Treasury to Sell Remaining Shares in Central Pacific

  • M&A

    The Treasury Department in 2010 took a massive haircut on its investment in Pacific Capital and now stands to make roughly 90 cents on the dollar from the bank's sale to UnionBanCal. It's a reminder that taking your lumps early on problem assets can be beneficial.

    March 15

The Treasury Department is looking to fully vacate its role as a common shareholder of Central Pacific Financial in Honolulu.

The $4.1 billion-asset company announced late Thursday that the Treasury is planning an offering on the 2.77 million common shares it currently holds.

The Treasury's stakes in bank companies made through the Troubled Asset Relief Program are typically in preferred shares and it is up to the company usually to seek an exit. Central Pacific, however, is one of a handful of companies that persuaded the Treasury to accept common equity at a discount to help facilitate a recapitalization.

In February 2011, the Treasury exchanged its $135 million in preferred shares for $56.2 million of common stock, or 5.62 million shares.

In June, the Treasury sold about half of those shares for $35.8 million. Earlier this week, the Treasury sold the preferred shares it holds in six community banks, recouping $362 million of its $411 million investment.

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