The U.S. Treasury announced last week a plan to sell preferred stock and subordinated Capital Purchase Program investments at auction as part of its ongoing effort to wind down and recover CPP investments under the Troubled Asset Relief Program.
The auctions for stock and CPP securities will be held as part of a series of auctions that include CPP securities of 53 institutions. The strategy was designed with the aim of protecting taxpayer interest, promoting financial stability and preserving the strength of America’s community banks.
Auctions will be held in Alarion Financial Services, ColoEast Bankshares, Commonwealth Business Bank, Crosstown Holding Company, Fidelity Federal Bancorp, Mountain Valley Bancshares, Omega Capital Corp. and Premier Financial Corp.
To date, the Treasury has recovered $271 billion from TARP’s bank programs through repayments, dividends, interest and other income. Approximately $2 billion in repayments were refinanced under the Small Business Lending Fund, which was created outside of TARP and allows the Treasury to permit CPP institutions to repay TARP funds through borrowing under the program.
The auctions are expected to begin on or around Monday and are expected to close by Thursday. Offerings will be executed using a modified Dutch auction methodology.
CPP securities will be offered only to domestic “qualified institutional buyers,” certain “accredited investors” and, in certain instances, directors and executive officers of the respective CPP securities issuers.