As part of the strategy it outlined last month for winding down its remaining Troubled Asset Relief Program (TARP) bank investments, the U.S. Department of the Treasury today announced that it priced secondary public offerings of the preferred stock it holds in the following seven financial institutions at the following prices per share:
- Taylor Capital Group, Inc. (Rosemont, IL), all of its 104,823 shares priced at $893.50 per share (approximately $92 million net proceeds);
- Ameris Bancorp (Moultrie, GA), all of its 52,000 shares priced at $930.60 per share (approximately $48 million net proceeds);
-First Defiance Financial Corp. (Defiance, OH), all of its 37,000 shares priced at $962.66 per share (approximately $35 million net proceeds);
- Farmers Capital Bank Corp. (Frankfort, KY), all of its 30,000 shares priced at $739.89 per share (approximately $22 million net proceeds);
- LNB Bancorp Inc. (Lorain, OH), all of its 25,223 shares priced at $869.17 per share (approximately $22 million net proceeds);
- First Capital Bancorp Inc. (Glen Allen, VA), all of its 10,958 shares priced at $920.11 per share (approximately $10 million net proceeds); and
- United Bancorp Inc. (Ann Arbor, MI), all of its 20,600 shares priced at $825.50 per share (approximately $17 million net proceeds).
The aggregate net proceeds to Treasury from the seven offerings are expected to be approximately $245 million, which was an overall total of 15 percent above the minimum prices set for the auctions. The prices above reflect a liquidation amount per share of $1,000 for the preferred stock of each institution. At settlement, winning bidders will be required to pay the clearing price for the preferred stock plus accrued and unpaid dividends on the preferred stock from and including May 15, 2012.
TARP’s bank programs have already earned a significant profit for taxpayers. Including the expected proceeds from today’s transaction, Treasury has now recovered $264 billion from TARP’s bank programs through repayments, dividends, interest, and other income – compared to the $245 billion initially invested. Each additional dollar recovered from TARP’s bank programs is an additional dollar of profit for taxpayers.
Today’s auctions are part of the strategy that Treasury outlined last month for winding down its remaining TARP bank investments in a way that protects taxpayer interests, promotes financial stability, and preserves the strength of our nation’s community banks. Treasury indicated that it intends to use a combination of repayments, restructurings, and sales to manage and recover those remaining investments. Treasury intends to announce additional CPP preferred stock auctions in the coming weeks.
“We’re pleased with the results of today’s auction, which enabled these community banks to replace temporary government support with new private capital, and keeps us on track to earn a positive return for taxpayers from TARP’s bank programs in excess of $20 billion,” said Assistant Secretary for Financial Stability Timothy G. Massad. “TARP played a critical role in stabilizing an economy in freefall during the financial crisis, and we are continuing to make good progress in winding down the program and recovering taxpayer dollars.”
The closing is expected to occur on or about June 19, 2012, subject to customary closing conditions. The offering was priced through a modified Dutch auction. Merrill Lynch, Pierce, Fenner & Smith Incorporated (“Merrill Lynch”) and Sandler O’Neill + Partners, L.P. (“Sandler O’Neill”) were the auction agents and joint bookrunning managers for the offerings. Houlihan Lokey Capital, Inc. is serving as financial advisor to Treasury with respect to the management and disposition of its Capital Purchase Program investments.
Each series of preferred stock is being sold pursuant to an effective shelf registration statement previously filed by the applicable issuer with the Securities and Exchange Commission (the “SEC”). Preliminary prospectus supplements related to each offering were filed with the SEC on June 11, 2012, and a final prospectus supplement related to each offering will be filed by the applicable issuer with the SEC and will be available on the SEC’s website at http://www.sec.gov.