Treasury’s auction of Fidelity stock nets $34 million
07/28/2012 7:34 AM
07/28/2012 7:34 AM
The Treasury Department said on Friday that it received $34.1 million in an auction of preferred stock in Fidelity Financial Corp.
And an official of the holding company of Wichita’s Fidelity Bank said one of the buyers was the company itself.
According to a news release from Treasury, it earned $891.26 a share on 36,282 shares of Fidelity’s series A preferred stock and $960.60 a share on 1,814 shares of Fidelity’s series B preferred stock.
Fidelity was among a dozen banks and thrifts in the country whose preferred stock and debt positions were auctioned between Monday and Thursday. The highest price for a series A share was $905.20 and the lowest was $720.25. Among series B shares, the highest price was $965.10 and the lowest was $780.25.
“To us that’s kind of a vote of confidence in our financial stability,” Fidelity spokesman Al Sanchez said.
All of the banks and thrifts in the auction had participated in Treasury’s Capital Purchase Program, part of the Troubled Asset Relief Program.
Treasury estimates the auction of the 12 banks’ securities will earn $248.5 million.
Treasury didn’t identify the purchasers of Fidelity’s stock. Sanchez said he doesn’t yet know the identities of the purchasers of Fidelity’s preferred stock.
“We have purchased some of that back, and we don’t know who the other investors are,” he said.
Sanchez said Fidelity will likely learn who the other buyers are by Aug. 9 or 10. That’s when Treasury said the closing for the auctions are expected.
He said the fact that other investors now own preferred stock in Fidelity wouldn’t affect overall ownership or control of the company.
“None of the common stock of the bank was affected by this and all the common stock of the bank continues to be privately held by the (Bastian) family,” Sanchez said.
Fidelity Financial, which has $1.5 billion in assets, received a $36.3 million investment from the Treasury in December 2008. In return for the investment Fidelity gave up preferred stock in the company, which it could regain once it paid back the investment plus interest. According to Treasury, Fidelity has made timely dividend payments totaling $6.7 million through June 2012.
Treasury is winding down the program sooner than expected. Under earlier terms with Treasury, banks receiving CPP funds had five years to repay the investment amount plus 5 percent interest. If banks took more than five years to pay it off, the interest rate moved up to 9 percent. The intent behind CPP was to help unfreeze capital and spur healthy banks to lend money during the deep recession and crisis in banking.
Sanchez said he doesn’t yet know the long-term plans for obtaining the preferred stock that will be held by new investors.
“We are pleased … that we are now out of the CPP program,” he said.