Daniel Gross

Five Transactions Yield $5.6 B in TARP Returns for Treasury

Contrary Indicator

By Daniel Gross

We've been following the slow motion winding down of the crisis-era rescue programs, chief among the TARP. In the past week, a series of transactions and stock repurchases have returned about $5.62 billion to federal coffers. The most recent report can be seen here.

These are the recent transactions:

On March 9, Mainline Bancorp, of Ebensburg, Pennsylvania, bought back $4.5 million in preferred shares and bought back preferred stock it had given Treasury in lieu of warrants for $225,000. The transaction came about as a result of S&T Bancorp's acquisition of Mainline,

On March 8, Treasury received $5.576 billion from selling shares of AIG. As announced, Treasury sold about $3 billion in shares it owns in the insurance company to public investors, and another $3 billion back to the company. The total it received is net of commissions and fees. Treasury still owns about 70 percent of the company's common stock.

On March 7, Heritage Commerce Corp., based in San Jose, California, returned $40 million in capital, repurchasing the preferred shares Treasury had bought in November, 2008. Heritage said it was able to do so without raising new capital. Treasury still owns warrants in the company that are likely worth about $2 million.

On March 7, Beach Business Bank, based in Manhattan Beach, California, made a $1.5 million payment to Treasury. The bank is paying off the original $6 million investment in installments. This is the third payment, and Beach Business Bank still owes $1.5 million to Treasury.

On March 7, Patterson Bancshares, in Patterson, Louisiana, repurchased a portion of the preferred shares Treasury had bought for $250,000. It still owes Treasury $3.44 million.

Hundreds of mostly small banks have yet to repay the TARP funds they received in 2008 and 2009.

Daniel Gross is economics editor at Yahoo! Finance

Follow him on Twitter @grossdm; email him at grossdaniel11@yahoo.co

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