Northwest Bancorp (NBCT) in Spokane, Wash., has completed its redemption of preferred stock it issued to the Treasury Department under the Troubled Asset Relief Program.
The $393 million-asset company paid $13.5 million to buy a total of 11,025 shares back from investors who had purchased the preferred stock at a Treasury auction earlier this year. Northwest paid $1,000 per share, 100% of the stated liquidation value, along with $2.5 million of accrued dividends and interest.
Northwest received its Tarp funds in February 2009. It funded the redemption primarily with proceeds from a $12.5 million capital raise.
Randall Fewel, Northwest's president and chief executive, said in a press release Tuesday that the bank's goal was to buy back the shares before the dividend rate it paid to investors jumped from 5% to 9% in February. He added that the redemption would save the company roughly $600,000 a year in interest payments.
"We believe the regulatory approval of this redemption is further indication of the company's financial strength," Fewel said. "Our capital ratios following the redemption will continue to exceed the requirements of our regulators and the standards for well-capitalized banks."
Northwest had an 11.3% Tier 1 leverage ratio and a 13.9% total risk-based capital ratio as of Sept. 30. The preferred stock redemption is expected to lower those ratios to 10.9% and 13.5%.