The U.S. Department of the Treasury will sell its stake in seven banks that have been part of the agency’s Troubled Asset Relief Program, American Banker reported Dec. 13. The banks will sell at an anticipated $2 million aggregate discount.
Treasury noted that it expected to gross around $23.8 million from the bank auctions — a 9 percent loss from the almost $26 million the agency originally invested in the troubled lenders.
Treasury previously has auctioned 84 TARP banks, which brought in $1.5 billion but represented a $221 million loss from the agency’s original investment. However, Treasury said it has netted a profit when all of its TARP divestiture programs are considered, recovering a total $268 billion from an initial investment of $254 billion, American Banker reported.
However, some sources told American Banker that they remained skeptical that the upcoming auction would net the level of bids Treasury expected. Additionally, potential investors, such as Basswood Capital Management, which was stiffed on a dividend payment by a TARP bank that it bid on at an October auction, told American Banker that they are worried that TARP banks could “try to game the system.”
Assistant Treasury Secretary Timothy G. Massad told American Banker that the TARP program had “helped stabilize the economy and turned a profit for taxpayers” and added that “these auctions are one part of our broader strategy to continue winding them down.”
The seven banks up for auction include Bank Financial Services in Eden Prairie, Minn.; Bank of Southern California in San Diego; Century Financial Services in Santa Fe, N.M.; Community Investors Bancorp in Bucyrus, Ohio; First Alliance Bancshares in Cordova, Tenn.; First Independence in Detroit; and Hyperion Bank in Philadelphia.