City National Corp. in Los Angeles and Texas Capital Bancshares Inc. in Dallas plan to complete stock offerings this week to repay their government capital.
On Tuesday, City National said that it expects to raise at least $109 million, and Texas Capital said that it expects to raise at least $55 million.
In both cases, the underwriters can buy additional shares to cover overallotments, up to 15% of the offering amounts. So the proceeds could be higher when the sales close, which is expected to be Friday.
City National said it would issue 2.8 million shares of common stock for $39 each, a 3% discount from Monday's closing price.
The $16.9 billion-asset company intends to redeem all $400 million of preferred stock and repurchase the warrant it sold to the Treasury Department through the Troubled Asset Relief Program in November.
Texas Capital said it would issue 4 million shares at $13.75 each, an 8% discount from Monday's close.
The $5 billion-asset Texas Capital also intends to redeem its $75 million of Tarp preferred shares but was unsure whether it would buy back the warrant.
Last fall the company raised $55 million in private capital and, when taking Tarp funds in January, opted to get less than the $130 million it could have received.
With the latest stock offering, "we will be well positioned to continue to follow our quality growth strategy," George Jones, Texas Capital's chief executive officer, said in a press release. "We have a strong capital base and the potential to take advantage of attractive opportunities within the Texas market."
By Tuesday afternoon, shares of City National had risen 2.5%, to $41.09, and those of Texas Capital had fallen 4.5%, to $14.31. Both companies said they still need regulatory approval to exit Tarp.
So far 11 companies have repaid the government, said KBW Inc.'s Keefe, Bruyette & Woods Inc. Others have filed for permission to do so, including the $1.2 billion-asset HF Financial Corp. in Sioux Falls, S.D., which got $25 million, and the $316 million-asset Somerset Hills Bancorp in Bernardsville, N.J., which got $7.4 million.
Many have cited the stigma attached to having the funds as a competitive disadvantage.