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 Treasury Department Announces Intent to Sell Preferred Stock Positions in Public Dutch Auctions


8/17/2012


WASHINGTON – 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 today announced its intention to sell several preferred stock CPP investments.  Treasury intends to conduct public auctions of its preferred stock positions in the following five banks:

  • BNC Bancorp, High Point, North Carolina

  • First Community Corporation, Lexington, South Carolina

  • First National Corporation, Strasburg, Virginia

  • Guaranty Federal Bancshares, Inc., Springfield, Missouri

  • Mackinac Financial Corporation, Manistique, Michigan

TARP’s bank programs have already earned a significant profit for taxpayers. To date, Treasury has recovered $265 billion from TARP’s bank programs through repayments, dividends, interest, and other income – compared to the $245 billion initially invested.  Treasury has remaining outstanding CPP investments in 304 banks.

Treasury expects to commence the auctions, which will be registered public offerings, on or about August 21, 2012.  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 Treasury used to auction other CPP investments. More detailed guidance for the auctions will be available in prospectuses that will be filed by the issuers of the preferred stock prior to the opening of each auction. 

Merrill Lynch, Pierce, Fenner & Smith Incorporated (“Merrill Lynch”) and Sandler O’Neill + Partners, L.P. (“Sandler O’Neill”) have been retained as the auction agents and joint bookrunning managers for the offerings.

If investors do not have an account with Merrill Lynch and/or Sandler O’Neill, they may be able to participate in the auction through their own brokers, as a network of several dozen brokerage firms will be invited to aggregate suitable client orders and submit them to the auction agents and bookrunners.  

Registration statements relating to the preferred stock of BNC Bancorp, First Community Corporation, First National Corporation, Guaranty Federal Bancshares, Inc., and Mackinac Financial Corporation have been filed with the Securities and Exchange Commission but have not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the applicable registration statement becomes effective.

Prospective investors will be able to obtain copies of the prospectuses relating to the securities, when available, from Merrill Lynch via email at dg.prospectus_requests@baml.com or (800) 294-1322 or from Sandler O’Neill via email at syndicate@sandleroneill.com or (866) 805-4128.


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