First Sound Bank (FSWA) in Seattle has bought back its Troubled Asset Relief Program shares after raising nearly $8 million.
The bank said Thursday that it paid the Treasury Department $3.7 million for its $7.4 million in outstanding Tarp shares, a 50% discount, and extinguished all its warrants and unpaid dividends.
The bank was required to raise at least $7 million as a condition of its Tarp exit, and on Tuesday it closed an offering that raised the nearly $8 million.
"We came to an agreement that would work for the Treasury and work for the bank," Chief Executive Patrick Fahey said. "There was interest on their part in having a healthy bank that could lend to small businesses in the Seattle area and support economic growth."
Following this capital raise, the $131 million-asset bank will be well capitalized, Fahey said. Less than two years ago the bank had a Tier 1 capital ratio of around 2%, he said.
"First Sound was probably the most troubled bank in the state once, and you can imagine it's hard to attract capital in that condition," he said. "Now we're in well-capitalized status. The offering was actually oversubscribed."
First Sound received $7.4 million in Tarp funds in December 2008. It has once branch in Seattle.
Fahey was hired as CEO in January 2012. In 1987, he founded the Pacific Northwest Bank, which Wells Fargo bought in 2003.
