Though the nation's biggest banks bought back the preferred stock they'd sold to Treasury as soon as they could, smaller banks have not been eager to buy out what they'd thought would be a patient, passive investor. Many of those institutions were not thrilled with the public stigma of being a bailout recipient after volunteering to take capital to maintain their lending activities.
With the banks not buying back those preferred shares, Treasury has been auctioning off its stakes to private investors. In November, the Treasury Department sold its preferred stock in 15 banks, including Parke, to such investors for $62 million - a discount to the $71.8 million in TARP funding those institutions had received.
Yes, even the government can buy high and sell low. Still, the Treasury Department says it has recovered $271 billion from TARP's bank programs through repayments, dividends, interest, and other income - a total that's more than its initial investment.
In Parke's case, the bank received $16.29 million from Treasury in exchange for preferred stock and warrants on Jan. 30, 2009. In the November auction, the federal government sold its 16,288 shares of Parke preferred stock at $719.11 per share, for net proceeds of $11.6 million.
On June 6, another auction sold Treasury's warrants in Parke and 15 other institutions to generate a total of $13.35 million in net proceeds. The government sold warrants to buy about 439,000 shares of Parke common stock for gross proceeds of $1.65 million.
Adding the $3.19 million in dividends paid by Parke to Treasury over the last four years to the proceeds generated by the sales of the preferred stock and warrants brings the government's total return to $16.44 million - a small profit.
Vito S. Pantilione, president and CEO of Parke, sounded relieved that the warrant auction meant the end of the federal government's role as a part-owner of the 14-year-old, four-office bank.
"That's it for TARP," he said. "Thank God, we're finally finished. The government's out, and we can get on with our lives without that hanging over our heads."
Contact Mike Armstrong
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