The U.S. Department of Treasury has priced auctions of preferred Capital Purchase Program (CPP) stock for five institutions as part of the government's strategy to wind down the Troubled Asset Relief Program (TARP) and recover remaining CPP investments, according to an announcement from Treasury.
Treasury said it expects the aggregate gross proceeds to taxpayers from the auctions to be about $15.4 million. The five institutions auctioning the CPP stock are as follows:
- Citizens Bank & Trust Company (Covington, Louisiana): 2,520 shares totaling about $1.64 million
- CSRA Bank Corp. (Wrens, Georgia): 2,520 shares totaling about $3.08 million
- Metropolitan Capital Bancorp (Chicago, Illinois): 4,490 shares totaling about $4.23 million
- Prairie Star Bancshares (Olathe, Kansas): 2,940 shares totaling about $3.51 million
- SouthFirst Bancshares (Sylacauga, Alabama): 2,898 shares totaling about $2.89 million
The auctions are expected to close on or about June 29, 2015, subject to customary closing conditions, and the offerings were priced through modified Dutch auctions, according to Treasury.
"These auctions are part of the strategy that Treasury outlined in May 2012 for winding down its remaining TARP bank investments in a way that protects taxpayer interests and preserves the strength of our nation’s community banks," Treasury said in a press release. "Treasury indicated that it intends to use a combination of repayments, restructurings, and sales to manage and recover those remaining investments."
Signed into law by the Bush administration, TARP was created in 2008 at the height of the nation's financial crisis in order to implement programs to stabilize the financial system during the financial crisis of 2008. Treasury initially invested $245 billion in TARP's bank programs, and to date Treasury has recovered $275 billion through repayments, dividends, interest, and other income. The $30 billion overage has resulted in a significant profit for taxpayers. The Small Business Lending Fund (SLBF) has resulted in the repayment of about $2.2 billion in TARP funds by CPP institutions that refinanced their repayments under the SLBF. Congress created the SBLF as a way for CPP institutions to repay TARP funds.
Treasury said the vast majority of the $275 billion recovered to date came from repayments at par, dividends, interest, and sales of warrants. The amount recovered as a result of CPP preferred stock sales amounts to about 1 percent ($3 billion) of that total of $275 billion.
TARP is expected to cost the government about $37.5 billion, far less than the $700 billion which Congress authorized for the program. Much of the cost has gone toward TARP to assist struggling homeowners avoid foreclosure. Click here to see Treasury's Monthly 105(a) Report to Congress on TARP, or click here to see an interactive MAP showing how Treasury has invested and recovered TARP funds.