U.S. sells Washington Federal stock warrants for $15.4M

Updated 5h 34m ago
By Martin Crutsinger, AP Economics Writer

WASHINGTON — The Treasury Department has received $15.39 million from the sale of warrants it received from Washington Federal of Seattle as part of the support it provided from the government's $700 billion bailout program.

The Treasury said Wednesday that it sold 1.71 million warrants in an auction the previous day for about $9.15 per warrant. The minimum bid was $5 per warrant.

Treasury says "These proceeds provide an additional return to the American taxpayer from Treasury's investment in the Company beyond the dividend payments it received on the related preferred stock."

READ: Treasury statement

Warrants are financial instruments that allow the holder to buy stock in the future at a fixed price.

Under the terms of the auction, the owner of the warrants will have the right to buy Washington Federal stock for $17.57 a share. That would mean shares of Washington Federal would have to be above $26.72 for the warrants to be "in the money" or above the price the holder paid for the warrant plus the amount they would pay for the stock.

At the height of the financial crisis, Washington Federal received $200 million in November 2008 from the government's $700 billion bailout fund, known as the Troubled Assets Relief Program.

Financial institutions have been eager to exit the TARP program to escape restrictions imposed on institutions receiving government support, including limitations on executive compensation.

The auction for the Washington Federal warrants followed one last week in which the government raised a record $1.54 billion from the sale of warrants received from Bank of America.

Treasury today and tomorrow plans to sell 595,829 warrants to buy the common stock of Signature Bank; and · 758,086 warrants to purchase the common stock of Texas Capital Bancshares.

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