Monarch Community Bancorp (MCBF) in Coldwater, Mich., has finalized a plan to repurchase shares and warrants issued under the Troubled Asset Relief Program from the Treasury Department at a 55% discount.
The $186 million-asset Monarch raised $16.5 million in an October private placement, of which $4.5 million will be used to retire $8.2 million in Tarp debt, according to a Tuesday press release.
The Treasury has agreed to exchange 6,785 Monarch preferred shares and a warrant to purchase up to 52,192 common shares for about 2.3 million common shares as part of the deal. Monarch investors would then purchase the newly issued common stock from the Treasury, allowing the company to exit the Tarp program.
"We are pleased that we have successfully concluded our negotiations with Treasury, and express our appreciation to the U.S. Department of Treasury for its efforts during this process," Monarch president and chief executive Richard DeVries said in the release. "The conclusion of these negotiations triggers our ability to move forward with the closing of the capital raise, the funds from which will be used to support the ongoing growth of the bank, and to raise our Tier 1 and Total Risk Based Capital Ratios to approximately 10% and 17.5%, respectively. These post-capital raise ratios are well above the FDIC and State of Michigan consent order requirements of 9% and 11%, respectively, and we believe the achievement of these capital ratios will mark the completion by the bank of all consent order requirements.
Monarch announced plans to lay off an unspecified number of employees in October to reduce expenses.