Treasury launches secondary offerings of TARP preferreds of six banks

By Stephanie N. Rotondo

Portland, Ore., March 26 - The Department of the Treasury launched secondary public offerings of the preferred stock of six financial institutions that participated in the Troubled Asset Relief Program's Capital Purchase Program on Monday.

The institutions are Banner Corp. of Walla Walla, Wash.; First Financial Holdings Inc. of Charleston, S.C.; MainSource Financial Group Inc. of Greensburg, Ind.; Seacoast Banking Corp. of Florida, located in Stuart, Fla.; Wilshire Bancorp Inc. in Los Angeles; and WSFS Financial Corp. of Wilmington, Del.

None of the firms will receive any of the proceeds raised in the offerings.

The prices will be determined through a modified Dutch auction. Investors have until 6:30 p.m. ET on Wednesday to submit their bids. At settlement, the winning bidders will pay the clearing price plus accrued dividends from and including Feb. 15.

The clearing price will be the highest price in the auction for which the quantity of all bids at or above that price equals the number of preferreds that the Treasury has elected to sell.

The preferreds being sold are

• $125 million of series A fixed-rate cumulative perpetual preferreds from Banner. The 124,000 preferreds have a liquidation preference of $1,000 each;

• $65 million of series A fixed-rate cumulative perpetual preferreds from First Financial. The 65,000 preferreds have a liquidation preference of $1,000 each;

• $57 million of series A fixed-rate cumulative perpetual preferred from MainSource. The 57,000 preferreds have a liquidation preference of $1,000 each;

• $50 million of series A fixed-rate cumulative preferreds from Seacoast. The 2,000 preferreds have a liquidation preference of $25,000 each;

• $62.16 million of series A fixed-rate cumulative perpetual preferreds from Wilshire. The 62,158 preferreds have a liquidation preference of $1,000 each; and

• $52.63 million of series A fixed-rate cumulative perpetual preferreds from WSFS. The 52,625 preferreds have a liquidation preference of $1,000 each.

For all of the preferreds, the initial dividend is 5% until Feb. 14, 2014. After that, the rate increases to 9%. Dividends will only be paid upon regulatory approval.

The preferreds can be called at any time at par plus accrued dividends.

Bank of America Merrill Lynch is the auction agent and bookrunner for the First Financial offering. For the remaining offerings, Bank of America Merrill Lynch and Sandler O'Neill + Partners, LP are the auction agents and joint bookrunners. Drexel Hamilton, LLC, SL Hare Capital, Inc. and TBC Securities, LLC are the co-managers for each offering.

Houlihan Lokey Capital, Inc. is acting as financial adviser to the Treasury.

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