On April 21, 2009, the Treasury announced the completion of the twenty-third round of TARP Capital infusions. The Treasury purchased a total of approximately $40.9 million in securities from 6 financial institutions on Friday, April 17, 2009, and has now invested in 554 institutions, totaling approximately $198.9 billion.
On April 7, 2009, the Treasury announced the completion of the twenty-first round of TARP Capital infusions. The Treasury purchased a total of approximately $54.8 million in securities from 10 financial institutions on Friday, April 3, 2009, and has now invested in 543 institutions, totaling approximately $198.8 billion.
Community First Bancshares, Inc, of Harrison, Arkansas, received the largest infusion, $12.7 million. BCB Holding Company, of Theodore, Alabama, received the smallest infusion, $1.7 million. (more…)
On March 31, 2009, five banks announced that they had completed redemptions of their TARP preferred stock.
- Signature Bank – $120 million
- Old National Bancorp – $100 million
- Bank of Marin Bancorp – $28 million
- IBERIABANK Corporation – $90 million
- Centra Financial Holdings, Inc. - $15 million
In their respective press releases, four institutions emphasized in one form or another their financial strength following the redemption. Two institutions emphasized the changing operating restrictions of participation that caused them to decided to repurchase the preferred shares.
On March 30, 2009, the Wall Street Journal reported that the Treasury Department estimates that about $134.5 billion remains under the Troubled Asset Relief Program, or TARP. In order to reach that figure, the Treasury considered funds already invested under the TARP Capital Purchase Program and then added $25 billion as a “conservative estimate” of funds that the Treasury believes will be paid back shortly.
The New York Times estimate, on the other hand, shows a total of $106.6 billion that is either uncommitted or pending (under the Capital Purchase Program). Assuming that you add the same “conservative estimate” of repayments, that would lead to a total of $131.6 billion remaining, or $2.9 billion less than the Treasury’s estimate.
Neither the Wall Street Journal nor the Treasury has provided a breakdown of how $134.5 billion is remaining out of the $700 billion TARP total. Assuming $134.5 billion would be remaining after $25 billion is redeemed, total expenditures to date should be $589.5 billion. (Assuming The New York Times’ estimate is correct, expenditures to date would be $593.4 billion.)
Despite the fact that no Subchapter S institution has yet received TARP Capital funds, and a term sheet for mutual organizations has not yet been announced, the Treasury has now provided documentation on how a TARP Capital recipient would redeem their investment, as permitted by the American Recovery and Reinvestment Act of 2009. On March 25, 2009, the Treasury published TARP Capital Purchase Program repurchase documents for public and private TARP Capital recipients.
Both the public and private documents contemplate the repurchase of all, or a portion of, the Company’s TARP Capital investment. Under the public company repurchase documents, if a Company repurchases 100% of the Treasury’s preferred stock, then the Company is also given 15 days to either repurchase the warrant for common stock at fair market value, or to issue a replacement warrant that does not contain the adjustment to reduce the number of shares covered by the warrant in the event of a qualified equity offering. Under the private company repurchase documents, once a Company repurchases 100% of the primary preferred shares (the ones initially paying 5%), it can also repurchase up to 100% of the warrant preferred shares (paying 9%).
The Treasury has provided a list of FAQs to address the changes to the Capital Purchase Program resulting from the American Recovery and Reinvestment Act of 2009 (the “Act”). These FAQs deal with how an institution that has received TARP Capital can redeem the investment and with how the redemption affects other aspects of the investment.
Importantly, the FAQs explicitly acknowledge that the participating institution may (1) redeem the investment under terms different from the terms contained in the original transaction documents, and (2) redeem less than the whole amount — 25% of the issue price is the minimum amount that can be redeemed.
According to the FAQs, an institution wishing to redeem should notify the Treasury and the institution’s primary regulator, who will then consult with the Treasury regarding the redemption. Detailed payment instructions will be given to the institution after the notification and consultation process.
The institution must pay any dividends, whether cumulative or non-cumulative, that are accrued and unpaid at the time of redemption, even if the institution did not or would not actually declare dividends for the period.
The Treasury has setup a new e-mail address to handle notifications of redemption: CPPRedemption@do.treas.gov.