M&I’s stock offering available at $5.75 per share until Wednesday; Large banks receive OK to repay TARP funds
M&I’s stock offering available at $5.75 per share until Wednesday
Marshall & Ilsley Corp. announced that the 87 million shares of its common stock in a new stock offering will be priced at $5.75 per share.
The new offering was announced Thursday. The Milwaukee-based parent company of M&I Bank said it expects the offering to generate $480 million in additional revenue, after deducting underwriting discounts and commissions and estimated offering expenses.
M&I has granted the underwriters an option to purchase up to an additional 13 million shares of its common stock. The offering is expected to close on Wednesday, June 17.
Morgan Stanley & Co. Inc. and Barclays Capital Inc. are acting as joint book-runners for the offering.
M&I intends to use the net proceeds of this offering for general corporate purposes and may contribute some portion of the net proceeds to the capital of its subsidiaries, which will use these contributions for their general corporate purposes.
M&I’s board said the company also may elect to repurchase a portion of its Senior Preferred Stock, Series B, issued to the United States Department of the Treasury as part of its Capital Purchase Program through the Troubled Asset Relief Program (TARP).
M&I’s stock was trading this morning at $6.10 per share.
Large banks receive OK to repay TARP funds
Ten of the largest financial institutions in the nation were given the go-ahead by the U.S. Treasury Department last week to repay $68 billion in funds they received as part of the government’s almost $200 billion bank bailout program.
"These repayments are an encouraging sign of financial repair, but we still have work to do," said Treasury Secretary Timothy Geithner in a statement.
According to MarketWatch.com, the banks that are allowed to pay back the funds from the Troubled Asset Relief Program (TARP) are: J.P. Morgan Chase & Co.; Goldman Sachs Group Inc.; Morgan Stanley; American Express; Bank of New York Mellon; State Street; U.S. Bancorp; BB&T Corp.; Capital One Financial Corp.; and Northern Trust Corp.
As part of the bank bailout program, known as the Capital Purchase Program, the 10 institutions eligible to repay TARP have the right to repurchase warrants the Treasury holds at fair market value.
Proceeds from the TARP repayments will go to the Treasury’s general account and help reduce the federal government’s borrowing and the national debt, Geithner said. The repayments also boost the government’s cushion to "respond to any future financial instability that might otherwise jeopardize economic recovery," he said.
Banks with a significant presence in metro Milwaukee were pleased with the announcement, saying their institutions will be best served by exiting the program.
"The repayment of the TARP capital will provide U.S. Bancorp with both independence and strategic flexibility, and we fully expect to continue to vigorously offer lending opportunities to our credit-worthy consumer, small business, corporate and institutional customers, invest for future growth and support the U.S. government’s overall efforts to stimulate the economy," said Richard Davis, CEO of Minneapolis-based U.S. Bancorp, the parent company of U.S. Bank. "Further, the funds we are now returning to the U.S. Treasury can be used to support other economic recovery efforts."
"Northern Trust is one of the best capitalized major banks in the industry and will remain so following our exit from the TARP Capital Purchase Program," Northern Trust CEO Frederick Waddell said. "We supported the Capital Purchase Program as an important element in restoring stability to the U.S. financial system and acknowledge the taxpayers’ support of the financial system during these difficult times. Now we are pleased to return this capital in the best interests of our shareholders, clients, employees and taxpayers."
However, the repayments effectively create a two-tier banking system, in which 10 other financial institutions, including Bank of America Corp., Citigroup Inc. and Wells Fargo, have a longer road to recovery.
