TARPedBanks (< 20)

TARPedBank Report: Welcome to the Recovery

September 06, 2010 – Comments (4)

Title inspired by Treasury Secretary Geithner (see end of entry).

Housekeeping:

Things have been pretty slow in the world of TARP since the last update.  The following six banks have repurchased their TARP preferred stock and end pick orders have been entered.

Columbia Banking System, Inc.  (COLB)
Boston Private Financial Holdings, Inc. (BPFH)
Fulton Financial Corporation (FULT)
Citizens & Northern Corporation (CZNZ)
Lakeland Financial Corporation (LKFN)
Lincoln National Corp. (LNC)

The following four banks repurchased their TARP preferred, but were never on the TARPedBanks scorecard; probably because they either aren’t public or weren’t ratable in CAPS.

Texas National Bancorporation
FPB Financial Corp.
First Southern Bancorp, Inc.
Green City Bancshares, Inc.

Three banks made a partial repurchase.  They will remain TARPedBanks picks until the repurchases are completed.

Lakeland Bancorp, Inc. (LBAI)
Sandy Spring Bancorp, Inc. (SASR)
Susquehana Bancshares (SUSQ)

New TARP Program:

I missed a new program in TARP, the Community Development Capital Initiative (CDCI).  This was announced back in Feb ’10, but didn’t get implemented until August.  From the press release, “Under this program, CDFI banks, thrifts and credit unions - which have been certified by Treasury as targeting more than 60 percent of their small business lending and other economic development activities to underserved communities - would be eligible to receive capital investments at a dividend rate of 2 percent, compared to the 5 percent rate that was offered under the Capital Purchase Program (CPP).”

So far, eleven banks (listed below) have swapped their Capital Purchase Plan preferred for CDCI preferred and, in two cases, also got an additional taxpayer investment.  The program is small by TARP standards, at least so far.  The total invested in all eleven participants a little over $143 million.

Mission Valley Bancorp
Carver Bancorp, Inc.
Southern Bancorp, Inc.
PGB Holdings, Inc.
Citizens Bancshares Corporation
First American International Corp.
Tri-State Bank of Memphis
Premier Bancorp, Inc.
University Financial Corp, Inc.
M&F Bancorp, Inc.
Guaranty Capital Corporation

Common Stock Sales:

Treasury continues to sell its Citigroup common stock.  The current trading plan will halt on 30 Sep for the quiet period ahead of earnings even if the share sales haven’t been completed.  The latest press release doesn’t mention it, but it’s reasonable to assume there will be a new trading authorization to sell shares after the quiet period if there are still some on the TARP books.  So far, Citigroup has consistently traded above Treasury’s $3.25 cost basis.  If that continues, C will almost certainly be the taxpayers’ most profitable TARP holding.  In addition to the remaining common, Treasury holds some preferred and two series of warrants; no plan has been announced for selling those assets.

Treasury will be a seller of at least some of its General Motors common stock in the upcoming IPO.  Treasury holds both common and preferred stock; Treasury's preferred will not be part of the IPO, although I believe GM will be issuing a new preferred series in the IPO.  This is an exciting event because it means there will be a new addition to the TARPedBanks scorecard once GM is once again ratable in CAPS.  Unlike Citi, it’s very unlikely taxpayers will turn a profit on GM.  It will probably compete with AIG for the title of ‘biggest loser’ among TARP holdings.

I’m not even thinking about trying to buy GM in or following the IPO.

Spare Change:

There are still a large number of banks that haven’t started repurchasing their preferred stock, including several with over $1 billion held by TARP.  I find it a little troubling that in the ‘summer of recovery’ and with Fed rates near zero there are so many banks that haven’t been able to even start making a dent in repaying TARP.

Speaking of the ‘summer of recovery,’ the Treasury press release page link to Sec. Geithner’s 8/2 op-ed titled ‘Welcome to the Recovery’ is broken.  I’m sure it’s just a coincidence that that’s the only link not working on the page.  The New York Times still has the op-ed up here for anyone interested.

Fool on!

Russ (aka rd80)