Christopher Menkin's  Instablog

Christopher Menkin
Send Message
Christopher "Kit" Menkin is of editor (, an internet trade publication for the finance/leasing industry. He has 46 years experience in the finance/leasing industry as well as being a founder of a commercial regional bank and serving on several company... More
My company:
Leasing news
  • Treasury Accepts Steep Discounts In Recent TARP Auction 0 comments
    Feb 12, 2013 1:37 PM

    By Andy Pierce, SNL Financial

    (click to enlarge)

    The U.S. Treasury is starting to realize heavier losses as it continues to auction its CPP investments in banks, many of which are behind on their dividend payments. Last week, the Treasury sold $295.8 million in CPP securities, taking a loss of $104.5 million before fees, a hit amounting to over a third of the principal amount auctioned.

    The 35% aggregate discount is the steepest seen thus far in the multibank auction process by a long shot. Seven out of the 11 auctioned banks are well behind on their dividend payments, further crippling the Treasury's overall return.

    The losses were mainly due in part to the 44.7% haircut the Treasury took on the $146 million in Series A preferred stock issued by Dickinson Financial Corp. II. The Dickinson investment was the largest to be included in a multibank auction to date, and accounted for over half of the total amount sold the prior week. Dickinson has struggled to keep up with its preferred dividends, missing 14 payments for a combined $27.9 million as of Dec. 31, 2012.

    (click to enlarge)

    Not surprisingly, other banks that were behind on their dividend payments also priced at relatively higher discounts. The Treasury took the highest discount on Citizens Bancshares Co., whose Series A and B preferred stock sold for a little more than half its original value at discounts of 49% and 48%, respectively. The bank has missed 12 dividend payments which total over $4 million in unpaid dividends.

    There were a few bright spots, as the Treasury should net a return on their investments in all four banks that were current on their dividend payments. Biscayne Bancshares Inc. was one such bank, and had their 7.7% subordinated notes sell at a 2.6% discount, while their 13.8% notes fetched a modest premium.

    (click to enlarge)

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Back To Christopher Menkin's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers


More »

Latest Comments

Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.