Wisconsin Banking News

Anchor Bank receives TARP funds, writes down $72M

Anchor Bank takes $72 million charge, but gains boost from Treasury

Madison-based Anchor BanCorp Wisconsin Inc. (ABCW) announced it will incur a charge of $72 million for declining asset values, event though the company has issued 110,000 shares of its senior preferred stock, Series B, to the U.S. Department of the Treasury in return for $110.0 million in cash.

In addition, ABCW issued a warrant to Treasury to purchase up to 7.4 million shares of ABCW common stock at an exercise price of $2.23 per share.

This transaction is part of the Treasury’s Capital Purchase Program, which is designed to infuse capital into the nation’s healthiest and strongest banks.

Douglas Timmerman, president and chief executive officer, said ABCW will downstream proceeds to its wholly-owned subsidiary, AnchorBank, where they will be used to make additional funds available for residential and consumer lending and to strengthen the bank’s capital position.

Timmerman said the bank would do its best "to apply the funds in a way that will further the goals of the Treasury Capital Purchase Program by increasing the availability of credit to qualified consumer and residential loan customers."

He noted that the infusion of capital would also allow the Bank greater latitude in its efforts to work with challenging loan situations.

With capital preservation critical in today’s economic climate, ABCW’s board of directors voted to suspend regular quarterly dividends on its common stock. To help further reduce expenses and preserve capital, ABCW has instituted hiring and salary freezes and will consider further expense reduction initiatives.

ABCW also announced that the estimated fair value of ABCW’s bank reporting unit was less than its book value, requiring a $72.2 million non-cash good will charge.

"The steps taken this quarter to write down goodwill are indicative of the depth of the current recession and the impact being felt by us and by most other financial institutions," Timmerman said.

 

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