This is not conclusive however for all the pundits that talked about the USA printing money and likening it to Argentina and Germany after the war, it would appear that there is not much of a comparison and in contrast a number of good investments. In line with my previous posts questioning if the USA really printed the money and why there was no balance sheet that offset the support of the banks along with the compensation the US government would gain from the support.
Large Cap Banks July 6, 2010
KBW TARP Tracker - 66th Edition
Financial Reform legislation approved by the House of Representatives last week
includes provisions to end the TARP program early, prior to its planned October 3, 2010
end date. In addition, Congress appears set to address the need for a Financial Crisis
Recovery fee on banks designed in part to offset the cost of the TARP program. As a
result, we are updating our TARP Tracker to review the cost and returns to the Treasury
to date from the TARP program. Specifically we review the TARP CPP program, the
primary program supporting banks.
n Overall, TARP CPP investments appear to provide positive returns to the
Treasury. To date, Treasury invested $205B in 707 banking institutions, received
repayments totaling $137B, earned income of $13B from 61 banks that fully repaid
CPP (inclusive of warrant disposition), and posted losses of $2.3B. The Treasury
currently has $65B remaining in outstanding CPP capital investments in 632 banking
institutions. There have been missed interest payments on less than $4B of this $65B in
remaining CPP capital investments.
n For the 61 banks that fully repaid CPP, Treasury's average Return on Investment
(ROI) is 10.3%, with six investments yielding ROIs >=20%: First ULB Corp. (29%),
Centra Financial Holdings (28%), FPBF (26%), AXP (23%), FMWC (21%) and GS
(20%). SBIB's $125M CPP TARP investment has the lowest ROI of 2.9%.
n Banks that fully repaid CPP outperformed the S&P 500 Financials Index since
disposal of the warrants. On average, these banks gained 5.5% relative to the S&P
500 Financials Index since disposal of the warrants through 7/2.
n Since the 65th edition of the TARP Tracker, four repayments were made: Boston
Private Financial Holdings (BPFH) - $104M, Lakeland Financial Corp. (LKFN) -
$56M, First Southern Bancorp (FSOF) - $11M, and FPB Financial Corp. (FPBF)
-$2M. Also, two banks auctioned their warrants: SIVB ($6.8M) and SBIB ($3.0M),
and two repurchased their warrants: FSOF ($0.5M), and FPBF ($0.2M).
n The Treasury Posted $2.3B Loss on CPP Investments in CIT and Pacific Coast
National Bancorp. On 12/10/09, under CIT's bankruptcy reorganization plan,
Treasury's preferred stock and warrant CPP investment were replaced by contingent
value rights (CVRs), which later expired without value on 2/8. As a result, the
Treasury's $2.3B investment in CIT is a loss. Further, on 2/11, Pacific Coast National
Bancorp dismissed its bankruptcy proceedings with no recovery to the Treasury for the
$4.1M in TARP it received.
n Three TARP recipients (UCBH Holdings, Pacific Coast National Bancorp,
Midwest Bank Holdings) are failed institutions.
n Ninety-eight institutions (including AIG) failed to make the most recent TARP
dividend payments due in May. For further details please refer to our 6/14 edition of
the KBW TARP Dividend Payments Tracker - 5th Ed..
n Please refer to the pdf version of this note for our complete analysis.
Melissa A. Roberts
Please refer to important disclosures and analyst certification information on pages 20 - 22.