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Auction to close on August 1.
As part of its ongoing efforts to wind down and recover its remaining Capital Purchase Program (CPP) investments under the Troubled Asset Relief Program (TARP), the U.S. Department of the Treasury has announced its intention to sell several preferred stock and subordinated debt CPP investments.
Reports say that the Treasury intends to conduct auctions for all of its preferred stock and subordinated debt positions (the CPP Securities) in the following six institutions:
- Calvert Financial Corporation (Ashland, MO);
- Community Pride Bank Corporation (Ham Lake, MN);
- First Banks, Inc. (Clayton, MO);
- First Intercontinental Bank (Doraville, GA);
- Universal Bancorp (Bloomfield, IN); and
- Virginia Company Bank (Newport News, VA)
These auctions are part of a series of auctions that will include the CPP Securities of the 53 financial institutions included in the Treasury’s December 18, 2012 announcement and are part of the overall strategy that Treasury outlined 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.
Further to this, the Treasury indicated that it intends to use a combination of repayments, restructurings, and sales to manage and recover those remaining investments.
TARP’s bank programs have already earned a significant profit for taxpayers. To date the Treasury has successfully recovered $271 billion from TARP’s bank programs through repayments, dividends, interest, and other income – compared to the $245 billion initially invested.
Approximately $2 billion of the repayments were refinanced under the Small Business Lending Fund (SBLF). Congress created the SBLF outside of TARP and required the Treasury to let CPP institutions repay TARP funds by borrowing under that program but it has remaining outstanding CPP investments in 129 institutions.
The Treasury expects to commence the auctions, which will be offered principally to domestic qualified institutional buyers and certain domestic institutional accredited investors, on or about July 29, 2013.
The auctions are expected to close at 6:00 pm, New York City time, on August 1, 2013. These offerings will be executed using a modified Dutch auction methodology that establishes a market price by allowing investors to submit bids at specified increments similar to the process the Treasury used to auction other CPP investments. The auction procedures will not include the submission of “all or none” bids.
