PNC Repays TARP Funds
PNC Financial Services Group (PNC) redeemed $7.6bn of Series N preferred shares held by the US Treasury under the Troubled Asset Relief Program's (TARP) Capital Purchase Program (CPP), the bank and Treasury announced Thursday. The repayment represents all of the Treasury’s investment in the bank and brings the total amount of repaid TARP funds to $173bn. The Treasury estimates total bank repayments and proceeds from sales of its common stock in banks should exceed $185bn by the end of 2010, cutting total taxpayer exposure to the banks by three-quarters. Treasury said its received about $17bn in revenue through interest, dividends, and the sale of warrants, adding profit could be higher as Treasury sells additional warrants in the weeks ahead. As HousingWire previously reported, PNC was negotiated the repayment plan last week. As part of the agreement to redeem preferred shares held by the Treasury, PNC priced a $3bn offering of 55.6m shares of common stock at $54 per share. Underwriters can purchase up to 8.3m additional shares in the event of over-allotments. The offering should close by Feb. 8, 2010. PNC also plans to offer an aggregate $1.5-$2bn of senior notes. PNC, runs a real estate portfolio comprised of properties in the northeastern United States. The bank signed an agreement to sell PNC Global Investment Servicing to Bank of New York Mellon (BK) for $2.3bn as part of the agreement to repay TARP. The sale, when completed in Q310, will give PNC a $5bn after-tax gain and a $1.6bn increase in Tier 1 common capital. These three measures combined – the TARP repayment, common stock offering and Global Investment Servicing sale – should boost PNC’s Tier 1 common capital by $4.3bn. The company’s Tier 1 common capital ratio will have increased by about 200 bps to an estimated 8% on a pro forma basis at Dec. 31, 2009. PNC’ss Tier 1 risk-based capital will have been 10.3%. Write to Austin Kilgore. The author held no relevant investments.