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The Treasury Department's recent auction of preferred shares in six banks may signal that the agency has finally found a path to end its bank investments under the Troubled Asset Relief Program.
April 12 -
Regulators have lifted an informal agreement with the banking unit of MainSource Financial Group (MSFG) in Greensburg, Ind.
March 26
MainSource Financial Group (MSFG) in Greensburg, Ind., has retired another chunk of the equity it originally issued in the Troubled Asset Relief Program.
The $2.8 billion-asset company disclosed Friday it repurchased 19,050 shares of the 57,000 shares, or $57 million, it issued to the Treasury Department in 2009 as part of Tarp, from a private investor in a negotiated deal. It did not disclose the price it paid.
The Treasury sold its stake in MainSource in March through an auction. MainSource was among one of the bidders in the Treasury auction and retired 21,000 shares for roughly $20 million.
The company said it plans to redeem the remainder by the first quarter of 2014.
R. Scott Siefers, an analyst with Sandler O'Neill, called the news a "plus," in a research note on Friday, because it pushes the company closer to paying a higher dividend and would allow it pursue "further shareholder-friendly capital management activities." Siefers, who has a "buy" rating on the company said the move should also save it nearly $1 million annually. He revised his 2013 estimates from $1.19 to $1.21.
"One of the main components of our MSFG upgrade a couple months ago was the strong potential for MSFG's capital story to improve meaningfully in the next couple of years," he said in the note. "As we hoped, the company has indeed continued along the path to repaying its remaining preferred shares.
