Treasury to Auction Stakes in Flagstar, Six Other Banks

The Treasury Department plans to auction its holdings in seven banks, including Flagstar Bancorp (FBC), as it continues to unwind the Troubled Asset Relief Program holdings.

The Treasury's original Tarp stakes in the seven banks totaled $545 million. An Treasury spokesman was not immediately available for further details on the current auction.

The auction will run from March 11 through March 14, the agency said Thursday.

The biggest of the seven stakes the Treasury will sell is its $267 million holding in Flagstar in Troy, Mich. The Treasury announced plans to sell its Flagstar shares in early February, but cancelled the sale after the company lost a $90 million judgment over its mortgage underwriting practices.

The Treasury will also sell a $180 million share in United Community Banks (UCBI) in Blairsville, Ga. United Community registered its Tarp shares last year, a move that would make the shares easier for the Treasury to resell. Last month, the $6.8 billion-asset company revised its earnings to reflect a $4 million settlement cost.

The Treasury will also complete its sale of its holdings in Old Second Bancorp (OSBC) in Aurora, Ill., which accepted $73 million from the Tarp program in January 2009. The Treasury auctioned nearly all of its shares in the $2 billion-asset company last week for $24.7 million.

The four other stakes the Treasury will auction are its $3 million stake in Alliance Bancshares in Dalton, Ga.; its $5 million stake in AmFirst Financial in McCook, Neb.; its $5.5 million stake in First Southwest Bancorp in Alamosa, Colo.; and its $11 million stake in Stonebridge Financial in West Chester, Penn.

This latest auction would bring the number of banks whose Tarp shares the Treasury has sold in the past year to over 100. There are about 200 banks remaining in the program, and the Treasury has said it intends to sell its shares in roughly two-thirds of them.