Treasury Fails to Sell All Investments in Latest Tarp Auction

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The Treasury Department did not sell some of the preferred shares it owns two community banks as planned after it received insufficient bids for the securities.

The department said Friday that it will recoup roughly $248.5 million from its latest auctions selling off its investments in a group of banks from the Troubled Asset Relief Program. However, it did not sell its Series B preferred stock in First Community Financial in Joliet, Ill., and its Series A preferred stock in First Western Financial in Denver. It also sold only 67% of its Series C preferred stock in First Western.

The Treasury sets a minimum price for each security as part of the auctions and it did not receive sufficient bids above that for those stakes, the department said.

The agency is working to aggressively to wind down Tarp. So far through four auctions, the Treasury has recouped roughly $1.1 billion of the $1.2 billion it had initially invested in the 32 banks involved.

Beginning in the fall, the department will auction off preferred shares of multiple banks that it has packaged together.

The 10 other banks included in this round of auctions were CBS Banc-Corp. in Russellville, Ala.; Exchange Bank in Santa Rosa, Calif.; Market Street Bancshares in Mount Vernon, Ill.; Fidelity Financial in Wichita, Kan.; Marquette National in Chicago; Premier Financial Bancorp (PFBI) in Huntington, W. Va.; Diamond Bancorp in Washington, Mo.; Park Bancorp. in Madison, Wis.; Trinity Capital in Los Alamos, N.M.; and Commonwealth Bancshares in Louisville, Ky.

The 12 banks had received a combined $322 million from December 2008 to December 2009 under Tarp.

At least one bank, Premier Financial, partially repurchased its own shares. It was unclear if other banks did the same. This was the first of the four auctions in which the Treasury sold shares of companies that are not publicly traded.

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