WASHINGTON--The Treasury Department said Monday it will sell its
stakes in seven banks that received rescue funds at the height of
the financial crisis, continuing the process of winding down the
rescue launched in 2008.
The public offering of preferred stock, first outlined by the
department last week, will begin Monday and will be priced through
a modified Dutch auction that closes Wednesday evening, the
Treasury said in a statement.
More than three years after the launch of the Troubled Asset
Relief Program in the fall of 2008, the federal government still
owns stakes in 335 banks, mostly small ones that have been unable
to fully pay back the government. The Treasury also holds stakes in
General Motors Co. (GM), insurer American International Group Inc.
(AIG) and Ally Financial Inc.
The government has recovered $343 billion, or more than 80% of
the $416 billion spent under TARP. The Treasury has recovered $264
billion from banks that received TARP money, more than the $245
billion initially invested.
To recoup its investments, Treasury said it would auction its
shares of Fidelity Southern Corp. (LION) of Atlanta; Firstbank
Corp. (FBMI) of Alma, Mich.; First Citizens Banc Corp. (FCZA) of
Sandusky, Ohio; MetroCorp Bancshares Inc. (MCBI) of Houston;
Peoples Bancorp of North Carolina Inc. (PEBK) of Newton, N.C.;
Pulaski Financial Corp. (PULB) of St. Louis; and Southern First
Bancshares Inc. (SFST) of Greenville, S.C.
So far this year, the Treasury has auctioned off its preferred
stock in 13 banks. That doesn't wipe out the banks"
obligations--the preferred shares don't have voting rights but do
come with dividends that are set to rise to 9% from 5% around the
end of 2013.
Earlier this week, the Treasury Department sent a letter to 200
small banks, saying that it intends to create pools of investments
in small banks that also will be auctioned off.
Due to the small size of Treasury's investments in those banks,
"we believe that a pooled auction may represent the best approach
to attract new private capital for community banks and recover
taxpayer dollars," Michael Harris, director of the bank-rescue
program for Treasury, wrote in the letter.
-Sarah Portlock and Alan Zibel contributed to this article.
Write to Andrew Ackerman at andrew.ackerman@dowjones.com