringing the total amount re-paid to approximately $70.3 billion.  At the end of August 2009,  Treasury’s outstanding investment equaled approximately $134.2 billion.

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Email This Content Email This Content Posted in TARP Capital. Tagged with , , , , . By Dustin Hall - Friday, September 4, 2009

Impressive Returns for Treasury in TARP CPP Program

Emphasizing the fact that the TARP Capital Purchase Program represents investments in financial institutions rather than any form of bailout, a recent SNL Interactive blog post (subscription required), illustrates that the Treasury Department earned a 12.74% annualized return on the CPP investments in the 21 banks that have returned all TARP funds.

The largest total returns to the Treasury have come from some of the largest recipients of TARP funds, namely Goldman Sachs Group Inc., Morgan Stanley and American Express Co., whose dividends on the government’s preferred shares and the redemption of warrants tied to the program yielded returns to Uncle Sam of 14.18%, 12.68% and 12.23%, respectively, according to SNL data.

Banks can redeem the warrants shortly after paying back TARP funds.  Banks send a valuation of the warrants, with the aid of a national investment bank, to the Treasury, which then decides whether or not to accept the price, negotiate it or contract a third-party for another valuation.  The aforementioned redemptions that generated outsized returns to the Treasury came in late July and early August after financial stocks have risen considerably from the levels seen in late May and early June when many of the first few warrant redemptions occurred.  Backlash in the media and from the Congressional Oversight Committee over the value of early warrant redemptions also caused the later transactions to be more favorable to the Treasury.

As explored in SNL’s post, the return to the Treasury (and cost to the TARP recipient) for public companies is largely tied to the value of the warrants received by Treasury, and therefore the price of the TARP recipient’s common stock.  Accordingly, for public TARP recipients, the total cost of the TARP investment remains variable and unknown.  Undertaking a capital raise (which may weigh on the common stock price) can, in turn, cause the institution to be able to strike a better price with the Treasury on the redemption of the warrants.

For TARP recipients that participated under the private company or Sub S term sheets, these fluctuations are irrelevant, as the Treasury exercises the warrant issued in connection with the Capital Purchase Program at closing in exchange for additional shares of preferred stock (or subordinated debentures for Sub S entities).  Accordingly, the total redemption cost for private and Sub S participates is fixed at the par value of those investments.

Email This Content Email This Content Posted in TARP Capital. Tagged with , . By Rob Klingler - Friday, August 28, 2009

July TARP Capital Infusions – TARP Map and List of Recipients Updated

During the month of July, the Treasury completed rounds thirty-four, thirty-five, thirty-six, and thirty-seven of TARP Capital infusions.  In these four rounds, which closed on July 10, July 17, July 24, and July 31, respectively, the Treasury purchased a total of approximately $1.2 billion in securities from 14 financial institutions.  Through July, the Treasury had invested in 664 institutions, totaling approximately $204.3 billion.

In these four rounds, Lincoln National Corporation, Radnor, Pennsylvania, received the largest infusion, $950 million, and Plato Holdings, Inc., Saint Paul, Minnesota, received the smallest infusion, $2.5 million.  Of note during the July closings, Yadkin Valley Financial Corporation received an additional $13.3 million investment after having received a $36 million investment on January 16, 2009.

During July, two financial institutions repaid their TARP capital investments: First Community Bankshares, Inc., Bluefield, Virginia ($41.5 million); and Old Line Bancshares, Inc., Bowie, Maryland ($7 million).  As of the end of July, 34 financial institutions had re-paid all, or some portion, of their TARP Capital investment, bringing the total amount re-paid to approximately $70.2 billion.  At the end of July,  Treasury’s outstanding investment equaled approximately $134.2 billion.

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Email This Content Email This Content Posted in TARP Capital. Tagged with , , , , . By Dustin Hall - Monday, August 10, 2009

Rounds 32 and 33 of TARP Capital Infusions – TARP Map and List of Recipients Updated

On June 23, 2009 and June 30, 2009, the Treasury announced the completion of the thirty-second and thirty-third rounds, respectively, of TARP Capital infusions.  In these two rounds, which closed on June 19 and June 26, the Treasury purchased a total of approximately $3.7 billion in securities from 26 financial institutions.   The Treasury has now invested in 650 institutions, totaling approximately $203.2 billion.

In these two rounds, Hartford Financial Services Group, Inc., Hartford, Connecticut, received the largest infusion, $3.4 billion.  Gold Canyon Bank, Gold Canyon, Arizona, received the smallest infusion, $1.6 million.

Of note during the last two weeks of June, 2009, eleven institutions re-paid approximately $68.3 billion.  The largest re-payments came from JPMorgan & Chase ($25 billion), The Goldman Sachs Group, Inc. ($10 billion), and Morgan Stanley ($10 billion).  As of June 30, 2009, the total amount re-paid under the TARP Capital Purchase Program is approximately $70.1 billion, and  Treasury’s outstanding investment equals approximately $133.1 billion. 

Also of note, the Treasury provided the warrant disposition information for a number of institutions that had previously re-paid the Treasury (please click here for our discussion of the disposition process).  The Treasury disposed of the additional investment of thirteen institutions (10 public (via warrants) and 3 private (via preferred stock)).  The proceeds from these dispositions totaled approximately $19.4 million. 

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Email This Content Email This Content Posted in TARP Capital. Tagged with , , , , . By Dustin Hall - Monday, July 6, 2009

To TARP or Not to TARP

As noted by the Wall Street Journal (subscription required), a steady stream of small banks are still lining up for government money.

Since May 31, 20 small banks have received a total of $164.1 million in taxpayer-funded capital, according to the Treasury’s latest available figures.  Half of those banks got the money in the same week that 10 big financial institutions gave theirs back.

Analysts see no end in sight to the trend.  The recession and borrowers are squeezing most of the 8,200 federally insured commercial banks and savings institutions in the U.S., so even a dollop of TARP funds could make a difference.  Some banks are turning to the government to fill a void left by investors who are leery about pouring money into the sector, despite the rebound by bank stocks since early March.

Meanwhile, the rules and stigma of TARP that turned some executives such as J.P. Morgan Chairman and CEO James Dimon against the program are irrelevant to small institutions.

Their employees usually don’t fly on corporate jets or collect hefty bonuses that trigger outrage from taxpayers, customers and Congress.  And curbs on dividend payments are a modest price to pay for greater assurance that the banks can plow ahead with their core mission to gather local deposits, lend them nearby and support local charities, some recent TARP recipients said.

It’s certainly a stretch to say the executive compensation restrictions are “irrelevant” to small institutions, but community banks generally don’t have the excesses that have drawn public and congressional scorn.  With the deadline for smaller community banks to apply to participate under the TARP Capital Purchase Program extended until November 9, 2009, many institutions are taking a fresh look as to whether to apply, even as larger institutions are making a decision as to whether to seek to redeem the TARP investment they’ve already received.

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Email This Content Email This Content Posted in Commentary, TARP Capital. Tagged with , . By Rob Klingler - Tuesday, June 30, 2009

Treasury Announces Warrant Repurchase and Disposition Process

On June 26, 2009, the Treasury announced its policy with regard to the repurchase or other disposition of the warrants it received from exchange-traded companies under the TARP Capital Purchase Program.

Under the terms of the Capital Purchase Program contract, publicly-traded institutions that have repaid the Treasury’s TARP investment have 15 days following repayment to make a determination of the “fair market value” to repurchase the warrants as well.  This determination is made by the institution’s Board of Directors, acting in good faith on the opinion of an independent banking firm.  The Treasury then has 10 days to either accept the “fair market value” offered by the company, or will initate the three appraiser process established in the original contract to determine a final “fair market value.”

If a company decides not to repurchase the warrants, the Treasury intends to sell the warrants through an auction process over the next few months.  The Treasury is in the process of establishing guidelines for these auctions.  Treasury also has the authority to dispose of warrants held by companies that have not redeemed their TARP investment generally (subject to a requirement to retain half the warrants through December 31, 2009).  Although the Treasury’s announcement of an upcoming auction does not specifically differentiate between companies that have and have not redeemed the TARP investment, presumably the upcoming auction is intended only for institutions that have elected not repurchase the warrants after redeeming the TARP investment.

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Email This Content Email This Content Posted in TARP Capital. Tagged with , , . By Rob Klingler - Saturday, June 27, 2009

Round 31 of TARP Capital Infusions – TARP Map and List of Recipients Updated

On June 16, 2009, the Treasury announced the completion of the thirty-first round of TARP Capital infusions.  The Treasury purchased a total of approximately $39 million in securities from 7 financial institutions on Friday, June 12, 2009, and has now invested in 624 institutions, totaling approximately $199.5 billion.

River Valley Bancorporation, Wausau, Wisconsin, received the largest infusion, $15 million.  SouthFirst Bancshares, Inc., Sylacuaga, Alabama, received the smallest infusion, $2.8 million.

Of note in this round, three institutions took advantage of the TARP Capital expansion for small community banks:  First Vernon Bancshares, Virginia Company Bank, and First Financial Bancshares. Under the expansion program, First Vernon and First Financial received investments of approximately 5% of their risk-weighted assets and Virginia Company received an investment of approximately 4% of its risk-weighted assets, while under the normal TARP Capital terms, they would have been eligible to receive only 3% of their risk-weighted assets.

As of June 16, 2009, twenty-two institutions have re-paid approximately $1.9 billion, and Treasury’s outstanding investment equals approximately $197.6 billion. (more…)

Email This Content Email This Content Posted in TARP Capital. Tagged with , , , . By Dustin Hall - Saturday, June 20, 2009