Auctions Part of Treasury’s Continued Efforts to Wind Down TARP’s Bank Programs
Proceeds Deliver Additional Profit for Taxpayers on TARP’s Bank Programs
WASHINGTON – As part of the strategy it outlined in May for winding down its remaining Troubled Asset Relief Program (TARP) bank investments, the U.S. Department of the Treasury announced that it priced secondary public offerings of the preferred stock it holds in the following four financial institutions at the following prices per share:
- BNC Bancorp (High Point, North Carolina), all of its 31,260 shares at a price of $921.23 per share (approximately $28.4 million net proceeds);
- First Community Corporation (Lexington, South Carolina), all of its 11,350 shares at a price of $982.83 per share (approximately $11.0 million net proceeds);
- First National Corporation (Strasburg, Virginia), all of its 13,900 Series A shares at a price of $882.50 per share and all of its 695 Series B shares at a price of $912.50 per share (approximately $12.7 million net proceeds); and
- Mackinac Financial Corporation (Manistique, Michigan), all of its 11,000 shares at a price of $958.09 per share (approximately $10.4 million net proceeds).
Treasury did not proceed with the sale of its preferred stock in Guaranty Federal Bancshares, Inc. (Springfield, Missouri), due to the fact that Treasury did not receive sufficient bids above the minimum price for the securities in accordance with the auction procedures. Treasury set a minimum price for each security as part of the auctions in order to protect taxpayer interests.
The aggregate net proceeds to Treasury from the offerings are expected to be approximately $62.4 million. 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 August 15, 2012.
TARP’s bank programs have already earned a significant profit for taxpayers. Including the expected proceeds from the transactions announced today, Treasury has now recovered $266 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.
These auctions are part of the strategy that Treasury outlined in May 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.
The closings are expected to occur on or about August 29, 2012, subject to customary closing conditions. The offerings were priced through modified Dutch auctions. 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 August 21, 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.
Copies of the final prospectus supplements relating to the offerings may be obtained, when available, from Merrill Lynch via email at firstname.lastname@example.org or (800) 294-1322 or from Sandler O’Neill via email at email@example.com or (866) 805-4128.
Before you invest, you should read the prospectus and prospectus supplement in the registration statement and other documents the applicable issuer has filed with the SEC for more complete information about the issuer and the preferred stock.
This news release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
For more details on Treasury’s lifetime cost estimates for TARP programs, please visit Treasury’s Monthly 105(a) Report to Congress on TARP at this link.