December 2009 Archives

Wells Fargo & Co. said it repaid the $25 billion in public money it received through the Troubled Asset Relief Program last year. In addition, Citigroup Inc. returned $20 billion, although the government remains a major shareholder in that company.

Both had previously announced plans to exit the program. Their repayments represented a big chunk of the roughly $245 billion that the Treasury Department had invested in banks through TARP.

Wells Fargo also paid accrued dividends of $131.9 million on the preferred stock it had issued to the Treasury Department as part of its participation in TARP, bringing the total dividends paid since October 2008 to $1.44 billion.

"With repayment of the TARP investment, we can instensify our focus on what we do best; helping consumers and businesses achieve financial success,'' said John Stumpf, Wells Fargo's president and chief executive. "We thank the U.S. government and taxpayers for their support of our financial system at a critical time for our nation.''

Stumpf said in a press release that Wells Fargo had supplied more than $640 billion in credit to consumers and businesses since taking the TARP money in October 2008.

Although Wells Fargo redeemed the preferred shares it issued the Treasury under the deal, the government still holds warrants to buy about 110 million of the company's common shares, at an exercise price of $34.01.

The stock has been trading at around $27 a share in recent days. The Treasury Department has been auctioning the warrants it received from other TARP recipients, including JPMorgan Chase & Co. and Capital One Financial Corp.

SVB Financial Group, the parent company of Silicon Valley Bank, said it had gained federal approval to repay the $235 million in public money it got through the Troubled Asset Relief Program.

SVB Financial raised $300 million through a private equity offering last month, with an eye toward exiting TARP.

The company, based in Santa Clara, Calif., said it had paid more than $10 million in dividends to the Treasury Department since it took government money through TARP's Capital Purchase Program in December 2008.

SVB Financial said that in addition to redeeming the preferred stock held by the Treasury Department, it hopes to repurchase the common stock warrants it issued as part of its TARP deal.

Ken Wilcox, SVB Financial's chief executive officer, said TARP did was it was supposed to for his company, bolstering the capital of a healthy bank so that it could continue making loans in an unstable environment.

"We are proud to say we have actively supported our clients throughout the downturn as they grew, created jobs and continued to bring innovations to market," Wilcox said in a press release.

With the economy stabilizing and debt and equity markets open again to companies like SVB Financial, the time has come to repay the government aid, he said.

Four more banks have consented to greater levels of regulatory supervision or operational restraint.

Pierce Commercial Bank -- the only one of the four to receive government money through the Troubled Asset Relief Program--consented to the issuance of a cease and desist order on Dec. 7.  The contract with the Federal Reserve System and the Washington State Department of Financial Institutions focuses on the Tacoma, Wash.-based bank's administration of residential mortgages.

The Federal Reserve had earlier cited Pierce's weaknesses in this area in a supervisory letter dated Oct 2.  The cease and desist order prohibits the bank from underwriting any new mortgages without prior approval, requires it to hire an outside consultant to evaluate its management structure and corporate governance, and also restricts its ability to redeem stock or pay dividends until it corrects its deficiencies.

The bank's parent company, Pierce County Bancorp, got $6.8 million in TARP money in January.

The First National Bank of Crossett, in Crossett, Ark., signed a consent order with the Office of the Comptroller of the Currency earlier this month that seeks to reduce the bank's level of problem loans, referred to as "criticized assets," and to apply stricter supervision to its commercial real estate portfolio. 

Edward Holt, Crossett's president and chief executive, said that the concerns were related to a group of real estate loans in northwest Arkansas, and that this was "the primary reason for the agreement with the Office of the Comptroller of the Currency."  Although the agreement does require Crossett to maintain higher minimums of certain capital levels, the bank as a whole improved its earnings between the third quarters of 2008 and 2009 and even lowered the total of its troubled assets by more than $700,000.

The Crossett agreement perhaps signals a greater willingness on the part of federal regulators to take early action to address an undesirable trend in an otherwise healthy bank.  Crossett's balance sheets seem to present a healthy bank with a single red flag, especially when compared with banks that have recently failed or that have been dubbed "troubled."

Phoenixville Federal Bank and Trust, of Phoenixville, Pa., entered into a supervisory agreement with the Office of Thrift Supervision on Dec. 8.  The agreement seems to arise from insufficient improvement upon certain weaknesses noted in an earlier examination by the OTS in May.  The agreement requires revised and enhanced underwriting and credit administration policies and procedures, especially in regard to commercial loans.

The contract also requires Phoenixville to improve its ability to identify, classify and monitor "criticized assets," and places the onus for that upon the company's directors.  Inherent in the agreement is the opinion that the bank has failed to assess the proper level of risk attached to some of its investments.

Saehan Bank of Los Angeles agreed to a consent order with the FDIC and the California Department of Financial Institutions on Dec. 2. Unlike that of the first three institutions, the regulators' criticism of Saehan is sweeping.  The order calls for immediate and specific actions relating to its low retention rate of qualified management, its unhealthy dependence upon brokered deposits, its low level of Tier 1 capital, and its plunging financial performance.

Saehan reported a loss of $29.8 million for the first nine months of 2009, compared with a loss of $1.45 million in the same period last year. Its nonperforming loans totaled $55.9 million, up from $27.3 million a year earlier. Indeed, Saehan's troubled assets have increased every quarter since December of 2007.

Saehan's provisions for loan losses in the first nine months totaled $47.5 million, compared with $10.3 million a year earlier.

The bank's president, Chung Hoon Youk, commented that "We have a number of capital raising options available to the bank and we are weighing these options while proceeding with efforts to raise capital through private sources in the U.S. and South Korea."

A search of federal records reveals that Saehan Bank operated under a similar FDIC consent order that was issued in June 2002.  It took the bank nearly two years to see that order lifted in May 2004. 

Regulators closed seven more banks Friday, including four that each had more than $1 billion in assets.

The biggest to be seized was First Federal Bank of California, of Santa Monica, Calif. The Office of Thrift Supervision shut down the bank and appointed the Federal Deposit Insurance Corp. as receiver.

The FDIC arranged for OneWest Bank, of Pasadena, Calif., to take over First Federal's 39 branches, $4.5 billion in deposits and $6.1 billion in assets. The FDIC agreed to share losses with OneWest on $5.3 billion of those assets.

The other casualties Friday included Imperial Capital Bank, of La Jolla, Calif.; Peoples First Community Bank, of Panama City, Fla; and New South Federal Savings Bank in Irondale, Ala. The number of failures for 2009 now stands at 140.

The FDIC arranged for City National Bank, of Los Angeles, to absorb Imperial Capital, which had nine branches, $2.8 billion in deposits and $4 billion in assets. City National paid a 0.24 percent premium for the deposits and bought $3.3 billion of the assets.

The FDIC and City National entered into a loss-sharing deal on $2.5 billion of those assets.

Imperial Capital had been operating under various regulatory orders, and said in a recent Securities and Exchange Commission filing that it faced a Dec. 14 deadline for raising new capital.

Hancock Bank, of Gulfport, Miss., agreed to take over Peoples First's 29 branches, its $1.7 billion in deposits and roughly $1.6 billion of its $1.8 billion in assets. Hancock paid a premium of 1 percent for the deposits, and the FDIC agreed to share losses on $1.4 billion of the assets.

The Office of Thrift Supervision issued an enforcement action on Nov. 27 giving Peoples First less than a month to find a buyer or merger partner.

The FDIC arranged for Beal Bank, of Plano, Tex., to acquire New South Federal's lone branch, along with its $1.2 billion in deposits and $1.5 billion in assets. Some $1.2 billion of those assets will be covered by a loss-sharing agreement.

Beal Bank is controlled by billionaire Andrew Beal, who has been one of the most active purchasers in the FDIC's auction of assets from failed banks.

The FDIC created a bridge bank to take over the operations of Independent Bankers' Bank, in Springfield, Ill. That institution did not take deposits from the general public, but functioned as a commercial bank for more than 450 client banks in four states.

It had $511.5 million in deposits and $585.5 million in assets as of Sept. 30.

Regulators also decided to liquidate RockBridge Commercial Bank, of Atlanta, after the FDIC was unable to find anyone to take it over. RockBridge had $291.7 million in deposits and $294 million in assets. Depositors will be sent checks for their insured account balances.

The FDIC also will wind down the operations of Citizens State Bank, in New Baltimore, Mich. It created the Deposit Insurance National Bank of New Baltimore, which will remain open for 45 days to allow Citizens State customers to close or move their accounts.

Huntingon National Bank, of Columbus, Ohio, will assist in the dissolution of Citizens State, which had $157.1 million in deposits and $168.6 million in assets.

The FDIC said the seven closings will cost its insurance fund an estimated $1.7 billion.

Central Pacific Bank, the primary subsidiary of Central Pacific Financial Corp., is again in the news for less-than-desirable reasons.  The financially troubled Hawaiian bank agreed to the issuance of a consent order by regulators last week.

The agreement with the Federal Deposit Insurance Corp. requires the bank to take sweeping measures to improve its fiscal health. They include greater supervision by the board of directors and senior executive officers, an increase in Tier 1 Capital, submission of a capital plan, and the stricture not to pay cash dividends to shareholders without first obtaining written permission from the FDIC and the Hawaii Division of Financial Institutions.

Regulators also told Central Pacific to develop a contingency plan in the event that it fails to meet agreed-upon stipulations.  This document "must include a plan to sell or merge the bank if the FDIC and DFI so direct."

Central Pacific got $135 million in public money in January through the Troubled Asset Relief Program. The Treasury Department's decision to gave rise to controversy in June, when news reports disclosed that the bank won approval for that aid shortly after an aide to U.S. Sen Daniel Inouye contacted federal regulators to inquire about the application.

Inouye, a Democrat from Hawaii, had much of his personal wealth tied up in Central Pacific shares at the time.  Although the senator publicly denied any wrongdoing in a statement released June 24, the question remained how an institution whose business practices had already been censured by the FDIC and state regulators could possibly be among the supposedly "healthy"" TARP applicants initially selected to receive funding.

Indeed, according to a June 30 report published simultaneously in the Washington Post and at Propublica.org, internal FDIC e-mails reveal that Central Pacific's application for funding had already been forwarded to another Treasury-headed council that reviews cases where a bank failed to meet guidelines for government investment.  In other words, the bank was not among the first group selected for TARP's Capital Purchase Program because it failed to meet the decisive criterion that it "demonstrate [its] viability without the benefit of federal funding."   It was, in short, not a healthy bank.

Much of the criticism leveled at Central Pacific prior to its receipt of the TARP funds is echoed in the latest consent order.  The bank's balance sheet is loaded with troubled assets, particularly those attached to commercial real estate.  On September 30, 2008, the bank held roughly $133 million in troubled assets; one year later that amount had skyrocketed to more than $446 million.

The consent order requires Central Pacific "develop or revise and implement a plan" that will help to extricate it from the non-performing and non-accruing loans in the areas of land development and construction. In its press release on the FDIC order, the bank's parent company states that it has already brokered deals to unload many of its commercial real estate loans and has engaged an outside firm to review its CRE loan portfolio.  It said the bank was winding down its California operations and planned to dispose of all related holdings within the next two years.

Additionally, the company's shareholders approved increasing the number of shares of common stock this October, setting the stage for a stock offering or private placement to raise additional capital.

The task before Central Pacific is formidable, and a change of course appears necessary for its survival.  According to Wendell Cochran of the Investigative Reporting Workshop at the American University School of Communication, Central Pacific's "troubled asset ratio" has risen from 10.2 percent in December 2007 to 71.3 percent in September 2009.  The national median is 14.1 percent.  "Of the 92 banks that have failed so far this year," Cochran wrote, "84 had troubled asset ratios of 100 percent or greater in the final quarter they reported data before they closed."   

The big banks may be headed for the exit, but smaller banks continue to seek government support through the Troubled Asset Relief Program.

The Treasury Department said in its latest transaction report that it invested a little more than $70 million in 10 banks. The list included seven financial institutions that were receiving their second round of TARP aid.

First Community Financial Partners Inc., of Joliet, Ill., got the biggest chunk of money -- $22 million -- in exchange for preferred stock and warrants for additional shares, which the Treasury exercised immediately.

Wachusett Financial Services Inc., of Clinton, Mass., got $12 million in taxpayer capital, while First Western Financial Inc., of Denver, got $11.9 million. First Western had previously received $8.6 million in TARP money.

Meridian Bank, in Devon, Pa., picked up $6.33 million, bringing the government's total investment in that institution to $12.5 million.  It had received $6.2 million in TARP money in February.

GrandSouth Bancorporation, of Greenville, S.C., got $6.2 million in the latest round of investment, on top of $9 million it received in January.

1^st Enterprise Bank, which has headquarters in Los Angeles, got $6 million in TARP funds, lifting the Treasury's total investment to $10.4 million. It previously received $4.4 million in January.

First Resource Bank, of Exton, Pa., picked up an additional $2.42 million. It got $2.6 million in January. First Business Bank, of San Diego, was another double dipper. It received $2.03 million, on top of the $2.2 million it collected in April.

Victory Bancorp Inc., of Limerick, Pa., got $1.5 million in TARP money last week. The Treasury had invested $541,000 in that bank in March.  

Nationwide Bankshares Inc., based in West Point, Neb., received $2 million from the government. It issued subordinated debentures to the Treasury, in lieu of stock.

The preferred stock that most banks have issued in return for government aid pays a dividend of 5 percent annually for the first five years, and 9 percent annually thereafter.

The Treasury Department is selling 3.2 million warrants to buy shares in TCF Financial Corp. as part of its efforts to unwind the investments it made through the Troubled Asset Relief Program.

It is selling the warrants today via a modified Dutch auction, with a minimum price of $1.50 per warrant.

The Treasury received the warrants when it provided $361 million in aid to TCF in November 2008. TCF, based in Wayzata, Minn., repaid that money in April and redeemed preferred stock it also had issued the government.

The warrants being sold give the holder the right to buy one share of TCF's common stock at $16.93 a share, until November 14, 2018. Its  shares closed Monday at $13.37, compared to a 52-week low of $8.74 recorded in March.

Based on the minimum bid price, the sale of the TCF warrants will generate at least $4.8 million.

The Treasury raised more than $1.1 billion this month by selling its warrants in two bigger TARP recipients, JPMorgan Chase & Co. and Capital One Financial Corp.

Citigroup Inc. said today has reached an agreement with the Treasury Department under which it will repay $20 billion of the $45 billion it received through the Troubled Asset Relief Program.

Citigroup said in a press release that it will raise the money to exit TARP through the sale of additional common stock and debt.

The deal also calls for the Treasury to sell $5 billion of the $25 billion in Citigroup common stock it holds, through a secondary offering. The government will divest its remaining commons shares in the banking giant over the next six to 12 months.

Citigroup, like other big banks that got TARP money, has chafed over the government's involvement in its business affairs, including restrictions on executive pay, "golden parachute'' payments to departing employees and other spending.

But Citigroup's chief executive officer, Vikram Pandit, said the program worked as it was supposed to, providing financial support to his bank until it was in a position to repay the money prudently.

"We owe the American taxpayers a debt of gratitude and recognize our obligation to support the economic recovery through lending and assistance to homeowners and other borrowers in need,'' he said in a prepared statement.

Citigroup got $25 billion in taxpayer capital in the first wave of TARP investments in October 2008.  In return, it gave the government a special class of preferred stock, plus warrants to buy common stock.

When Citigroup's troubles deepened the following month, the Treasury advanced it another $20 billion, and agreed to cover the first $29 billion in losses on a portfolio of more than $300 billion in so-called "toxic securities.''

The government later converted $25 billion of its Citigroup preferred stock to common stock, to help strengthen the company's balance sheet by putting additional equity on the books.

Taxpayers now own 34 percent of Citigroup. The new offerings connected to the TARP repayment will dilute that stake, and could drive down its market value, at least in the short term.

As part of the repayment agreement between Citigroup and the Treasury, the loss-sharing arrangement on the toxic assets also will be dissolved.

The Federal Deposit Insurance Corp. has announced two new auctions of assets from a pair of failed banks.

Bids are due Dec. 17 for roughly $8 million of performing and non-performing loan participations once held by Warren Bank of Warren, Mich. The Michigan Office of Financial and Insurance Regulation closed the bank in October and appointed the FDIC as receiver.

Although the FDIC arranged for another bank to absorb Warren's branches and deposits, it was left holding $455 million in assets.

The auction, marketed by Garnet Capital Advisors LLC, consists of three loan participations previously held by Warren. Each of the three will be bid individually. Garnet Capital's offering sheet describes them only as commercial loans, with one in Colorado (totaling $2.5 million) and two in Michigan (totaling $5.5 million).

The sale is restricted to federally-insured institutions in 11 specified states. It is not possible to discern from either the FDIC's loan-sales announcement page or Garnet Capital's public web presence the ratio of performing to non-performing loans. The strictures of registration and participation make it unlikely that anyone except screened and vetted parties of interest will ascertain such data prior to the sale.

Bids are due Jan.12 for the second auction, which again features assets from Warren, along with a smaller single pool from the recently closed Dwelling House Savings & Loan of Pittsburgh.  Garnet Capital also is marketing these assets and will conduct the auction.

The $16.2 million of performing and non-performing assets include more than $14.5 million of Warren's commercial and industrial business loans.  Ninety percent of these assets, to be auctioned in four separate pools, are performing.

A much smaller slice of Warren's consumer loans ($938,494) is being offered in a single pool, only half of which is classified as performing. Another pool of $749,103 in church loans from Dwelling House, with 87 percent rated as performing, also will be auctioned.

BailoutSleuth has begun tracking these deals as part of our continuing coverage of the upheaval in the financial industry.

Regulators closed three more banks Friday, bringing the toll for the year to 133.

Kansas officials shut down SolutionsBank, of Overland Park, Kan., and appointed the Federal Deposit Insurance Corp. as receiver. The FDIC struck a deal with Arvest Bank, of Fayetteville, Ark., to take over the failed bank's six branches, its $421.3 million in deposits and its $511.1 million in assets.

The FDIC entered into a loss-sharing agreement with Arvest on $411.3 million of SolutionsBank's assets. Regulators had ordered SolutionsBank in October to take "prompt corrective action'' to raise additional capital or find a buyer.

The Office of the Comptroller of the Currency shut down Republic Federal Bank N.A., of Miami. The FDIC was appointed as receiver, and arranged for 1st United Bank of Boca Raton, Fla., to take over the failed bank's four branches, along with its $352.7 million in deposits and $267.1 million of its $433 million in assets.

The bank agreed to pay a 1.2 percent premium to acquire Republic  Federal's deposits. The FDIC agreed to share in any losses with 1st United on $210.4 million of those assets.

The Office of the Comptroller of the Currency also closed Valley Capital Bank, in Mesa, Ariz. Enterprise Bank, of Clayton, Mo., agreed to buy Valley Capital's sole branch, along with $41.3 million in deposits and $40.3 million in assets. Enterprise paid a 2 percent premium for the deposits.

The FDIC and Enterprise agreed to a loss-sharing arrangement covering $29.8 million of the assets.

The FDIC said the three closings would cost its insurance fund an estimated $252.1 million.

The Treasury Department said it will receive a little more than $936 million from the sale of warrants it got from JPMorgan Chase & Co. when it provided that company with government aid through the Troubled Asset Relief Program.

The Treasury held an auction on Thursday that established the price for the 88.4 million warrants at $10.75 each. The sale of the warrants is expected to close by Dec. 16.

The Treasury also held an auction last week for warrants issued by Capital One Financial Corp. as part of its participation in TARP. That sale raised $146.5 million.

JPMorgan Chase got $25 billion in public money through the Troubled Asset Relief Program in October 2008.  In return, it issued the government a special class of preferred stock, plus warrants to buy common stock.

JPMorgan repaid the TARP funds and retired the preferred stock in July. The redemption did not include the warrants, which have an exercise price of $42.42 a share, and expire in October 2018.

JPMorgan Chase's common stock closed Thursday at $41.27. Its shares hit a low of $14.96 on March 6.

Bank of America Corp. has repaid the $45 billion it received from the government through the Troubled Asset Relief Program, leaving Citigroup Inc. and Wells Fargo & Co. as the banking companies with the biggest outstanding balances.

Citigroup also took $45 billion from the Treasury Department. It got $20 million in the first wave of TARP investments in October 2008 and got an additional $25 billion when its condition worsened the following month. The latter amount has been converted to common stock, making the U.S. government - and by extension American taxpayers - a major shareholder in the New York-based company.

Wells Fargo got $25 billion in October 2008, partly to help with its acquisition of Wachovia Corp. - a deal that was arranged by regulators worried about Wachovia's heavy mortgage losses.

Bank of America had announced earlier this month that it intended to repay its TARP funds, using a combination of existing cash and money from a $19.3 billion stock offering.

The redemption of the preferred shares it issued to the government frees the company from operating restrictions imposed on TARP recipients, including limits on executive compensation. Bank of America has been having a hard time recruiting a replacement for Kenneth D. Lewis, who is stepping down as chairman and chief executive effective Dec. 31.

Citigroup also has been talking with the government about repaying the $20 billion remaining on its TARP obligations. Wells Fargo says that although it intends to redeem the preferred shares it issued to the Treasury in exchange for  aid, it does not want to issue new stock and dilute the interests of existing investors to raise the money.

The Federal Deposit Insurance Corp.'s loan sales web page has listed a new auction of assets from yet another failed bank.

Bids are due next Tuesday for approximately $73 million of performing and non-performing loan participations that were held by the failed Irwin Union Bank & Trust Co. of Columbus, Ind.

The Indiana Department of Financial Institutions closed the bank on Sept. 18.  The FDIC acts as receiver for such institutions and has begun to auction loans from them with what appears to be increasing regularity.

The portfolio, marketed by the advisory firm of Eastdil Secured, consists of 14 loan participations that Irwin Union held at the time of its collapse. The announcement says the loans are secured mainly by commercial real estate and land, but provides no other particulars.

It is not possible to discern from either the FDIC's loan sales page or Eastdil Secured's loan sales page the ratio of performing to non-performing Loans.  This differs from other loan portfolios recently listed on the FDIC sales page, which tend to be described in greater detail. 

The Irwin Union announcement also stipulates that bidding on the offering is restricted to FDIC-insured banks, and Eastdil's registration overview web page states that potential bidders must be vetted and must make a $50,000 due-diligence deposit to view the FDIC offering details.

A confidentiality agreement is also required.

Broadway Financial Corp. has received an additional $6 million in government money through the Troubled Asset Relief Program.

The Treasury Department's latest purchase of preferred stock brings its total investment in the Los Angeles-based company to $15 million.  

Broadway Financial operates Broadway Financial Bank, a minority-owned, community-oriented savings bank that serves the Mid City and South Los Angeles markets.

Paul C. Hudson, the company's chairman and chief executive, said in a press release that the additional TARP money would strengthen its capital ratios and "support rational asset growth.''

Two other banks also got TARP money in latest round of government investments. Delmar Bancorp, of Delmar, Md., got $9 million in exchange for preferred stock and warrants that were immediately exercised.

Liberty Bancshares Inc., of Fort Worth, Texas, got $6.5 million from the Treasury in return for preferred stock and warrants.

A trio of financial institutions has repaid monies to the Treasury Department, while a fourth completed a public offering with an eye toward doing to the same.

Boston-based Wainwright Bank & Trust said it had repaid $22 million in public money it received through the Troubled Asset Relief Program. Wainwright's president and chief executive, Jan A. Miller, emphasized that Wainwright had been "well capitalized'' prior to the Treasury's investment.

He said that when Wainwright took the money last December, TARP's Capital Purchase Program was a "program for healthy banks'' but later came to be characterized by the media as part of the government's general bailout of troubled companies.

Miller stated that rules changed so severely after the company became a participant that "the original purpose of the program was negatively impacted.'' Wainwright's board of directors voted unanimously last month to repay the TARP money and redeem the preferred stock it issued to the government.

LSB Corp., of North Andover, Mass., cited the same public misconception as the impetus for repaying the $15 million it received from the Treasury. Gerald T. Mulligan,  president of LSB and its sole subsidiary, River Bank, noted that his company also was deemed "well capitalized'' when it took TARP funds.

He added that Congressional changes to the program and the "ongoing negative public perception'' made it best to repay the money and exit the program as soon as possible. LSB redeemed its preferred stock from the government last month.

San Rafael, Calif.-based Westamerica Bancorporation, also completed the redemption of $83.7 million in preferred shares in November. It had originally issued the stock in February, and had repurchased half in September.

David Payne, Westamerica's CEO, said in a press release that his company was proud to have fully retired the stock using its operating cash flow.

Meanwhile, Washington Banking Co., of Oak Harbor, Wash., announced last month that it had raised $45 million in gross proceeds by selling 5 million shares of common stock. The company said it would use the offering to finance general operations and "to position the company for eventual redemption of preferred stock issued to the U.S. Treasury under the TARP Capital Purchase Program.''

The company, which operates Whidbey Island Bank, got a little more than $26.3 million in TARP funds in January.

The Federal Deposit Insurance Corp., which holds billions of dollars in assets from failed banks, is selling nearly $182 million in loans through three separate auctions.

The auctions listed on the FDIC's Loan Sales Announcements web page represent a wide range of performing and non-performing loans. The agency offers the loans through a small group of advisory firms, which market the assets to potential investors, assist then with due diligence, then conduct the sales.

BailoutSleuth has begun tracking these deals as part of our continuing coverage of the upheaval in the financial industry.

The FDIC took bids Wednesday on approximately $60 million of assets from the closed Community Bank of Nevada.  The portfolio, marketed by First Financial Network Inc., consisted of 430 commercial and industrial loans and commercial real estate loans, 58 percent of which are performing.

Another FDIC contractor, First Annapolis Capital Inc., is marketing $119 million of performing credit-card loans from the failed Silverton Bank of Atlanta, Ga.  The offering announcement describes the portfolio's balance as roughly 53 percent consumer accounts and 47 percent business accounts.

Although the FDIC website has yet to post deadlines for due diligence and bids, the offering announcement on First Annapolis' website lists them as Dec. 7 and 8, respectively.

Meanwhile, The Debt Exchange Inc. is presenting a single residential loan pool totaling $2.7 million, which came from the receivership of Market Street Mortgage.  The non-performing pool is secured by an unspecified number of condominiums in a Georgia residential complex. The sale has a Dec. 8 bid date.

Midwest Banc Holdings Inc., the Melrose Park, Ill.-based parent company of fiscally troubled Midwest Bank, is offering to exchange up to 17.25 million shares of common stock for any or all of its outstanding depositary shares.

The potential recapitalization also could include the preferred stock that Midwest Banc Holdings issued to the Treasury Department last December in exchange for nearly $84.9 million in aid through the Troubled Asset Relief Program.

Midwest Banc Holdings said it hopes to raise about $190 million in conjunction with the restructuring, with the goal of "increasing our common equity capital so that we may withstand continued and potentially more adverse economic conditions."

The Treasury would get a new series of preferred stock that could later be converted to common shares. If that happens, the government would have a significant stake in Midwest Banc Holdings, but its investment would cease to garner steady dividend income and would be at far greater risk should the company continue to struggle.

Midwest Bank Holdings has $3.6 billion in assets and is one of the biggest independent banking companies in the Chicago area. It has been hurt by the economic downturn and by more than $80 million in losses on its investments in Fannie Mae and Freddie Mac, the government-sponsored mortgage finance companies that went into conservatorship last year.

Midwest Banc Holdings says its capital plan's ultimate success rests with its ability to implement the exchange offer, which has a deadline of Jan. 13. It said parties "who have provided non-binding indications of interest" in providing an infusion of funds have noted that the successful completion of the offer is a prerequisite of their participation. Those parties include the Treasury.

Midwest Banc Holdings is already in default of its obligations to certain lenders, who could immediately require it to repay $63.6 million plus accrued interest. The company missed a pair of $5 million principal payments to its primary lender (Marshall & Ilsley Bank) on July 1 and Oct. 1, with another payment scheduled for January 4.

Midwest Banc Holdings has brokered a forbearance agreement with the bank that lasts until March 31.

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Perhaps more troubling is the company's admission that, in the wake of a safety and soundness examination, it anticipates that the Federal Reserve Bank of Chicago will require Midwest Bank to enter formal supervisory action with regulators to improve its financial condition.

Midwest Banc Holdings also is facing the possible delisting of its common shares by the Nasdaq exchange for failing to maintain a $1 per share closing bid price. It is asking shareholders to approve a reverse stock split that will lift the company's price per share well above the Nasdaq minimum and maintain the listing.

Regulators closed six more banks on Friday, bringing the total for the year to 130.

The latest casualties included AmTrust Bank of Cleveland, which had $12 billion in assets and is the fourth-biggest bank to fail in 2009. The Federal Deposit Insurance Corp. was appointed as receiver and arranged for New York Community Bank to take over AmTrust's 66 branches, its $8 billion in deposits and $9 billion of its assets.

The FDIC agreed to share losses with New York Community Bank on $6 billion of those assets.

Shares of New York Community Bank's parent company, New York Community Bancorp Inc., jumped in the final hour of trading Friday, and volume surged as well, giving rise to questions about whether some investors had learned of the AmTrust deal early and took advantage of the advance knowledge.

As part of the takeover, Old Westbury-based New York Community Bankcorp gave the FDIC an "equity appreciation instrument'' that will be payable in cash or stock and will have a base value of $25 million.

AmTrust's failure was not unexpected; its parent company filed for bankruptcy earlier in the week, citing effects of the downturn in housing and construction. Although AmTrust was based in Cleveland, it also was a big player in south Florida and other markets.

The other five banks shut down by regulators were Buckhead Community Bank, in Atlanta; First Security National Bank, in Norcross, Ga.; Tattnall Bank, of Reidsville, Ga.; Benchmark Bank, of Aurora, Ill.; and Greater Atlantic Bank, of Reston, Va.

The FDIC arranged for State Bank and Trust Co., of Macon, Ga., to assume Buckhead Community Bank's six branches, its $838 million in deposits and its $874 million in assets. The FDIC and State Bank and Trust entered into a loss-sharing arrangement on $692 million of the failed bank's assets.

Trustmark Corp. filed an 8-K and exhibit with the Securities and Exchange Commission this week  that signaled its intent to repay the Treasury Department for the $215 million it received last November through the Troubled Asset Relief Program.

The company issued preferred shares and warrants to the government in exchange for the money, advanced under TARP's Capital Purchase Program. To date, it has paid nearly $7.9 million in dividends on the stock.

Trustmark, based in Jackson, Miss. is a diversified financial services company that operates Trustmark National Bank. It says that it has $9.8 billion in assets, including subsidiaries that provide wealth management, insurance and other services.

The capital to repay the TARP money will be raised through a public offering of 5.4 million shares of common stock, priced at $18.50 per share.

Trustmark expects the offering to raise gross proceeds of $100 million (although underwriters have a 30-day option to purchase an additional 810,810 shares). The offering is expected to close on or about Dec. 7th.

The company said that after the stock is sold, it intends of notify the Treasury of its intent to redeem all 215,000 shares of preferred stock it issued to the government last year. Trustmark said it understands that Treasury officials must approve any repayment of the loan, and it cannot predict when it might receive Treasury's approval. Any funds that are not used to repay the government will be used for general corporate purposes.

Trustmark said if it does redeem the preferred shares of stock, it also will seek to repurchase the warrant that it issued to the Treasury. It would have to get Treasury's approval for this move, as well as reach an agreement with the department about the fair market value of the warrant.

The Treasury Department  will recoup some the money it spent on the Troubled Asset Relief Program by auctioning warrants to buy nearly 12.7 million shares of common stock in Capital One Financial Corp.

The Treasury got the warrants, along with preferred stock, when it provided Capital One with $3.55 billion in aid last November.

Capital One repaid the goverment and redeemed the preferred stock earlier this year.

Deutsche Bank Securities Inc. will conduct the auction Thursday on the Treasury's behalf. Each of the warrants allows the holder to buy one share of Capital One's stock, at a price of $42.13 a share.

The company's stock closed Tuesday at $38.09. That compares with $31.19 on the day that it took the TARP money.

Because it is difficult to pin a precise value on warrants that cannot yet be exercised at a profit, the Treasury has decided to establish fair prices through an auction process. For the Capital One sale, it set a minimum bid of $7.50 per warrant.

At that price, the Capital One warrants would fetch roughly $95 million.