( Source: Jonathan D. Epstein The Buffalo News, N.Y. (MCT) — M&T Bank Corp. is getting out of the federal government’s TARP program, as the U.S. Treasury Department on Thursday sold its entire stake of preferred shares in the bank to external investors through an underwritten public stock offering.
According to a prospectus document filed by the Buffalo-based bank with the Securities and Exchange Commission, Treasury offered 381,500 shares of fixed-rate preferred stock for to Treasury.
The stock sale is part of Treasury’s new strategy of unwinding the TARP program through a series of public auctions of its remaining preferred stock investments in the banking industry. As of early this month, the agency had conducted four such auctions, each involving multiple banks.
Congress passed the $700 billion TARP bailout program in October 2008, in the wake of the massive financial crisis brought on by the collapse of Lehman Brothers Holdings, the shotgun sales of Washington Mutual, Wachovia Corp. and Merrill Lynch & Co., the seizure of Fannie Mae and Freddie Mac, and the government bailout of American International Group – all in a few weeks.
Under the TARP program, Treasury invested several hundred billion dollars in both large and small banks nationwide, providing them with an injection of capital to either bail them out or sustain further lending and investment in communities to kick-start the economy. In exchange, Treasury received preferred stock in the banks and quarterly dividend payments that started at 5 percent but were to rise to 9 percent after 2013, to give banks an incentive to repay the money early.
M&T is the only one of the nation’s largest banks that was able to repay TARP without raising extra capital and diluting existing shareholders – an accomplishment the bank has touted. Indeed, that’s why M&T waited so long to do so, as it’s one of the last of the 25 largest banks to get out of TARP.
As of July 9, the government had recovered $264 billion from TARP’s bank investments through repayments, dividends, interest and other income, compared with $245 billion that Treasury initially invested. The government still had investments in 325 banks, totaling $13.8 billion, but held at least one auction since then.
email: jepstein@buffnews.com
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Source: Jonathan D. Epstein The Buffalo News, N.Y. (MCT)
